In Downer EDI Rail Pty Ltd v John Holland Queensland Pty Ltd¹ the Queensland Supreme Court considered whether the scope of expert determination can include new cross-claims beyond the disputes identified in a notice of dispute.

Summary

In the recent decision of Downer EDI Rail Pty Ltd v John Holland Queensland Pty Ltd [2025] QSC 310, the Queensland Supreme Court held an expert’s jurisdiction under the dispute resolution clause was confined to disputes identified in the relevant notice of dispute and could not extend to the new cross-claims.

The decision reveals the importance of adhering to the contractual dispute resolution process and serves as an important reminder for parties not to bypass agreed procedural stages.

Factual Background

Downer EDI Rail Pty Ltd (Downer) and John Holland Queensland Pty Ltd (John Holland) are parties to a design and construct contract (D&C Contract) where John Holland is required to design and construct a rollingstock manufacturing facility in Torbanlea, Queensland.

In summary:

• Clause 62 of the D&C Contract recorded the dispute resolution mechanism, which escalated to allow either party to give notice requiring a dispute to be referred to expert determination. Following such a referral, the parties were required to enter into an agreement with that expert on either the terms set out in the D&C contract or such other terms agreed by the parties.
• The D&C Contract contained rules for the expert determination (ED Rules).
• Following John Holland issuing two Notices of Dispute, Downer referred the disputes to expert determination. Subsequently, the parties agreed to appoint Mark Dempsey SC as the expert.
• Following agreement on the expert, disagreements arose in respect of the terms of the Expert Determination Agreement (ED Agreement), in particular whether Downer was permitted to have certain cross-claims considered as part of the determination.
• John Holland’s position was that expert’s authority was limited to the dispute identified in the Notice of Dispute and that the ED Rules’ reference to a ‘cross-claim’ did not allow claims or causes of action outside the original dispute.
• Downer asserted that there was a right under the ED Rules to bring a cross-claim during expert determination and rejected John Holland’s interpretation, submitting that the entitlement for a respondent to bring a cross-claim is part of the pre-agreed machinery for resolving a dispute by expert determination.

Decision

As a preliminary issue, the Court considered whether it should determine the issue regarding the proper construction of the ED Rules and the ED Agreement, or whether this issue fell within the scope of a dispute that the parties have agreed that the expert should determine. In deciding that Court should determine the issue, Cooper J found that it would be in the interests of justice and convenience to determine the issue and that it would be wasteful of time and costs and contrary to the interests of justice to defer a decision, particularly where the decision by the expert on whether he had jurisdiction to hear a cross-claim would not be final.

Ultimately, Cooper J rejected Downer’s submissions regarding the scope of the expert determination, and concluded that the expert’s authority is limited to deciding disputes that have been notified in the notice of dispute, and that allowing unnotified claims would undermine the contractual procedure and commercial purpose of the dispute resolution procedure in the D&C Contract:

“…on the proper construction…of the D&C Contract and the provisions of the Expert Determination Agreement which the parties have agreed to enter into, the scope of decision-making authority the parties have agreed to confer on the Independent Expert is limited to determining the Dispute that is subject of a Notice of Dispute, and which has proceeded through the stages of cl 62 dispute procedure resolution which precede a referral to Expert Determination…”²

What do you need to do?

Expert determination clauses can be an excellent, efficient and cost-effective way of enabling parties to breach an impasse without having to resort to litigation. Drafting those clauses to minimise any dispute as to their enforceability is fraught and even the most careful drafting can fail to identify every potential contingency which might arise.

Our Construction and Infrastructure team are highly experienced in preparing such clauses and can assist in any queries you may have regarding dispute resolution, including the effective drafting of contractual resolution procedures.

This article was written by Colin Harris, Partner, and Gemma King, Law Clerk.

¹ [2025] QSC 310.
² Ibid [15].