HIGH COURT FINDS EXPERT UNRELIABLE AND LACKING INDEPENDENCE ~ Herbert Smith Freehills – Litigation notes, 24 JULY, 2017.
A recent High Court decision has highlighted once again the importance of ensuring experts are aware of and comply with their duties to the court. It also demonstrates the potential dangers of repeatedly instructing the same expert and the need to ensure an expert is applying the correct legal standard when giving their opinion: The Governors and Company of the Bank of Ireland and another v Watts Group PLC  EWHC 1667 (TCC).
The court concluded that the written and oral evidence of the claimant’s expert quantity surveyor (“V”) was unreliable and the evidence of the defendant’s expert should therefore be preferred wherever there was disagreement between them. The reasons for this conclusion included:
- V was not, he considered, a properly independent witness. The Bank was his principal client, providing the vast majority of his work and fees. V had spent most of the last few years acting for the Bank as an expert witness in actions against quantity surveyors arising out of the 2008/9 financial crash.
- He had shown a lack of realism and his criticisms were based on an unrealistic expectation of what the defendant was required to do. He had also applied the wrong test, substituting the approach he would have taken, and the result he would have reached, rather than considering what a reasonably competent monitoring surveyor would have done in the circumstances.
- He had attempted to mislead the court with a selective quote from RICS guidance.
- He had adopted an unreasonable approach, failing to make concessions at the experts’ meeting and when giving evidence.
Instructing the same expert on a number of similar matters can be time and cost effective. This case illustrates however that there may come a point where the independence of the expert is called into doubt because of the closeness of the relationship with the instructing party. It also demonstrates the importance of ensuring the experts comply with their duties at each stage of the litigation process, and that they understand and give an opinion on the correct questions.
The Bank of Ireland lent money to a developer for a residential development in York. The developer later went into liquidation causing a loss to the bank of approximately £750,000. The Bank sought to recoup that loss from Watts, quantity surveyors who had prepared an Initial Appraisal Report (IAR) commenting on the developer’s proposal, the bill of quantities, costs estimates, projected cash flow and the build programme.
In support of its negligence claim against Watts, the Bank relied on expert evidence from a quantity surveyor, V.
The judge (Mr Justice Coulson) observed that although it was commonplace for counsel to submit that “their” expert’s evidence should be preferred wholesale to that of the expert on the other side, that was not usually a justified approach. In this case however he had concluded that the written and oral evidence of V was unreliable, so wherever V disagreed with W, Watts’ expert, he should prefer W’s evidence.
The judge concluded that V was not a properly independent witness. The Bank was his principal client, providing the vast majority of his work (and fees) and he had spent most of the last few years acting for the Bank as an expert witness in actions against monitoring quantity surveyors arising out of the 2008/9 financial crash. Until this case, the cases had been resolved by ADR. V was unaware, the judge thought, of the difference between acting as the Bank’s advocate in a mediation and his duties to the court when giving evidence.
Lack of realism
Watts were paid £1,500 for producing the IAR. V’s reports and associated work to criticise it cost 30 times that amount. This was a clear indication that the criticism made of Watts’ work was based on an unrealistic expectation of what they were required to do. The length and number of V’s reports confirmed the judge in his view that V was prepared to go to any lengths to shore up the Bank’s case.
Attempt to mislead
V’s view was that Watts were obliged to start from scratch and produce their own detailed breakdown of the construction costs. In support of that view, he relied upon RICS guidance which he quoted as saying “the Project Monitor… may have to develop his or her own elemental breakdown of construction costs to prove or disprove the Developer’s figures.” That was misleading as the full quote made clear that this was in the context of smaller developments, inexperienced clients/contractors and hand holding exercises, none of which applied on the facts. This misuse of a source document was contrary to V’s duty to the court.
V’s oral evidence made it plain that he was applying the wrong test. He was not looking to see what a reasonably competent monitoring surveyor would have done in the circumstances and to test Watts’ performance against that benchmark. Instead he was setting out what he claimed he would have done, line by line, figure by figure.
V’s approach was unreasonable. He made no concessions at the experts’ without prejudice meetings and in his reports and oral evidence he sought to maintain criticisms over Watts’ later reports which the Bank had not pleaded. He had on occasion sought to advocate the Bank’s case in his evidence, whether right or wrong.
The judge referred to the well-known passages in The Ikarian Reefer  1 WLR 603 regarding the duties of an independent expert. He concluded that V did not comply with those duties and he was not confident that he was aware of them or had had them explained to him.
So far as the underlying case is concerned, the judge rejected the allegations of negligence made against Watts. In any event, if there had been negligence, no loss was caused by it and applying the principles from SAAMCO as explained in BPE Solicitors v Hughes-Holland  UKSC 21 no loss had been identified as being recoverable in law from Watts (essentially because Watts would only have been responsible for the financial consequences of the information they provided being inaccurate, not for the financial consequences of the Bank entering into the transaction). Moreover, the true cause of the Bank’s loss was its own errors in making the loan.