For those of you not old enough to remember, back in the 1980’s, Frankie goes to Hollywood released a song called “Two Tribes”, which featured the line, “When two tribes go to war”. Having recently read Fraser J’s judgment in ICI v Merit and Coulson J’s judgment in Bank of Ireland v Watts, and given their comments about experts, it seemed apt to borrow from the song for my title. (Arguably it should have been three judges if we take into account Stuart-Smith J’s comments in 25 OBS (Nominees1) v Lend Lease, but that spoils the title!)
This post focuses on what Coulson J had to say about experts in Bank of Ireland v Watts, I’ll save ICI v Merit (and the project monitoring angle in Bank of Ireland) for another day (and will leave others to share their thoughts on 25 OBS (Nominees1) v Lend Lease).
It isn’t the first time Matt or I have commented on the behaviour of experts (for example, see Twelve reasons why expert’s evidence was “entirely worthless” and Experts again), and it certainly will not be the last!
Bank of Ireland v Watts Group plc
A little bit of scene-setting.
This was a claim by the Bank of Ireland (and its governors) against Watts for professional negligence relating to a residential development in York. Watts was instructed in January 2008 to act as an “independent quantity surveyor” on the Bank’s behalf to check the costings the developer had supplied and to prepare an initial appraisal report (IAR). The first draft of the IAR was produced in January 2008, a second version in February 2008 and a final version in April 2008. Watts was paid £1,500 for producing the IAR.
The Bank alleged it relied on the IAR when it permitted the developer, Derwent Vale York Ltd, to borrow money, but that the IAR was negligently prepared and caused it to lose £750,000 when the developer went into liquidation and the unfinished development had to be sold.
Pausing there, a few things struck me:
- The developer was a special purpose vehicle, owned by Derwent Vale Developments Ltd and Modus Partnerships Ltd. The Bank had a long standing relationship with the Modus group of companies, who were a Manchester-based property development and investment group. The group was a long-established client of the Bank’s Manchester office and the overall parent was Modus Ventures Ltd. It was described internally as a “key relationship”.
- The Bank advanced something in the region of £1.4 million to the developer but its exposure to the Modus group was considerably greater, some £83 million when Modus Ventures Ltd went into administration in May 2009.
- At the point that Watts was instructed to prepare the IAR, the Bank had already lent some £210,000 to enable the developer to purchase the site.
The court rejected the Bank’s allegations of negligence. In addition, it held that even if there had been negligence, the Bank’s case failed on grounds of causation, the loss was irrecoverable and, even if the loss had been recoverable, it would have been reduced by 75% on grounds of contributory negligence.
In reaching these conclusions, the court considered expert evidence. That’s not usual, especially not when professional negligence is alleged. Perhaps what is unusual in this case is what was said about the experts. Mr Whitehead, who appeared on behalf of Watts generated just a few lines:
“Mr Whitehead complied at all times with his duties to the court. I did not regard him as an advocate of Watts’ case. He made proper concessions where appropriate… For all those reasons, therefore, where there was a significant disagreement between Mr Vosser and Mr Whitehead, I preferred the evidence of Mr Whitehead.
The Bank’s expert, Mr Vosser, did not fare so well, having over 12 paragraphs devoted to his evidence, which the court described as “unreliable”, “not properly independent” and “unreasonable”.
A lack of independence
It became clear in evidence that the Bank was Mr Vosser’s principal client, providing the vast majority of his work (and fees), plus:
“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 2008-2009 financial crash.”
This lead the court to state:
“Mr Vosser’s close relationship with the Bank was borne out by many things: his unrealistic approach to the allegations; his attempt to mislead the court; his application of the wrong test; his unreasonable intransigence which led to his refusal to make any concessions whatsoever; and the fact that many of his criticisms, which he did not withdraw, were so unpersuasive that the Bank, quite properly, declined even to plead them as allegations of professional negligence.”
When I read this, I wondered how Mr Vosser could have ever considered himself independent but perhaps, as the court noted, he had never given evidence in court before and so was unaware of the difference between being an advocate for the Bank in, say, a mediation, and the duties he had to the court when giving expert evidence.
“The Ikarian Reefer was a ship that passed in the night”
We were also reminded that an expert’s duties are set out in The Ikarian Reefer. Here, the court questioned whether Mr Vosser “was aware of them or had had them explained”. (Although it isn’t mentioned in the judgment, Mr Vosser also clearly failed to comply with CPR 35 and other expert guidance.)
What can be done about this problem of experts not complying with their duties?
That got me thinking. We’ve seen issues with experts not understanding their duties before (for example, you only have to look as far as Van Oord UK Ltd and another v Allseas UK Ltd, where the expert struggled and then failed to return to the witness box after a break).
There are already numerous training courses that can be taken on acting as an expert, report writing and so on, so I’m not necessarily sure this will help. Furthermore, the courts have certainly not held back on their criticism of experts, but this doesn’t appear to have made much of a difference to some.
Here are some other ideas.
Avoiding “professional experts”
What about a requirement for the expert to provide evidence that they currently practice in the area in which they are giving expert evidence?
It strikes me that in some of the cases where experts have come in for criticism, the individuals involved have done nothing but act as an expert in recent years, the so called “professional experts”. This results in two issues:
- The “expert” may not necessarily be up to date with current practice.
- The constant exposure to disputes and the adversarial nature of our common law legal system can blur the lines of independence and impartiality for some.
These “experts” need to be reminded of paragraph 2.1 of PD 35:
“Expert evidence should be the independent product of the expert uninfluenced by the pressures of litigation.”
More use of the single joint expert
The courts could exercise their powers to order parties to use single joint experts on more multi-track cases, particularly in areas where there should (at least in theory) not be a substantial range of expert opinion, for example where only the quantum of a claim is in dispute.
This should help to resolve the problem of experts that lean towards the contentions of their instructing party, and struggle with the concept of impartiality.
Independence of the expert
A requirement for the instructing solicitor to declare that they have made all reasonable investigations and are content that the appointed expert is independent of its instructing party.
I suggest this because Mr Vosser’s instructing solicitor must have known that the court would conclude that he was not independent given the amount of work he had undertaken for the Bank.
Form and content of an expert’s report
Encouraging solicitors to cross-check the requirements of paragraph 3 of PD 35 when reviewing an expert report.
What if the other party appointed me?
Finally, as I stated in a blog almost five years ago, one of the most important questions any expert should ask themselves is this:
“Would I be of the same opinion if I had been appointed by the other party?”
If only Mr Vosser had asked himself this question, a considerable amount of time and effort would have been saved.