Lainson Holdings v Duffy Kennedy [2019] NSWSC 576

Does an expert have to make her or his determination “according to law”?  

Not as silly a question as you might think.  A landowner and builder entered into a contract.   

The contract included a dispute resolution clause. The effect was that any dispute about the contract must be referred to an expert for determination “according to law”.  A dispute arose and an expert was appointed. The expert made a determination in favour of the builder.  

The landowner commenced Court proceedings disputing the determination.   It said the expert goofed in finding there was an implied term: [30]. It also said that when an expert makes a determination where a question of law becomes material, the Court can intervene if the expert makes a mistake of law: [31].  

The Court disagreed about the implied term. It then found the landowner’s submission works commercial inconvenience: if the landowner was right, then every expert determination would be open to appeal on every legal question determined if the question could be seen differently: [50].  

Expert determination is a contractual mechanism, not a judicial process; it is not subject to judicial correction if it includes a mistake of law as long as the determination was made in accordance with the contract: [60].