UK Construction and Law
Expert resigns, the machinery breaks down, and an interim ruling made along the way binds nobody
By Staff Writer | 16 August 2026
A surveyor appointed to fix compensation on a break clause decided one preliminary point, then resigned without deciding the rest. The court has held that his ruling does not survive, and will now determine the sum itself. The gap between the parties is more than £20m.
Anyone who writes an expert determination clause into a building contract, a development agreement or a lease should read the judgment in Royal Free London NHS Foundation Trust v Newlon Housing Trust, handed down on 11 August 2026. It is a study in what is left standing when the machinery jams.
The dispute concerns a hospital site in Hampstead unused as a hospital since about 2008. In 2005 the trust granted the housing association a 99 year lease of one flat and 53 bedsits, part of a wider transaction over three properties for a total premium of £5m, of which £843,558 was allocated to this lease. The association spent £483,000 refurbishing. The rent was a peppercorn.
Two ways of calculating the same compensation
Because both sides understood the site might be redeveloped, the lease carried a landlord's break clause with its own compensation formula. Compensation was the lower of Option A, an accounting exercise capitalising the lost income stream, or Option B, eighty per cent of market value. Market value was defined in the lease itself, with vacant possession, unencumbered by the nomination agreement that gave the trust first call on the accommodation, but reflecting the planning use and the potential for a change of use.
The association's own estimate put Option A at £21.47m and Option B at £23.36m. The trust served a termination notice on 30 September 2020 and chose Option B, fixing the valuation date at 27 June 2018. Then the valuers were appointed and the gap opened. The trust's valuer said the compensation was nil. The association's valuer said market value was £27,380,000, producing compensation of £21.904m. The difference turned on redevelopment and marriage value.
Four years, one preliminary ruling, no determination
The dispute went to a surveyor appointed by the President of the Royal Institution of Chartered Surveyors in March 2022. Asked to decide first whether the bid of a special purchaser could be taken into account, he took an opinion from leading counsel, adopted its conclusion, and issued that ruling on 31 August 2022 with directions for the valuation itself.
He never reached the valuation. As the issues expanded he told the parties the case needed evidence tested by cross examination and was no longer suitable for a single expert on written submissions. He proposed that they convert him to an arbitrator, or confer immunity from suit on him. They declined both, and he resigned on 19 October 2023. Attempts to replace him failed, and in February 2025 the institution said it was unlikely to find anyone with sufficient professional indemnity cover willing to accept the appointment.
Expert determinations are often creatures of contract, and a lease is just a contract to be interpreted like any other contract. Expert determination clauses range in complexity and detail but the starting point and in most cases the end point when considering the scope of the expert's role is the contract under which they were appointed.
Master Kaye, sitting as a Deputy High Court Judge
The trust argued that the preliminary ruling had been made under a separate free standing agreement, or was preserved by an estoppel by convention, and so bound the parties even though the machinery had failed. The judge rejected both. The correspondence, the directions and the agreed statement of facts all recorded that the exercise was part of the determination under the lease. It was not free standing, and nothing supported a common assumption that it would outlive the process it belonged to.
The court found that the parties are not bound by the surveyor's ruling of 31 August 2022, and will determine market value itself.
What survived, and what did not
On the substance the court went the association's way on the interpretation questions. The bid of a special purchaser is not excluded. The association may contend that market value includes a sum referable to a hypothetical purchaser's hope of selling on to a special purchaser. And the assumption of vacant possession does not import a negative assumption about reproviding the accommodation elsewhere; that will turn on the evidence.
The judge also observed that in 2020 the parties had signed a memorandum of understanding recording an intention to work together in a partnership that would remove the need to pay compensation at all, and that five years on it is nowhere to be seen while the costs continue.
The lesson sits in the drafting. Option A ran to several pages in detail an accountant could follow. Option B was six lines. The parties spent four years and a resigned expert on the six lines.