Overview
This case is a rare example of a party successfully setting aside an expert’s determination. It also provides a useful review of the meaning of “manifest error” and where such an error can make an agreement non-binding.
Background
E20 Stadium LLP (“E20”) entered into a Concession Agreement with WH Holding Ltd (“WHH”) in March 2013 to give WHH the rights to use the Queen Elizabeth Park Stadium as the home ground for the football club West Ham United.
Stadium Premium Amount
The Concession Agreement contained a provision which meant that E20 was entitled to a share of any gains made by the shareholders of WHH in connection with a sale or transfer of interests in West Ham United. This was the “Stadium Premium Amount”.
Mistakes are costly and somebody must pay. The time to correct a mistake is before it is made.”
Henry H. Buckley
In November 2021, WHH issued shares to a third party. The third party bought shares from various WHH shareholders under three separate agreements. One of those shareholders also entered into an option agreement with the third party for the purchase of further shares.
E20 argued that this arrangement triggered the payment of a Stadium Premium Amount from WHH. However, WHH disagreed, and the matter was referred to an expert, as permitted by the Concession Agreement. The expert gave his determination in favour of E20 in February 2023, ordering WHH to pay £3.6 million plus costs to E20.
Challenge by WHH
In December 2023 WHH challenged this decision and sought a declaration from the High Court that it was not bound by the expert’s determination. The Concession Agreement contained a provision that the determination of the expert was to be binding “in the absence of manifest error”.
WHH argued that there were two manifest errors. Firstly, the expert had used E20’s calculation of the Stadium Premium Amount, which was incorrect. Secondly, the expert had treated the three separate agreements and the option agreement of November 2021 as one single transaction, which was also a mistaken interpretation.
Role of the expert
Usually, an expert’s determination can only be challenged on the grounds of fraud, bias or non-compliance with the relevant agreement. There is much less scope to challenge the determination of an expert because it is their specialist knowledge and opinion which is being sought.
Because of this, some parties will choose to include a clause allowing challenge on the basis of manifest error, as the parties here had done. This means that the parties will not be held to the agreement where the expert has clearly made a mistake.
Meaning of Manifest error
There was much discussion in the case as to what will constitute a “manifest error“. It is relatively straightforward to demonstrate that an error has been made, especially a mathematical one, but proving that it is “manifest” is more difficult.
Previous definitions such as a “blunder” or a “howler” were considered unhelpfully broad. The definition upheld was that an error must be “obvious or easily demonstrable without extensive investigation” Van Der Merwe (2008).
What is an extensive investigation?
Guidance as to what was “easily demonstrable” was detailed in Veba Oil Supply (2002) as mistakes “so obvious and obviously capable of affecting the determination as to admit no difference of opinion”.
Where the agreement required the expert to give reasons for their decisions, then it follows that the parties will be entitled to examine those reasons for errors. Therefore, the review undertaken by WHH was what was expected for a challenge on the grounds of manifest error.
Calculation of the Stadium Premium Amount
The judge agreed with WHH that the expert’s calculation of £3.6 million was wrong. E20 had reached this figure by carrying out two separate calculations then blending them into a combined amount, which was a misapplication of the terms of the Concession Agreement. The result was a mathematical error so obvious that it would “admit no difference of opinion” and therefore was within the definition of “manifest error“.
One Transaction
Even if the separate agreements could be regarded as one single transaction, the judge noted that the Concession Agreement contained no mechanism for calculating a single Stadium Premium Amount in this way. This was also a “manifest error“.
Outcome
The court affirmed that wording of the Concession Agreement was “admirably clear” and involved “applying the words… and doing the mathematics”, concluding that the errors “went to the heart of the expert’s determination.” This was not about the exercise of fine judgment, where there might have been scope for a difference of opinion without the error being manifest.
The expert’s determination was not binding in this case and E20 had to reimburse £3.6 million to WHH.
Commentary
Expert determination is a frequently used method of alternative dispute resolution and can be a quick and cost-effective way of helping parties to reach a solution. However, this case demonstrates that the parties must take great care in checking the wording of what they are agreeing to. They must be clear on when the expert’s determination can be challenged, and the scope of that challenge.
Link: WH Holding Ltd v E20 Stadium LLP [2025] EWHC 140 (Comm) (27 January 2025)
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