Commercial parties often agree to resolve disputes by expert determination, with the determination being final and binding except in the case of ‘manifest error’.
But what is manifest error and how can it be established?
In WH Holding Limited v London Stadium LLP (formerly E20 Stadium LLP), the English Court of Appeal recently considered the issue in the context of a partial sale of a Premier League football club.1
It confirmed that the bar is high. The question is whether the expert was “so obviously wrong as to admit of no difference of opinion”, even where the error related to the interpretation of the contract.2
The facts
The defendant (E20) is the head leaseholder of the London Stadium, built for the 2012 London Olympics. The claimant (WHH) is the owner of West Ham United Football Club. In 2013, E20 granted a 99-year concession to WHH to host football matches at the London Stadium, which is now West Ham’s home ground.
The concession contained an “overage” or “anti-embarrassment” provision. This entitled E20 to a payment (the Stadium Premium Amount) if shares in WHH were disposed of (absolutely or by way of option) by its majority owners at a valuation which cleared a particular valuation threshold. Such a disposal occurred on 11 November 2021 to a new minority shareholder by way of a hybrid transaction involving the sale of shares and the grant of a call option. The parties could not agree on how much was owing as a Stadium Premium Amount as a result of that hybrid transaction.
The expert determination
The parties had agreed that any disputes concerning the Stadium Premium Amount would be settled by expert determination. The determination was to be final except in the case of manifest error.
The parties agreed on a commercial King’s Counsel to act as expert and agreed that he was to determine “any issues of fact or opinion” arising.3
The expert awarded the higher of the figures for the Stadium Premium Amount, as contended by E20.
WHH challenged that conclusion in the High Court on the basis of “manifest error” and was successful. In particular, the Court concluded that the expert had misread the word “or” as “and” in the relevant formula and the correct answer was arrived at by simply “applying the words of the Agreement and doing the mathematics”.4
The Court of Appeal’s decision
The Court of Appeal overturned the High Court’s decision and confirmed that the Expert’s determination was final.
The Court held that “an error will be manifest if, after investigation limited in time and extent, it is so obvious (and obviously capable of affecting the determination) as to admit of no difference of opinion”.5
This high bar is “fully applicable to a decision as to the interpretation of a contract”, as several first instance decisions of the English courts had previously held.6 As a result, there will be no manifest error if “it is possible that argument might persuade a judge, despite his view to the contrary, that [the expert’s] interpretation is correct”.7
However, the Court rejected further refinements on that test proposed by E20, holding that:
- “Limited investigation” does not mean “without the need for adversarial argument”.8 The question is whether there is an obvious error after such argument.
- The Court is not prohibited from determining first whether there was an error and then considering whether the error it has found was “manifest” (even though, it might be said, this makes it more likely that the Court will find that the mistake it has found was obvious).9
On the facts, the Court concluded that the high hurdle of manifest error was not overcome.10 Even though there was “force” in WHH’s arguments on the proper interpretation of the contractual formula, it was at least arguable that the higher amount was due. That was the case even if it required the Court to read the word “or” as “and” in the formula.
Comment
Expert determinations are commonly provided for in commercial contracts in New Zealand. It is also common to provide that the determination will be final and binding, except in the case of manifest error.
However, there is limited authority in New Zealand on the meaning of manifest error.11 We expect the English courts’ approach as set out in WH Holding to be highly influential. If parties in New Zealand want a different test to apply, they would be well advised to use a different formulation or to define what ‘manifest error’ is intended to mean in their agreement.
The case also serves as a further reminder of the opportunity that parties have to define the scope and process of their expert determination. Disputes about expert determinations commonly arise because the clause that provides for them is silent on how the expert determination is to operate. In particular, disputes can arise over:
- the issues to be determined by the expert;
- the terms of the expert’s instructions;
- any necessary qualifications for the expert;
- whether extrinsic evidence can be considered; and
- the procedure which the expert should adopt (including whether the expert may hear oral evidence).
Given the limited grounds on which an expert determination can be challenged, parties may well wish to agree these types of issues at the time of contracting.
If you have any questions about this article, please get in touch with the contacts listed or your usual Bell Gully adviser.
1 WH Holding Limited v London Stadium LLP (formerly E20 Stadium LLP) [2026] EWCA Civ 153.
2 At [78].
3 WH Holding Ltd v E20 Stadium LLP [2025] EWHC 140 (Comm) at [12].
4 WH Holding Ltd v E20 Stadium LLP [2025] EWHC 140 (Comm) at [85(ii)].
5 WH Holding Limited v London Stadium LLP (formerly E20 Stadium LLP) [2026] EWCA Civ 153 at [45], summarising other English decision, including most importantly Sara & Hossein Holdings Ltd v Blacks Outdoor Redtail Ltd [2023] 1 WLR 575 (CA).
6 At [57].
7 At [58].
8 At [50].
9 At [52].
10 At [78].
11 The test was addressed briefly in Forest 360 Limited v Philips Contracting Mt. Maunganui Ltd [2022] NZHC 3186 at [66] (which referred to some earlier English decisions).
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
