Re Tariq Halal Meat (Ilford) Ltd [2020] EWHC 734 (Ch)

Chief Insolvency and Companies Court Judge Briggs handed down judgment on Friday addressing the circumstances where an insolvency practitioner should be made personally liable for the costs of a challenge to their adjudication on a proof of debt.

Having assessed authorities from Re Silver Valley Mines (1882) LR 21 Ch D 381 to Fielding and another v Hunt [2017] EWHC 406, Chief Judge Briggs stated that although the cases did not “speak with one voice when it comes to nomenclature”, nonetheless a principled approach emerged:

1. The starting point is Insolvency Rule 14.9(2), providing that an order should not ordinarily be made against an office holder personally.
2. Something more is required, which “relates to the conduct of the office holder”.
3. The degree of conduct deserving of a personal costs order will depend on the circumstances of each case. A mere mistake is unlikely to be sufficient. Acting in a neutral manner, on an appeal from a rejection of proof, is unlikely to be sufficient. Acting for a personal advantage in resisting an appeal is very likely to lead to a personal costs order. Such conduct would present a “special case” and a “good reason”, and may be characterised as “irrational conduct”, or “unreasonable conduct”.
4. Where the conduct complained of relates to a decision made on a proof of debt, the court will take account of the duties imposed upon an office holder to investigate the proof (i.e. to examine every proof, to consider the validity of the debt which is sought to be proved, and to require satisfactory evidence that the debt on which the proof is founded is a real debt, even where the proof is based on a judgment).

On the facts of the case, a personal costs order was not warranted. Thomas Robinson acted for the successful administrator, instructed by Pinsent Masons LLP.

The full judgment can be read here.

Gareth Clark v HM Revenue and Customs [2020] EWCA Civ 204

Court of Appeal pensions/tax decision on meaning of “payment” in context of unauthorised payments charge regime and on nature of “discovery” assessments

Jonathan Davey QC has received judgment from the Court of Appeal (Bean, Henderson and Davies LJJ) in an appeal concerning the meaning of “payment” in the context of the “unauthorised payment charge” regime in relation to registered pension schemes under the Finance Act 2004 (“FA 2004”). The case concerned a scheme entered into by the Appellant the purpose of which was to enable him to liberate his pension monies for personal investment in the London property market without giving rise to a charge to tax. The Court of Appeal upheld the decision of the Upper Tribunal (Tax and Chancery Chamber) (Arnold J and Judge Herrington) that the scheme did not work. The Court of Appeal held that in considering whether the tax charge imposed on unauthorised member payments by virtue of sections 208 to 210 FA 2004 applied, the question of whether a “payment” had been made fell to be answered by looking at “the practical, business reality of the transaction” (at [82]), including any composite transaction of which the payment formed part. Applying that approach, on the facts of the case, a transfer of legal title without beneficial title did constitute a “payment”. In reaching that conclusion the Court of Appeal had regard to the decision of the Court of Appeal (judgment of Chadwick LJ) in Venables v Hornby [2002] EWCA Civ 1277 and the decision of the High Court (judgment of Arden J) in Hillsdown Holdings PLC v Inland Revenue  Commissioners [1999] STC 561. On the procedural point in dispute between the parties of whether the transfer in question was properly to be regarded as part of the subject matter of the “discovery” assessment issued by HMRC, the Court provided important guidance as to the operation of the discovery provisions within section 29 of the Taxes Management Act 1970 including in relation to the question of how the scope of a discovery assessment is to be delimited. Jonathan Davey QC acts for the Respondents (HMRC) with Sam Chandler (5 Stone Buildings). Michael Jones (Gray’s Inn Tax Chambers) acts for the Appellant.

The full judgment can be read here.

Shelford and others v HM Revenue and Customs [2020] UKFTT 53 (TC)

First-tier Tribunal Decision concerning “Home Loan Scheme”, purported sale of house to interest in possession trust and section 2 of the Law of Property (Miscellaneous Provisions) Act 1989

Jonathan Davey QC has received judgment from the First-tier Tribunal (“FTT”) in an appeal concerning the correct inheritance tax analysis applicable in respect of a “Home Loan Scheme” (the “Scheme”) involving the purported sale of a house to an interest in possession trust. The purpose of the Scheme was to remove the value of the house from the estate of a particular individual for the purposes of inheritance tax, whilst enabling the individual to continue to live in the house rent-free for the rest of his life. The FTT held that the Scheme did not work. The FTT found (among other things) that the loan agreement and sale agreement forming part of the Scheme involved “mislabelling”, and that the arrangements did not amount to a valid contract for the sale of land as they did not comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The FTT therefore found for the Respondents and dismissed the appeal. Jonathan Davey QC acts for the Respondents (HMRC) with Thomas Chacko (Pump Court Tax Chambers). William Massey QC, Emma Chamberlain and Oliver Conolly (Pump Court Tax Chambers) act for the Appellants.

The full judgment can be read here.

Judgment in Filatona Trading Ltd and Ors v Navigator Equities Ltd and Ors [2020] EWCA Civ 109

Judgment was handed down on Thursday by the Court of Appeal in Filatona Trading Ltd and Ors v and Navigator Equities Ltd and Ors [2020] EWCA Civ 109. In the judgment, the Court of Appeal gave authoritative guidance on the factors which determine when a principal is precluded from intervening on a contract made by his or her agent. Iain Pester represented the successful Third Respondent.

You can read the full judgment here.

In the matter of Comet Group Limited (in Liquidation) [2018] EWHC 1378 (Ch) – reporting restrictions lifted on 28 January 2020

This judgment is an important one. It concerned an application by the joint liquidators of Comet (formerly joint administrators) for directions permitting them not to carry out any further investigation into the validity of the fixed and floating charge held by a single purpose vehicle (“HAL”) that had been granted by Comet under a year before it collapsed into administration. The joint liquidators also sought a direction that they be permitted to transfer a further tranche of funds to HAL that had been realised in the administration.

The joint liquidators joined the Institute of Chartered Accountants of England and Wales (“ICAEW”) as a respondent to the application on the ground that the ICAEW had threatened to report the joint liquidators to their licensing body if they transferred further funds to HAL. The joint liquidators were already subject to disciplinary proceedings that had been commenced by ICAEW in 2014 with complaints, inter alia, that when the joint liquidators accepted their appointment originally as joint administrators they had not put in place sufficient safeguards to address conflicts of interest that they had as a result of their prior relationship with HAL and its ultimate owners.

The joint liquidators’ position on the application was that they had obtained two opinions from Freshfields and one opinion from David Allison QC to the effect that the security held by HAL was valid and that, therefore, the joint liquidators were entitled to act pursuant to that advice. In response, the ICAEW obtained an opinion from Lexa Hilliard QC that had concluded that there were a number of issues surrounding the grant of the security to HAL which cried out for investigation and that, in the absence of such investigation, it was well arguable that the security was invalid.

Sir Nicholas Warren held in a judgment handed down on 7 June 2018 that, contrary to the advice that the joint liquidators had received, there were a number of issues surrounding the grant of the security to HAL that deserved investigation and that the joint liquidators, by reason of their perceived lack of independence as a consequence of their prior relationship with HAL, should not carry out those investigations. The Judge went on to hold that the investigations should be carried out by an independent additional liquidator, which the Judge appointed at a subsequent hearing.

In a later judgment handed down on 21 June 2018, the Judge imposed reporting restrictions on the publication of the main judgment in order not to prejudice any investigation that might be carried out by an independent additional liquidator, once appointed. Costs were awarded to ICAEW on the indemnity basis.

This case has been widely reported including by The Times and Financial Times.

The 2018 judgments can be viewed here and here.

By an order dated 7 January 2020, Deputy ICC Judge Frith lifted the reporting restrictions on publication of both judgments.

Terence Mowschenson QC and Lexa Hilliard QC acted for the ICAEW.

National Bank Trust v Ilya Yurov & Ors [2020] EWHC 100 (Comm)

Following an eight week trial in late 2018, the High Court has handed down judgment finding against the former majority shareholders of Russia’s National Bank Trust who were alleged to have misappropriated over $1billion of Bank funds via a sophisticated network of offshore companies.

The case has been widely reported including by the Financial Times and The Wall Street Journal.

The Bank brought a claim against its former majority shareholders, who were also members of the Bank’s Supervisory Board, and their wives in relation to approximately $1billion of loans which they were alleged to have procured over a period of ten years for the benefit of what were said to be their own companies. The Bank’s case was that this money was, in large part, transferred to an offshore network of further companies, also beneficially owned by the shareholders, for the purposes of servicing other loans from the Bank as well as for their own personal benefit.

The defendants’ position was notable insofar as while two of the defendant shareholders, Mr Yurov and Mr Fetisov, accepted that Bank funds had been transferred through a network of companies but maintained that this had been done legitimately and in the best interests of the Bank, the third shareholder Mr Belyaev denied all knowledge of and involvement in any such scheme.

The case, which was brought under Russian law, raised difficult legal questions in respect of which the Russian Courts’ position remains uncertain in many instances. It also involved complex accounting evidence that sought to trace through thousands of transactions involving hundreds of companies over ten years.

Although a fact heavy judgment decided on the basis of Russian law, it nevertheless provides a valuable summary and application of the English law principles governing, for example, what is required to properly plead and prove fraud, including the approach to be taken by the Court in determining inherent probabilities, as well as the role of documentary and circumstantial evidence. This was particularly significant in light of the nature of Mr Belyaev’s defence.

The judgment also provides a useful discussion of:

1. The application of foreign law by the English Court, including the weight to be attached to foreign judgments;
2. The circumstances, as set out by the Court of Appeal in Wisniewski v Central Manchester HA [1998] PIQR 324, in which adverse inferences may be drawn from the absence of a witness who might have been expected to have material evidence to give on an issue in the action;
3. The importance of adequately pleading one’s case, particularly in fraud claims and with reference to Part 16 PD para 8.2; in this case the Judge found that the Bank was not entitled to rely on its allegation that a particular fiduciary lending arrangement  was “inherently dishonest” in circumstances where it had not been positively pleaded and particularised.

Tim Penny QC and Tara Taylor acted for the second and fifth defendants (instructed by Fried Frank Harris Shriver and Jacobson LLP).

You can read the full judgment here.

Re Carlauren Group Companies

The High Court has placed eight companies in the Carlauren Group of luxury hotels and care homes into administration. The matter has been widely reported, including by the BBC and Guardian.

The Group began operations in 2015 and raised some £76 million from investors worldwide. However in 2019 it fell into arrears in paying fixed returns to those investors. Three of its c. 40 companies entered administration in late July 2019.

The Group had brought an application challenging the validity of two of those appointments, while other applications were brought by investors, creditors, and the existing administrators. These sought administration orders in relation to the two companies already in administration (in case the existing appointments were held invalid) and in relation to other parts of the Group.

After a two-day hearing, the High Court decided to place eight companies into administration, including its two holding companies. Thomas Robinson acted for the successful administrators, Carl Jackson and Simon Bonney of Quantuma LLP, instructed by Cathryn Williams and Paul Muscutt of Crowell & Moring LLP.

Dealing with arguments over invalid appointments

The dispute as to validity concerned i) the enforceability of a Qualifying Floating Charge, and ii) which persons held shares in the company in question at the relevant time and whether shareholders could rely on the Duomatic principle to appoint under paragraph 22 of Schedule B1 when the appointment in fact relied only on directors’ powers.

Adopting a approach that may be useful in other cases, the court noted that it had before it applications by creditors to put the same companies into administration with retrospective effect. Doing so avoided the need to decide on the validity of the initial appointment. If the appointments had been valid then paragraph 7 of Schedule B1 would apply to prevent administrators being appointed to a company already in administration. The court addressed this by terminating their appointment, to the extent necessary, under paragraph 79. This follows the approach in Pettit v Bradford Bulls [2017] BCC 50.

Need for investigation

The court recorded, but made no findings on, the allegations made regarding use of investors money. These included its diversion to the Group’s director’s personal bank account, the acquisition of a private jet, yachts, two houses and five luxury cars for the director. They also included allegations of running a collective investment scheme in contravention of s.19 of FSMA 2000 and a practice of paying investors with money from later investors amounting to a Ponzi Scheme. The court concluded simply that there was a “pressing need” for investigation.

Purpose of administration

The Court considered at some length the test at paragraph 11(1)(b) of Schedule B1, and reasons why it was reasonably likely that the purpose of administration would be achieved. It adopted a “holistic” approach to the Group, noting that the administrators may wish to put together packages of subsidiaries for realisation purposes, and address issues such as planning permission and change of use regarding several properties (held in different companies). The court placed weight on the views of the two existing administrators, and rejected certain criticisms of their conduct.

University of London v Cornerstone Telecommunications Infrastructure Limited [2019] EWCA Civ 2075

This case concerns interim and temporary rights under the new Electronic Communications Code in Schedule 3A to the Communications Act 2003, brought in by the Digital Economy Act 2017.

It has answered two massive questions that have been boring holes in the febrile minds of Code Geeks over recent months:

Question 1: Is an ‘MSV’ (multi-skilled visit) – basically a survey by an operator to see if a site is suitable for apparatus – a code right so that it can be sought as an interim right under paragraph 26 of the Code, thereby (i) involving only the lower ‘good arguable case’ test; and (ii) invoking code levels of consideration and compensation (including the ‘no-network assumption’), rather than ransom levels?

Question 2: Can a paragraph 26 interim right be sought alone or has it got to be ‘parasitic’ – on a full-blown paragraph 20 claim, as suggested in Cornerstone v Compton Beauchamp [2019] EWCA Civ 1755 at [68]?

The answers in the Judgment of the Court of Appeal (Etherton MR, Lewison LJ, Arnold LJ) is yes to both questions. It’s a green light to operators when it comes to MSV’s and interim rights.

The basis for the yes answer to the first question is paragraph 3(d) of the Code which creates a code right “to carry out any works on the land for or in connection with the installation of electronic communications apparatus on, under or over the land or elsewhere”.

It is true that surveys do not necessarily involve invasive banging and screwing and hammers and nails and the MSV in this case did not. But ‘works’ is a wide word and hammers and nails are not needed to create charitable ‘works’ nor the ‘works’ of Shakespeare.

Ultimately though, these code rights must be construed in light of the purpose of the code – to facilitate electronic communications apparatus in the public interest. On that basis, the Court of Appeal was satisfied that an MSV fell within 3(d).

The basis of the yes answer to the second question is the difference between the notice under paragraph 26(3) only having to be one which ‘complies’ with paragraph 20(2) (ticks the rather low-level requirements of 20(2)) and the express assumption of extant paragraph 20 proceedings in paragraph 27(3).

That was a difference which the Court of Appeal recognised was not referred to in Compton Beauchamp but it means that properly read the Code means that whilst a paragraph 27 claim for interim rights needs to be accompanied by paragraph 20 proceedings and can be made only when there is already electronic communications apparatus on the land, a paragraph 26 claim for interim rights can be made whether or not apparatus is already on site and without a supportive paragraph 20 claim.

Subject to the supervision of the Upper Tribunal, therefore, many opportunities open up to the operator in using paragraph 26 claims for interim rights. We can expect to see many more.

Jonathan Seitler QC acted for the successful respondent, Cornerstone Telecommunications Infrastructure Limited.

Sequent Nominees Ltd v Hautford Ltd [2019] UKSC 47

Supreme Court by majority of 3 to 2 reverses unanimous Court of Appeal decision in Sequent Nominees Ltd v Hautford Ltd and holds that a landlord’s refusal of consent to an application for change of planning use was reasonable.

This case provides important clarification for practitioners as to the interpretation of contracts, and leases in particular.  When considering the exercise of a contractual discretion (such as the common provision in a lease that the tenant shall not do a particular act without the landlord’s consent “such consent not to be unreasonably withheld” – known as a “fully qualified covenant”), and when determining what is and is not “reasonable”, the Court should look at the facts as they are at the date of the request for consent.  The Court should not consider the reasonableness of a refusal of consent “by reference to an over-refined construction of the lease as at the time of its grant”.

The exercise is not therefore to attempt to identify the original purpose for which the parties might have included the right for one of them to refuse consent.  Rather, the correct approach is simply to construe the clause so as to discover what upon its express terms it permits the (non-)consenting party to do.  In the context of leases in particular, the question of reasonableness is then resolved by asking whether the refusal of consent serves a purpose that is “sufficiently connected with the landlord and tenant relationship as at the time when consent is requested”.

This would seem to be contrary to the approach taken in cases such as Bates v Donaldson [1896] 2 QB 241 (CA), Houlder v Gibbs [1925] 1 Ch 575 (CA) (per Sargant LJ: “in considering the operation and effect of a clause of this kind, you have to consider what was within the reasonable contemplation of the parties to the lease”; per Warrington J: “What was the danger which the lessor contemplated, and against which the lessee was content to allow the lessor to protect himself?  What is to be inferred from what may be treated as being in the contemplation of the parties when the contract was made?”), and West Layton v Ford [1979] 1 QB 593 (CA) (where Roskill LJ stated that the enquiry was to “look first of all at the covenant in order to see what its purpose was when the parties entered into it”).  It also seems contrary to the more general observations of Lord Neuberger as to contractual interpretation in Arnold v Britton [2015] AC 1619. ^[1]

Nonetheless the majority of the Supreme Court (Lords Briggs, Carnwath and Hodge, with Lady Arden and Lord Wilson dissenting) held that the Courts below which had followed that earlier line of authority had adopted an erroneous construction of the lease and had therefore made an error of law which required the Court to consider the matter afresh.

The facts

The case concerned a 100 year lease of a whole building in Soho granted in 1986 for a premium of £200,000 at a peppercorn rent.  The current tenant (Hautford) was an assignee of the original term.  The current landlord (Sequent formerly known as Rotrust Nominees) was the original landlord by another name.  At the date of trial there were just under 70 years remaining of the term.  There was no restriction on assignment until the last 7 years of the term.  The lease contained the following user covenant (clause 3(11)):

“Not to use the Demised Premises otherwise than for one or more of the following purposes (a) retail shop (b) offices (c) residential purposes (d) storage (e) studio…”

By clause 3(19) Hautford covenanted:

“to perform and observe all the provisions and requirements of all statutes and regulations relating to Town and Country Planning and not to apply for any planning permission without the prior written consent of the Landlord such consent not to be unreasonably withheld.”

The building extended over 6 floors, including a basement.  At the time of trial the top two floors of the building had planning consent for residential use, the basement and ground floor were authorised for retail use and the first and second floors were authorised for office/ancillary use.  Approximately 25% of the building was in residential use.  Hautford wished to make a planning application to change the use of the first and second floors of the building to residential use.  If that application were successful, approximately 52% of the building would be in residential use.

Sequent refused permission on the ground that giving consent would increase the prospect of a successful claim by Hautford to enfranchise (i.e. compulsorily purchase the freehold) under the Leasehold Reform Act 1967 (LRA 1967).  Sequent also stated that it wanted to retain control of the building for estate management purposes as it forms part of a block of adjacent and contiguous properties in Sequent’s freehold ownership.

Sequent alleged that the purpose of the requirement to obtain consent to the making of a planning application is simply to protect the landlord from damage to its reversion.  Hence refusal of consent was said to be reasonable because Sequent was protecting its property interests in the face of a potential claim under LRA 1967 which would deprive it entirely of its freehold interest in the building and would also have an adverse impact on the value of its investment in the wider adjacent estate.

Both Courts below found that Sequent’s refusal of consent was unreasonable (essentially) because to hold otherwise would be to re-write the user covenant and prevent the tenant from being able to use the entire demised premises for the permitted residential purposes.

Decision of the Supreme Court

Lord Briggs (with whom Lords Carnwath and Hodge agreed) held that the landlord should succeed in its appeal since seeking to avoid a significant increase in the risk of enfranchisement was the “quintessential type of consideration rendering reasonable the refusal of consent”.  On “a down to earth factual analysis of the economic consequences to the landlord of giving or refusing the requested consent” the refusal of consent was reasonable.

For property practitioners this is a particularly important decision as it is the first case concerning the inter-relationship between a bespoke, individually-negotiated user covenant which expressly authorises as between landlord and tenant a particular use of the demised premises, and a “boiler plate” covenant to perform and observe all the provisions and requirements of planning legislation and not to apply to the local authority for permission to change the planning use of the premises without the landlord’s consent.

The Supreme Court held that in such a situation the user clause does not in fact confer an unqualified right on the tenant to use the premises for the purpose ostensibly permitted by the lease; rather the user clause must be read together with (and in effect subject to) the separate planning clause with the result that the tenant is only permitted to use such parts of the premises as are from time to time permitted by the planning regime to be used for those purposes.

In a pithy dissenting judgment Lord Wilson concluded that clause 3(11) was a bespoke clause “of singular generosity to the leaseholder” the effect of which was specifically to permit residential use of every part of the demised premises, unqualified by any requirement to secure the freeholder’s prior consent.  He held (alluding to Hautford’s argument based on the principle of non-derogation from grant) that if the landlord could withhold consent to an application for planning permission to make residential use of the premises (or part of them) then the user clause would be deprived of substantial effect.

Practical points

This is a very helpful decision for landlords.  However as Lord Wilson pointed out in his judgment (again alluding to Hautford’s argument to this effect) the generosity or otherwise of the user clause in a particular lease will be reflected in the premium paid to the freeholder by the initial leaseholder, and in the subsequent premiums paid for later assignments of both the freehold and leasehold interests in the premises.  Property practitioners will now wish to consider with their lay clients – both landlords and tenants – whether the decision of the majority in this case affects the valuation of their clients’ assets.  Many leases will contain the same “boiler plate” planning provisions alongside bespoke user clauses (or alterations clauses, for example) and these clauses must now be construed together, with the result that a particular use that was thought by the parties to be permitted by the landlord may not, in fact, be permitted at all.

Tiffany Scott QC and Charlotte Black acted for the Respondent tenant, instructed by Mark Steggles of Thomson Snell & Passmore.

You can read the full judgment here.

^[1] All these cases were cited before the Supreme Court but none is addressed in their Lordships’ judgments.

Great Dunmow Estates Limited v Crest Nicholson Operations Ltd & Ors [2019] EWCA Civ 1683

The Court of Appeal has, in Great Dunmow Estates Limited v Crest Nicholson Operations Ltd & Ors [2019] EWCA Civ 1683: (1) held that matters ‘agreed’ in the course of the expert determination could not have contractual effect where the underlying contract contained anti-informal variation clauses which the later ‘agreement’ did not meet; and (2) confirmed that absent indications in the contract to the contrary, the court retains jurisdiction to construe the contract which defines the expert’s role.

The expert in this case was appointed under a conditional contract for the sale of land to value the land at the “Valuation Date”. That date was defined as “the Challenge Expiry Date or (if later) the date of the valuation”. The Challenge Expiry Date had passed, so on a literal reading the Valuation Date appeared therefore to be the date of the valuation.

The parties’ surveyors, in accordance with the expert’s directions, prepared a “Statement of Agreed Facts” which recorded (amongst other things) that the Valuation Date was to be the date of the valuation.

The expert thereafter instructed leading counsel to advise upon a different issue. In providing that advice, counsel noted that the literal reading of clause 6.2 was wrong, and that on a proper construction the Valuation Date should be the (earlier) “Challenge Expiry Date”.

It was found at first instance (and not challenged on appeal) that the expert’s counsel was correct as a matter of construction: the valuation date under the contract should have been the “Challenge Expiry Date”.

Notwithstanding, HHJ Kramer held that the expert should prepare the valuation using the later date, i.e. the date of his valuation, because the Statement of Agreed Facts amounted to a binding contract to that effect. In so holding, HHJ Kramer also held that the Court had jurisdiction to determine these issues; and that the identification of the correct “Valuation Date” was not a matter which the parties has agreed to be within the sole remit of the expert under the conditional sale contract.

Between the trial at first instance and the Court of Appeal’s decision, the Supreme Court decided MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24. That confirmed that parties could agree to bind themselves to require certain formalities to vary contracts. The conditional sale contract contained such formalities, that the Statement of Agreed Facts did not meet.

The Court of Appeal therefore held that the Statement of Agreed Facts could not have had contractual effect (the question as to whether it might be given effect by an estoppel has been remitted to the Chancery Division). Whilst not a surprising result following MWB, it is potentially far-reaching. Parties will often seek to ‘agree’ all manner of things with varying degrees of formality in the course of the expert determination process itself. Regard will need to be had to any anti-variation clauses in the governing agreements to be guaranteed of the efficacy of such agreements.

The Court of Appeal continued to consider (obiter) the jurisdiction question. There was some tension between earlier Court of Appeal authorities on the extent of the court’s jurisdiction to address issues of construction which arose in the course of an expert determination (Norwich Union Life Insurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 and National Grid Co plc v M25 Corp Ltd [1999] 1 EGLR 164).

It has now been held (judgment of Patten LJ at [43]) that, “[t]he balance of authority is… now firmly in favour of preserving access to the courts to determine this legal issue going to jurisdiction”. Unless there is something in the contract defining the expert’s task that “can be read or implied as making him the sole arbiter” of issues about the extent of his role, the courts will have jurisdiction to determine such questions.

This may open the door to more challenges to expert determinations, and clear words will be required to exclude the court’s jurisdiction if the parties intend the expert to have exclusive jurisdiction to construe the agreement which defines their role.

Jonathan Seitler QC and Tom Roscoe (instructed by Gateley) acted for the successful appellants.

You can read the full judgment here.