{"id":15597,"date":"2021-05-05T11:16:16","date_gmt":"2021-05-05T01:16:16","guid":{"rendered":"https:\/\/disputescentre.com.au\/?p=15597"},"modified":"2022-05-09T09:00:31","modified_gmt":"2022-05-08T23:00:31","slug":"lainson-holdings-case-note-2","status":"publish","type":"post","link":"https:\/\/disputescentre.com.au\/lainson-holdings-case-note-2\/","title":{"rendered":"Expert Determination Case Note: Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd [2019] NSWSC 576"},"content":{"rendered":"

The NSW Supreme Court clarified the role of experts appointed under expert determination clauses in Lainson Holdings Pty Ltd v Duffy Kennedy Pty Ltd (\u2018Lainson Holdings\u2019).[1]<\/sup><\/a> The decision confirms that experts are not required to determine disputes \u2018free of legal error\u2019 in order for the decision to be binding, even where the contract required the determination to be \u2018according to law\u2019.<\/p>\n

The Facts<\/h3>\n

Lainson Holdings Pty Ltd (\u2018Lainson\u2019) and Duffy Kennedy Pty Ltd (\u2018Duffy\u2019) entered into a building contract supported by a deed whereby Duffy contracted to construct a building on land owned by Lainson.<\/p>\n

A dispute arose initially regarding Duffy providing bank guarantees, and both parties, subsequently, made further claims and cross claims against each other relating a range of other things in relation to repudiation and termination of the contract, payment for work, loss of profit and damages relating to competency of work performance.<\/p>\n

An expert was appointed under the parties agreed provision of the Deed which provided for Notice of disputes before then \u2018any dispute or difference whatsoever arising out of or in connection with this contract shall be submitted to an expert\u2026\u2019 was agreed under the heading \u2018Expert Determination\u2019. The expert determination was to be conducted in accordance with specified rules before commencing arbitration or litigation. The rules required the expert to determine the dispute \u2018according to law\u2019.<\/p>\n

The Decision<\/h3>\n

Lainson presented two main arguments.<\/p>\n

Lainson argued the expert made an error in law in determining that Lainson had an implied duty to act reasonably and in good faith and not for extraneous purpose in the issuing of two Notices.<\/p>\n

His Honour rejected Lainson\u2019s argument that the words \u2018according to law\u2019 require the correct application of only legally correct principles by the expert in determining in a manner free from legal error affecting the result. His Honour found that \u2018The construction would burden the Expert with an obligation to try the Dispute as if he were acting as a court of law\u2019 and provide a right of review wider than an arbitral award which was not intended by the parties on the construction of the contract and was unlikely to have been intended by the parties when entering the contract.<\/p>\n

His Honour Hammerschlag J referred to the clear authorities that establish the following principles:<\/p>\n