High Court finds parties not bound by expert determination which contained manifest errors

In a recent decision, the High Court granted a claim for declaratory relief that parties were not bound by an expert determination which contained manifest errors, where the relevant clause in the underlying contract contained a carve-out for manifest error or fraud on the part of the expert: WH Holding Ltd v E20 Stadium LLP [2025] EWHC 140 (Comm).

While noting that what constitutes a manifest error will depend on the circumstances of a specific case, the judge applied guidance from a number of authorities to conclude that the appropriate test was whether the error was "so obvious and obviously capable of affecting the determination as to admit of no difference of opinion". He warned against evaluating errors by reference to pejorative language such as whether the expert has committed a "blunder" or "howler", which involve subjective judgment and may cast unfair aspersions on the expert's approach.

The judge also provided helpful comments as to what a court can consider when evaluating whether an expert's decision contained manifest errors. While, again, each case will turn on its facts, in circumstances where the parties had agreed that a reasoned decision may only be overturned on grounds of manifest error or fraud, the judge considered that it was appropriate for the examination to be fairly thorough, including a review of the submissions made to the expert and the documents mentioned in them.

Background

The claimant ("WHH") and the defendant ("E20") were parties to an agreement made in 2013 relating to the use of a stadium in London's Queen Elizabeth Olympic Park by West Ham Football Club (the "Club"). WHH was the holding company for the Club, and most of the shares in WHH were held (directly or indirectly) by two individuals (the "Relevant Shareholders").

The agreement included an anti-embarrassment clause which ensured that E20 could share in future gains made by a Relevant Shareholder if they sold or transferred any interest in the Club. If the provisions were met, WHH was obliged to pay E20 a sum referred to as a "Stadium Premium Amount".

A dispute arose as to whether the anti-embarrassment clause had been triggered by a series of agreements entered into by one of the Relevant Shareholders, which included a put and call option. WHH contended that no Stadium Premium Amount was due as a result of the transactions, whereas E20 asserted that the correct application of the agreement resulted in a Stadium Premium Amount of £3.6 million being payable.

As provided for under the agreement, the dispute was referred to an expert for determination, whose decision was to be final and binding "in the absence of manifest error". WHH argued that the expert's determination was not binding because it contained two manifest errors:

1. First, the expert had accepted E20's calculation of the Stadium Premium Amount, which was arrived at by applying the relevant percentage to a figure for Adjusted Consideration which was contrary to the definition of that term in the agreement.
2. Second, the expert had determined that four transactions constituted a single "qualifying transaction" for the purpose of the anti-embarrassment clause. WHH argued that these were separate transactions, as they involved different counterparties.

Decision

The High Court (Paul Mitchell KC, sitting as a Deputy High Court Judge) held that the determination was not final and binding due to the expert's manifest errors.

The judge noted that, when evaluating whether an expert has made a manifest error, the test is not one of negligence. It is perfectly possible to be in error, particularly regarding the law, without being negligent. Equally, it is possible for an error in law to be made which is not "manifest". Accordingly, the court's task when addressing WHH's challenge was different than when determining an appeal: it was not enough for WHH to show that the expert was wrong.

The judge noted that, as the parties agreed, the most authoritative summary of the usual likely meaning of "manifest error" is contained in the Supreme Court's decision in Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2. In that case, Lord Hamblen observed that the precise meaning of "manifest error", and the degree of investigation permissible to investigate the nature of the error, depends on the particular contract and the context in which the term was used. However, he noted that an explanation often cited is that a "manifest error" is one that is "obvious or easily demonstrable without extensive investigation" (as per Lewison J in IIG Capital LLC v Van Der Merwe [2008] 1 All ER (Comm) 435), and guidance as to what is "obvious or easily demonstrable" was set out by the Court of Appeal in Veba Oil Supply & Trading GmbH v Petrotrade Inc [2002] 1 All ER 703 as being "so obvious and obviously capable of affecting the determination as to admit of no difference of opinion".

As for the materials the judge should review in assessing whether the expert had made a manifest error, the parties were agreed on the relevance of Invensys plc v Automotive Sealing Systems Ltd [2002] 1 All ER (Comm) 222. In that case, Thomas J said that if parties agreed that an expert determination would not be binding in the face of a manifest error, they must have contemplated an examination of the expert's reasoning to see if it disclosed any manifest error. In deciding the present case, the judge considered: (i) the underlying agreement; (ii) the written submissions made to the expert; (iii) the agreed attendance note of oral submissions made to the expert; (iv) the expert's written determination; and (v) documents referred to in items (ii) to (iv). He held that consideration of these materials could not amount to impermissible "extensive" examination. In circumstances where there was no possible remedy for an aggrieved party other than by challenging a determination on the ground of manifest error or fraud, he considered that a fairly thorough examination of the expert’s determination was appropriate.

Having considered the underlying documents and decided that the expert had indeed made errors in his decision, the judge then went on to consider whether these errors were "manifest". 

E20 submitted that for an error to be manifest it needed to be a “a howler”, something that “hit you between the eyes”, “so obvious a blunder that there really can be no dispute about it”. Despite acknowledging that there was support for this in dicta from the authorities, the judge did not accept these submissions. He did not see how this terminology, with its pejorative overtones, could give a guide to the necessary qualities of an error in a reasoned determination. Further, an assessment of whether an error is a "blunder" or a "howler" would involve the application of almost purely subjective judgment. The judge also questioned whether it was appropriate or fair to use language like this which would cast aspersions on the expert when they were not present, and in circumstances where the expert ultimately has (based on the terms of engagement) complete immunity in relation to their decision.

Accordingly, the judge expressed his view that it was "safer" to focus on the guidance in Van Der Merwe and Veba, read together as meaning that "to be 'manifest', errors must be so obvious and obviously capable of affecting the determination as to admit of no difference of opinion". The judge then proceeded to apply that test to the errors identified in this case.

The judge found that the expert’s error in adopting the blended calculation proffered by E20 was that he misread the word “or” in the definition of Consideration to mean “and”. The error was obvious as it would have been avoided entirely if the expert had accepted that “or” meant what it said. Further, it could be seen from the underlying agreement that E20's calculation had no basis in the rules.

These errors were obviously capable of affecting the determination because, if they had not been made, the result would have been that E20’s claim for £3.6 million would have been rejected and WHH would not have been ordered to pay E20’s costs. The errors went to the heart of the expert’s determination.

They were also unlikely to admit any difference of opinion, because the reasoning involved applying the words of the agreement and doing the mathematics, not exercising fine judgment in relation to a difficult argument regarding construction. The judge firmly rejected E20's contention that the agreement was “poorly drafted and ambiguous” and that the expert had therefore reached a reasonable construction.

Accordingly, the judge granted the declaration sought by WHH that the parties were not bound by the expert's determination.