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Expert Duties – A Triple Threat?5 July 2021

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In three recent cases, the English courts have provided a series of warnings on the uses and abuses of expert evidence, from guidance on the avoidance of conflicts to the implications of a failure by experts to comply with their duties.

"Lord Justice Coulson rejected arguments that there was a tension between the duties owed by an expert to the court and to its client: “on the contrary, complying with the overriding duty to the court is the best possible way in which an expert can satisfy his professional duty to his client.”"

Expert evidence is a vital tool in many disputes, particularly in the context of specialist, technical industries such as shipping and construction, so these decisions will be of considerable practical interest to participants in those sectors, as well as more widely.

Do experts owe their clients a duty to avoid conflicts?

Secretariat Consulting Pte Ltd & others v A Company¹ concerned a group of companies which provided litigation support services and acted as delay and quantum experts in construction claims. One of the group companies (“SCL”), agreed to provide a developer with arbitration support and expert services in an arbitration brought by a sub-contractor in relation to the construction of a petrochemical plant. Three months later, the project manager responsible for EPCM services for the project started a separate arbitration against the developer for unpaid fees and instructed another member of the group (“SIUL”) to assist it in that claim. The developer objected to SIUL’s instruction by the project manager and obtained an injunction to restrain them from carrying out further work in the second arbitration. SCL and SIUL appealed.

At first instance, the injunction had been granted on the novel basis that the group owed the developer fiduciary duties of loyalty which meant that it could not provide similar expert services to a third party in relation to a claim against the developer arising out of the same project and concerning similar subject matter. The Court of Appeal did not consider it appropriate to make a binding determination on this point, although Lord Justice Coulson rejected arguments that there was a tension between the duties owed by an expert to the court and to its client: “on the contrary, complying with the overriding duty to the court is the best possible way in which an expert can satisfy his professional duty to his client.”

Instead the Court of Appeal upheld the injunction on the basis of a contractual duty, holding that:

  • SCL’s confirmation that it had no conflict of interest in acting for the developer and had stated that “[SCL] will maintain this position for the duration of [SCL’s] engagement” meant that it clearly owed the developer a contractual duty to avoid conflicts of interest.
  • This contractual duty bound other group entities as the conflict check carried out by SCL had been carried out in respect of all group entities. Moreover, the group entities branded themselves as one business and it was that business whom its clients regarded as their expert, not the individual group entities.
  • It was clear that a conflict of interest existed, not least because a member of SCL had approached the developer’s solicitors about SIUL potentially acting for the project manager. The solicitors expressed their view that there was a conflict but SIUL agreed to act for the project manager nevertheless, stating that they did “not consider it to be a true conflict”.

While SIUL and SCL contended that this decision could have far reaching implications, the Court of Appeal disagreed, explaining that the conflict could have easily been avoided had SCL made it clear that “its representations as to conflict of interest and its undertakings for the future were based solely on the entity involved, and that, despite the scope of the conflict check that they had undertaken, no such representations or undertakings were given in relation to any other entity in the … group”.

In an interesting aside, particularly for the construction sector, Coulson LJ noted that while it is not always easy to discern what specialist expertise a delay expert brings to bear on the issues in a dispute, they are nevertheless a key component of a party’s team, and his previous comment that their reports were “simply vehicles by which the parties reargue the facts² was perhaps a little unfair.

Can a significant enough breach of an expert’s duties lead to their evidence being discounted?

Meanwhile, in Dana UK Axel Ltd v Freudenberg FST GmbH³, the English High Court considered an application made in the course of trial to exclude the evidence of three of the defendant’s expert witnesses. The Court found that not only had the defendant not met the requirements of an order requiring it to provide further disclosure of material that its experts had seen or produced, the experts themselves had committed serious breaches of their duties to the Court:

"The implications of a failure to pay due regard to the need for expert independence may be severe."

  • There was continued and extensive contact between the experts and the defendant’s employees which went far beyond mere “logistics”. This free flow of information, much of which was unrecorded and apparently took place without the oversight of the defendant’s solicitors, meant that the Court could not be satisfied that all material instructions had been disclosed. The judge noted that “[it] is essential for the Court to understand what information and instructions have been provided to each side’s experts, not least so that it can be clear as to whether the experts are operating on the basis of the same information and thus on a level playing field. Experts should be focussed on the need to ensure that information received by them has also been made available to their opposite numbers”.
  • It was particularly inappropriate for such exchanges to have occurred in the period when joint expert meetings were taking place, not least because concerns about such communications had been raised by the claimant and dismissed by the defendant’s solicitors.
  • The experts had attended site visits without informing the claimant’s experts, and without giving them an opportunity to have access to the same information.
  • The experts’ analyses and opinions appeared to have been directly influenced by the defendant, in a blatant disregard for their duties as independent experts. Indeed, truly independent experts paying proper attention to their duties would not have attended site visits without informing their opposite number and would not have felt comfortable receiving extensive information from their clients to which their opposite number was not privy.

These breaches were sufficient in of themselves to justify the Court refusing the defendant permission to rely on the expert reports.

Will the conduct of an expert justify an order for indemnity costs?

Finally, in Beattie Passive Norse Limited and another v Canham Consulting Limited⁴, the High Court considered an application for indemnity costs made by a defendant who had managed to reduce an original claim for £3.7m to a damages award of just £2,000. The Court found that the claim had been exaggerated and opportunistic and, in the course of giving judgment, serious criticisms had been made of the claimant’s expert. However, while the conduct of experts can, in a particularly egregious case, lead to an order for indemnity costs, and in this case the expert’s approach left much to be desired, it alone did not justify such an order. Nevertheless, the Court noted a worrying trend of failures by experts to comply with their duties in providing independent, objective and unbiased opinions and warned that its decision should not be seen as an encouragement to parties relying on such evidence.

Conclusions

The use of experts remains a preserve of the court and the parties may only rely on expert evidence with express permission to do so. However, the use of expert evidence is almost ubiquitous in many fields of commercial litigation and it is easy for parties and experts to find the lines blurring, either in respect of their duties to their instructing party or in their duties to the court.

Whilst initially surprising, the Court of Appeal’s view in Secretariat on duties of client loyalty being the best way to ensure the expert’s duties to the court are revealing of the how the courts think experts should approach their evidence. Meanwhile, it is clear from both the rejection by the court of the expert evidence in Dana and the warning on the effect of an expert overstepping on costs in Beattie that the implications of a failure to pay due regard to the need for expert independence may be severe. It is easy for experts to become part of the litigation team as Males LJ stated in Secretariat, but a certain line must never be crossed and an expert should, at all times, give their free and honest opinion – even if it is not in the instructing clients’ favour. These lessons apply equally to arbitration, as Males LJ reminded us in Secretariat: “…it is common practice for international arbitrators to require that experts give independent evidence unaffected by any sense of loyalty or obligation to the party instructing them”.

[1] [2021] EWCA Civ 6
[2] Van Oord v All Seas UK Limited [2015] EWHC 3074
[3] [2021] EWHC 1413 (TCC)
[4] [2021] EWHC 1414 (TCC)

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