Chris delivered this presentation to delegates from the Mediator Network: It covered: What is Expert Determination? How does it differ from other forms of ADR/dispute resolution? Getting your appointment right - the engagement letter and the contract between expert and parties. Should the Expert Determiner stick to their expertise? What is the procedure and the rules to adopt? What to include in the determination?

1. Expert Determination
Chris Makin FCA FCMI FAE QDR MCIArb
07887 660072
www.chrismakin.co.uk

2. Today’s speaker
• Chartered accountant since 1969
• Sole practitioner then partner in national & international
firms, 1971 to 2003
• Freelance practitioner since then: forensic accountancy,
expert witness, mediation and expert determination
• General practice up to 1989 – accounts, audits, tax returns,
boring stuff!
• Forensic accountant since 1989, mediator since 1998,
accredited ED since 2009 (though done EDs since 1995)
• One of the first 5 to be accredited ED by The Academy of
Experts, and now an Academy examiner in ED
• Performed about 30 EDs, mainly share sale/purchase
disputes but some more interesting ones, too
07887 660072
www.chrismakin.co.uk

3. ED: we will address:
• What is Expert Determination?
• How does it differ from other forms of ADR?
• Getting your appointment right – the engagement
letter and the contract between expert and parties
• Should the ED stay within their expertise?
(No – see Bruce –v- Carpenter [2006] EWHC 3301 (Ch))
• Procedure, and what rules to adopt
• What to include in the Determination
07887 660072
www.chrismakin.co.uk

4. 07887 660072
www.chrismakin.co.uk
What is Expert Determination?
• An independent expert is appointed by the parties to
resolve a matter.
• The decision is legally binding on the parties.
• Usually arises from a contractual dispute but…
• …it can be used when there is no dispute eg valuation
of a private business.
• Expert Determination is:
• Confidential
• Quick
• Inexpensive
• Binding

5. 07887 660072
www.chrismakin.co.uk
Is Expert Determination ADR?
• Alternative Dispute Resolution (ADR) covers many forms of
dispute resolution.
• ADR is everything other than litigation and arbitration.
• In ADR it is the parties who have the final decision.
• ED is generally referred to as an ADR process; however in purist
terms it is not ADR
• Essentially a contractually based form of dispute resolution.
• Not governed by statute.
• The agreement is enforceable under contract law.
• Very difficult to challenge a properly carried out determination
• See my article on the ICAEW website, and on my own website at
https://chrismakin.co.uk/expert-determination/expert-
determination-form-adr/

6. 07887 660072
www.chrismakin.co.uk
How does it work?
• Appointment from the DRC of a contract, or by
agreement between the parties in dispute.
• No fixed procedure.
• Each case is governed by the Terms of the DRC or
determined by the contract appointing the
Determiner.
• Typical disputes for accountants:
Completion accounts
Earn-outs

7. 07887 660072
www.chrismakin.co.uk
Terms of Appointment
• The Determiner’s appointment terms are vital and
should cover:
• Issue(s) to be determined
• Any specific procedures to be followed
• That the Determination will be final and binding
• Confidentiality of the Determination
• Power to award interest and the basis as well as dates for
payments awarded
• The payment of the Determiner’s fees and expenses (and
allocation)
• Parties’ costs (each to pay own, or determiner to award?)
• Immunity for the Determiner

8. 07887 660072
www.chrismakin.co.uk
Reaching a Determination
• The basis upon which the decision is reached must
accord with the requirements of the procedure
under which the Determination is conducted.
• Typically: Submission, Response, Reply
• The Determiner must approach his task by:
• Ascertaining and deciding the relevant facts.
• Establishing and deciding the relevant law, and
• Applying the decided law to the decided facts.

9. 07887 660072
www.chrismakin.co.uk
Should the expert give reasons?
• Pro:
• The losing party knows how the decision was reached,
that it was made on a logical basis and taking his
submissions into account.
• Con:
• Disclosed reasons provide grounds for further argument
and may provide ‘ammunition’ for the losing party to
contest the decision.
• On balance:
• Reasons are not normally desirable.
The contract will determine whether there are Reasons or
not (a Speaking or a Non-Speaking Determination).

10. 07887 660072
www.chrismakin.co.uk
The Determination
• Should be clear and concise, and define the scope
of the dispute and how it has been decided. Should
not include unnecessary material.
• Must accord with any mechanism set out in the
contract.

11. 07887 660072
www.chrismakin.co.uk
The Determination format
• Introduction
• Narrative
• Logic & Reasons
• Decision
• Costs

12. 07887 660072
www.chrismakin.co.uk
Introduction
• The Contract
• The expert provisions (if any) or the ad hoc
agreement
• The mode of appointment of the Expert
• The date when the matter was referred
• What the Expert was asked to do

13. 07887 66007
www.chrismakin.co.uk
Narrative Section
• The circumstances leading to the dispute
• The relevant facts
• The respective arguments
• Expert’s conclusions on facts
• Expert’s conclusions on any legal points raised

14. 07887 660072
www.chrismakin.co.uk
Costs
• If the Rules permit:
• Allocation of the Expert’s costs and expenses (if
required).
• Allocation of the parties’ costs (if requested).
• These decisions give the expert the power to
penalise the losing party or the time-waster.

15. 07887 660072
www.chrismakin.co.uk
The Logic and Reason
• These should set out the step by step logic of the
expert’s decisions on each point at issue.

16. 07887 660072
www.chrismakin.co.uk
BUT…

17. 07887 660072
www.chrismakin.co.uk
Non-Speaking is preferable
• All of the above should be included in a confidential
report which is released to the parties only if they
insist on a Speaking Determination
• Wherever possible, the Expert should issue a Non-
Speaking Determination, but still write for himself a
report which includes everything above.

18. 07887 660072
www.chrismakin.co.uk
Ideally…
Example of non-speaking determination letter:
“Dear Sirs
“(Title of dispute and names of parties)
“I am the expert appointed by the parties in dispute under the terms of my
countersigned letter of engagement dated ## ### ####.
“I determine this dispute by finding that A must pay to B the sum of £X by
(date), failing which simple interest shall run at a daily rate of Y% until paid.
“I make no award as to costs.
“I will not enter into any correspondence or communication about any aspect
of this my finding.
“Yours faithfully”

19. 07887 660072
www.chrismakin.co.uk
So that the decision is…
• Clear – not ambiguous
• Complete – all issues determined
• Enforceable

20. 07887 660072
www.chrismakin.co.uk
Rules?
• One should use those stipulated by the parties.
• If none stipulated, why not use “The Academy of
Experts’ Rules for Expert Determination” also
adopted by ICAEW. See
http://www.academyofexperts.org/about-
tae/what-expert-determination/rules-expert-
determination

21. 07887 660072
www.chrismakin.co.uk
Challenging the expert’s decision
• Begum –v- Hossain [2015] EWCA Civ717 – see my website at
https://chrismakin.co.uk/blog/is-an-expert-determination-
always-the-final-answer/
• Lord Denning in Campbell –v- Edwards [1976] 1 WLR 403:
o “It is simply the law of contract. If two persons agree that
the price of property should be fixed by a valuer on whom
they agree, and he gives that valuation honestly and in good
faith, they are bound by it. Even if he has made a mistake
they are still bound by it. The reason is because they have
agreed to be bound by it. If there were fraud or collusion, of
course, it would be very different. Fraud or collusion
unravels everything.” (My emphasis)
• The parties want FINALITY, not challenges!

22. 07887 660072
www.chrismakin.co.uk
Do you need an Expert Determiner?
• ED is suitable for virtually any dispute, but mainly
those arising from contract.
• Does the DRC specify ED? Or do the parties agree
to it?
• For financial disputes, ask the ICAEW President to
appoint at https://www.icaew.com/about-
icaew/find-a-chartered-accountant/find-an-
accredited-forensic-expert/expert-determination
• For other disputes, see www.academyofexperts.org

23. Questions,
anyone?
07887 660072
www.chrismakin.co.uk