Expert determination: When is a decision enforceable?

The recent TCC decision in GSY Hospitality Ltd v Gladstone Court Developments Ltd [2025] EWHC 3231 (TCC) provides a useful reminder of the limits of expert determination, particularly where an expert strays outside their mandate by making an error of law. The judgment examines a deceptively simple question: if an expert reaches the “right” answer, but for the wrong legal reasons, is their determination still binding? In this case, the court’s answer was a firm “no”.

The facts

The dispute arose out of the development of a luxury hotel. GSY Hospitality (GSY) would purchase the leasehold of the hotel from Gladstone Court Developments (Gladstone) after the construction and fit out works had been completed by Gladstone (or on its behalf). The parties signed two separate contracts¹ and had agreed a contractual mechanism for apportioning certain costs (preliminaries, mechanical and engineering subcontractor overheads and profits, and firefighting lifts) between them. GSY’s position was that the contractual mechanism required the costs to be apportioned strictly in accordance with a “Costs Apportionment” schedule. Gladstone’s position at the expert determination stage that the parties later agreed a cap on its liability of £800,000 through an informal variation of the agreement. This was less than it would have had to pay under the Costs Apportionment schedule.

The matter was referred to expert determination, which the parties had agreed in their contract would be binding except in cases of manifest error or questions of law. The expert concluded that the parties had agreed an informal variation introducing the £800,000 cap, based on (a) the oral evidence in the form of witness statements, and (b) the absence of a challenge by GSY to interim applications or certificates issued by Gladstone that referred to the liability to these costs being capped at £800,000.

GSY asked the court to set aside that portion of the expert’s determination on the basis of an error of law.

What was the error of law?

Both parties ultimately accepted that the expert’s reasoning contained an error of law. Specifically, the agreements contained a No Oral Modification (NOM) clause requiring amendments to the contract to be in writing to be effective. In 2018, the Supreme Court confirmed that NOM clauses are enforceable in MWB v Rock Advertising.

The expert did not consider the NOM clause, nor the Rock Advertising case law.

The decision

Mr Roger Ter Haar KC, sitting as Deputy High Court Judge, held that failure to engage with these issues amounted to a clear error of law. Since the agreement provided that the experts’ determination was binding, except in cases of manifest error, under the expert’s mandate, he was required to reach a decision containing no error of law.

Gladstone argued that the decision could still be justified based on a separate legal doctrine, estoppel by convention. 

Mr Ter Haar KC declined to engage with this issue, asserting that the issue at this stage was not whether the expert’s answer could be justified, but whether the expert acted within the mandate given to him. As the expert had made an error of law and failed to consider the NOM clause, the process had materially departed from his instructions. Whether an estoppel might later provide an alternative route to the same result is a separate question.

The court revisited the established principles in Premier Telecommunications v Webb, which outline when an expert determination can be set aside, quoting paragraph (7):

“Once it is shown that the expert departed from his instructions in a material respect, the court is not concerned with the effect of that departure on the result. The determination is not binding.”

Mr Ter Haar KC continued by explaining that experts must ask the right question. A determination cannot be upheld simply because it may have landed, by coincidence, on an answer that might later be legally justified. As the expert failed to consider the NOM clauses, failed to engage with the decision in MWB v Rock Advertising and had therefore applied the wrong legal tests, he had departed materially from his mandate, and as a result his determination on the apportionment issue was not binding. GSY were successful in having that part of the determination set aside.

Practical implications

The decision is a useful reminder to parties negotiating and operating construction contracts of some important points including:

1. Check the small print – From time-to-time, it may be expedient to amend the terms of your agreement. Check whether your agreement has a NOM Clause. If it does, make sure the amendment is agreed in writing and any other formalities are met. 
2. Do not assume informal discussions or conduct will be effective to vary a contract. Informal arrangements and agreements between parties, however common in the construction industry, cannot bypass clear contractual terms.
3. Think carefully about what dispute resolution forum is right for the parties and the project – Parties should think strategically about their dispute resolution mechanism and ensure it aligns with their needs and priorities. For example, parties opting for adjudication could still appoint an ‘expert’ to determine the dispute (e.g. a quantity surveyor to determine a pricing dispute). In adjudication, an adjudicator is allowed to make an error in law, so long as it does not affect their jurisdiction or create natural justice issues. The parties may take the view that this greater certainty that the decision will stand is preferable. Adjudication is, of course, only binding pending a final resolution; expert determinations, by contrast, are final in nature and therefore subject to closer supervision where the expert steps outside their mandate.
4. Framing the Question for an Expert – Determinations by experts are vulnerable to being set aside if the expert has asked themselves the wrong question, even if their decision is legally justified or gives the ‘right’ answer on the merits. Parties can assist experts — and increase the chances that they will benefit from a defensible determination — by framing the question for experts. This requires a good understanding of the facts and the applicable contract provisions and law.
5. The Expert’s Mandate – The critical question is whether the expert has complied with their mandate. Parties may wish to consider carefully how the mandate is framed to give an expert more or less flexibility but should keep in mind the potential impact of this on whether the eventual decision will be vulnerable to being set aside.

Footnote:

1. The transaction was documented in two separate contracts (a SPA agreed between GSY and Gladstone; and an operating services agreement between Hyatt International, GSY and Gladstone.