Whether a losing party is required to give effect to expert determination.
In Coventry City Council v GK Investments Limited , the parties were in dispute over an alleged breach of lease whereby the use of a property was changed without the consent of the landlord. The parties agreed to appoint an expert, who was to provide a determination. Both parties agreed the points referred to the expert, and two separate Deeds of Variation. One implemented payment of a premium, whilst the other increased the rent to a market rent. The expert was to determine whether there had been a breach, and if so which Deed of Variation was to be completed.
The expert’s opinion found that there had been a breach of the lease and recommended the Deed of Variation which increased the rent be executed. The tenant refused to execute the Deed, stating that the expert did not have power to require it to do so, and that it had not agreed to enter into the Deed despite agreeing to expert determination. The tenant argued that, as an alternative, it could reinstate the alterations, and argued against an order for specific performance to enter into the Deed.
The High Court found that the tenant had agreed through its conduct – specifically, the exchange of emails – to resolve the dispute by appointment of an expert, and this included the execution of the Deed of Variation. Regardless of whether an express obligation or agreement had been made, this agreement could be implied in any event through reference to 1997 case Cott UK Limited v F E Barber.
The Court held that specific performance was an appropriate remedy, and in addition awarded the Council landlord a sum for rent lost by the tenant’s refusal to enter into the Deed of Variation.
Advice and action for landlords
This case reaches a logical conclusion. If both parties are in agreement that an expert should be appointed, agree the terms of the appointment and the documentation to be entered into upon delivery of the expert’s determination, it follows that they should be expected to execute whatever documentation is required to give effect to that decision.
The expert has an implied authority to make a final and binding decision.
The Court found in favour of the landlord. If both parties are in agreement that an expert should be appointed, it follows that the expert has an implied authority to make a final and binding decision.