BuildLaw Issue 38 December 2019 | Page 5

Cross claims in Expert Determination
When an issue is referred to Expert Determination, can the Expert validly decide on a cross claim which bears no relation to the initial issue?
It is not uncommon, in Australia at least, for a contract to specify that certain unresolved disputes must be referred to Expert Determination – where an expert makes a binding decision on the matter before them. In fact, the standard form contract provided by the New South Wales Government for construction projects valued at over $1 million does so (Contract). This Contract was used by Poonindie Pty Ltd (trading as Ted Wilson and Sons) (TWS) and Eurobodalla Shire Council (the Council) for construction works at a sewage treatment plant.
After the parties sought an Expert Determination for a dispute, TWS contested the validity of the determination. TWS brought proceedings seeking a declaration that the determination was void, arguing that some of the issues decided in the determination were outside of the Expert’s jurisdiction. The Supreme Court of New South Wales dealt with the issue in Poonindie Pty Ltd t/a Ted Wilson and Sons (TWS) v Eurobodalla Shire Council [2019] NSWSC 1485.
According to the contract:
• a party wishing to refer an ‘issue’ to Expert Determination must follow the procedure set out in clauses 69 and 70 of the Contract (including correct notification to the other party of the issue being brought); then
• in response to any ‘issue’ referred to the Expert, the other party may raise ‘any defence, set-off or cross-claim’.
In this case, TWS brought an ’issue’ for determination. The Council responded with three cross claims (the additional disputes). The Expert determined all four issues. TWS contended that the Expert had no jurisdiction to deal with the additional disputes, because they were not econnected with the subject matter of the initial ‘issue’. The problem from TWS’ perspective was that while the applicant was required to adhere to the procedure set out in clauses 69 and 70 when raising issues, the respondent could bring any claims as cross claims without adhering to the procedure.