DAMAGES CLAIMED BUT NOT PLEADED: REALLY STRANGE WITNESS STATEMENTS; PARTISAN EXPERTS: THE ICI CASE IS BACK IN COURT

If you are ever looking for an example of matters going awry in litigation then read the judgment of Mr Justice Fraser in  Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd [2018] EWHC 1577 (TCC).  All the usual problematic issues of civil litigation are here – pleadings, witness evidence and expert evidence.  This is all the more remarkable because the first trial on this issue provided enough material for six posts on this blog. All of the issues relating to the first trial appear to have been repeated, but with minor variations.  An interesting aspect of this case is that the claimant appeared determined, on occasions,  to avoid the factual conclusions reached by the judge at the first trial.

 

“It is, however, the case that my considered conclusion on each of ICI’s experts is that their evidence is not sufficiently independent of the party who has instructed them, and that the evidence of their opposite numbers is to be preferred… I do not know whether this preponderance of lack of independence on the part of a number of experts called by ICI is a coincidence. If it is a coincidence, it is a remarkable one.”

“It is to be hoped that expert evidence such as that called by ICI in this case, and also in Bank of Ireland v Watts Group plc, does not become part of a worrying trend in this respect. There are some jurisdictions where partisan expert evidence is the norm. For the avoidance of any doubt, this jurisdiction is not one of them. Not only experts, but the legal advisers who instruct them, should take very careful note of the principles which govern expert evidence.”

 

THE CASE

The action was part of a long-running dispute about the construction of steelworks in a paint manufacturing plant. At the first trial (the “liability trial”) The judge made robust findings of fact in relation to the quality of the statements given by some of the witnesses for the claimant.  The current judgment was the trial on damages.

AN “EXTRAORDINARILY UNHELPFUL APPROACH”

Firstly read the judge’s general observations.
  1. For the full details of the sorry events of this project from mid-2014 into March 2015, recourse should be had to the judgment on liability. Essentially, Mr Boerboom decided that the best way to bring the project cost down was to push MMT towards insolvency. This is a finding that I made in that judgment, although it is accurate to say that it is a finding to which Mr Boerboom paid little attention in his third witness statement for the quantum trial. When he gave evidence on 17 April 2018, he remained wedded to the theme that ICI had adopted from 2014 to 2017, namely that MMT’s works were substantially defective. That is one of a number of points in respect of which I had made a number of findings adverse to ICI in the liability judgment; but again, those findings did not seem to trouble Mr Boerboom. There are other instances in which ICI’s case at this quantum trial wholly ignored earlier findings of the High Court that did not suit it, not least the approach of its accountancy expert Mr Thompson, which I deal with further below. It goes without saying – or rather, it should – that quantum trials that follow detailed liability findings by the court ought to treat those findings as what they are, namely the final resolution of that particular component of the litigation between the parties.
  2. I had also found in the liability judgment that ICI had repudiated the contract with MMT, by purporting to accept non-existent repudiatory breaches on MMT’s part and dismissing MMT from site. Mr Boerboom and the other members of Steer Co knew these were not valid grounds when the decision was taken on ICI’s behalf to “accept” these alleged breaches. However, this final act only came after some months of stringing MMT along, including promising MMT a payment of £2.5 million in late 2014 if certain conditions were met. That payment was part of an agreement (at least so far as MMT was concerned) in something I called the 10-Point Letter, which was dated 19 November 2014. Internally at AkzoNobel, authority for making such a payment to MMT was withdrawn shortly after this letter was agreed with MMT, and AkzoNobel thereafter did not intend to make such a payment, nor did those within AkzoNobel any longer have authority to do so once this had been withdrawn. Nobody, however, told MMT that, who were encouraged towards fulfilling the conditions specified in the letter regardless. This was not the only example of double-dealing on the part of AkzoNobel in this case. By double-dealing I mean deciding one thing behind the scenes or internally, but either saying something different or allowing MMT to believe something different at the same time. During the quantum trial it became clear that an agreement was reached in early September 2014 between Mr Conrad of ICI and Mr Wells of MMT that £1.4 million would be paid to MMT for preliminaries and secondary steelwork support in the interim payments for August and September 2014. Mr Boerboom decided this would not be paid. Again, nobody told MMT that either.
    1. Some parties, and this appears on the face of it to include ICI and MMT (pending any revision to that conclusion after all matters of liability and quantum are resolved), seem to believe that the justice system will devote to them unlimited judicial resources to resolve each and every tiny point of disagreement. Jackson J, as he then was, found himself being asked to value every piece of steel work in Wembley Stadium. He expressed himself as ready cheerfully to undertake that task. I am being asked to value over 42,000m of pipework installed in a paint manufacturing facility, a great deal of it work that had to be redone as the design changed, which was not shown on the original design models, and with a great deal of work directly instructed on site. I do not share the good cheer of Jackson J at such a task. Nor do I consider that, in this case, on the material available to the court and with proper consideration of the overriding objective, the parties are entitled to this from the court in this case. CPR Part 1.1(2)(e) requires the court to allot this case “an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.
    2. The trial duration for the quantum hearing had to be increased from four to eight days as a result of the addition of accountancy experts, who were necessary for resolution of some of the larger items in the counterclaim. ICI and MMT have, with respect to them, consumed far more than their fair share of judicial resources already. Further, to resolve each and every non-agreed item on the Scott Schedule would take an enormous amount of time, added to which there is simply not the material available before the court to do so in any event. Some of the items are of very small value, yet they are still not agreed. Many are worth just hundreds of pounds. Yet because of the number of these and the bitter dispute over the total valuation of the account, the aggregate value becomes important.
    3. The following points will suffice to identify the difficulties with the approach taken by the parties, and one that was raised by the court with ICI during closing arguments. The Scott Schedule appears to have had its genesis as one of the appendices to Mr Kitt’s report. With ICI’s written Closing Submissions an appendix, Claim Appendix I, was provided to the court entitled “Agreed Scott Schedule”. This stated, in some introductory text, the following:
“1. The purpose of this Scott Schedule is to assist the Judge identify the parties’ respective valuations and how they differ.
2. In order to do this, the valuations given by the parties to different items of the account are set out side by side. It is hoped that this will enable the Judge identify where the major points of difference are.
3. The parties have also identified certain issues which will need to be determined as part of the Judge’s assessment of the value of the PMIs. Although the wording of those issues has been agreed between the parties:
(i) This agreement is without prejudice to their pleaded positions.
(ii) The issues identified are not necessarily exhaustive of the dispute between the parties. Instead, there may be other subsidiary issues which need to be determined. The identification of an issue is intended only to assist the Judge identify the main reason why the parties’ valuations are different.”
    1. These passages are, in my judgment, a clear example of the parties ducking the matter of resolving their issues, and attempting to preserve a “sit on the fence” approach to the quantum trial, whether to assist in the prospects of a future appeal or otherwise. To provide what are said to be agreed issues, but recite that this is “without prejudice to their pleaded positions” is wholly unhelpful, and in any case contradictory. Firstly, the parties’ pleaded positions in this case only go to the total, and not to the underlying elements of the account. There are precious few, if any, specific valuations issues pleaded. Secondly, there is no attempt to identify what the “other subsidiary issues” that are said to arise in fact are. Thirdly, these “other subsidiary issues” are not even addressed anywhere else in any event. The valuation of MMT’s account is made up of approximately 270 PMIs, and a very considerable (and greater number) of Site Instructions or SIs. Many of these SIs are not dealt with in the quantum expert reports. They are usually of modest value. Over 700 were issued during the project. There is a total of 271 SIs in total of which 88 are agreed. There are 165 SIs listed in the Scott Schedule. Only 73 of these are dealt with by the quantum experts (and hence coloured yellow in the Schedule handed up on the last day of trial). The total claimed by MMT for the SIs is £611,085.41, against an earlier total of £642,924. ICI, on the face of the schedule, advances three figures for the value of the SIs. Mr Brownlee’s assessment for these is £227,000; Mr Kitt’s High Valuation is £312,000; and Mr Kitt’s Low Valuation is £232,000.
    2. When the specific problem in relation just to the first SI, SI 6, was explored in closing submissions it was clear that there was no practical solution being advanced by the parties as to how this should be addressed. The issue of whether prior agreements on values of SIs should be kept is an issue that runs like a thread through a great many of the different times. However, if the answer to that were to be “No”, of the three competing ICI valuations for SI6 (or two, if Mr Brownlee’s is ignored) ICI appeared simply to be inviting the court to think of a number, as long as it is lower than the one sought by MMT.
    3. It also appeared that resolution of all of the issues, both in the Agreed Issues list before the trial, and the Scott Schedule issues, could potentially leave some numbers yet to be agreed. In other words, figures might still need to be attached to the court’s findings on the issues concerning quantum. The apparently serious suggestion from Mr Bowdery when this point was raised during closing submissions, was that the court should write to the quantum experts directly for assistance, were this to be the case. I am not prepared to entertain this for two reasons. Firstly, I do not consider it to be proper for the court to enter into separate correspondence with experts in any event. Secondly, even if it were, there is no guarantee that would lead to any agreed figures in any event – indeed, rather to the contrary, all the indications are that the parties and the experts would simply disagree about something else. The quantum experts’ agreement to date is anything but an agreement.
    4. The “Agreed Expended List of Issues” which was submitted the day after oral closing submissions was accompanied by what was called an Explanatory Note. This included text such as the following, in relation to a Scott Schedule which had to be used electronically due to its size and complexity:
“For those parts of the account where there are a large number of elements, the “Analysis of Difference” column has filters applied to it. This will enable the reader to select only those PMIs which are affected by a particular issue by filtering out the “blanks” …… The claims PMIs do not have “issues” columns in view of the fact that the parties have discussed these considerably during the hearing and submissions, and they have been subject to individual consideration by the parties’ experts.”
    1. I find this approach extraordinarily unhelpful. It is a more sophisticated way of saying – the court has the trial bundle; here are the figures; please just get on with it. It fails to consider whether there is evidence in relation to a PMI, or not. This approach was reflective of what had been done in Opening Submissions. For example, MMT’s submissions in the appendix dealing with the valuation of Steelwork PMIs (Issue 1(c)) stated “The court would probably be assisted by having [a particular spreadsheet] open when reviewing this appendix. The court will find most (but not all) of the documents it needs in relation to the steelwork PMIs in the quantum e-bundle in the folder named ‘1-Disputed Steelwork PMIs and associated documentation’…..Other relevant documents will be in the chronological bundle…..”
This is an extremely unhelpful approach. There were a total of four counsel instructed for this trial, and I consider that the court is entitled to greater assistance on such detailed matters, and on the use and scope of the Scott Schedule – a document neither ordered by the court, nor approved – than it received in this case.
    1. Nor did the Explanatory Note present an agreed position in relation to SIs, if these were found not to be due in the amount claimed by MMT. In summary, due to Mr Kitt’s approach in his report, ICI favoured a pro rata percentage approach, whereas MMT wanted the parties to have the opportunity to agree figures, but failing that to have another day of submissions. It will only be necessary to resolve these different approaches when or if there remain any further issues outstanding after resolution of the issues above, and the 29 sub-issues and 12 PMIs under “Claims” in Issue 1(h). It may help if I indicate that I am not prepared to allow any further evidence at all in this quantum trial.
    2. The crux of this is that, so far as the valuation of MMT’s works are concerned, it may be necessary to invite the parties to agree further figures, depending upon the scope and effect of individual findings on the separate issues that have been identified as arising out of the Scott Schedule. This is particularly likely to arise in respect of preliminaries, which are claimed by MMT on a percentage basis, and which therefore depends upon the final total of the items in the account.
Whether the potential further issues numbered 5 to 8 are pleaded
    1. ICI challenges that issues 5 to 8 arise in this trial as it is submitted these matters are not pleaded. It is necessary to resolve that first. After handing down the liability judgment on 12 July 2017, the usual hearing for consequential matters took place. On that occasion, this included an application by MMT to amend its counterclaim, that application being dated 21 July 2017 and supported by evidence from Mr Mills of MMT’s solicitors, which on this occasion was included in Box 10 on the application notice itself, form N244. This evidence, which was brief, stated that:
“The Particulars of Claim do not presently include for the business losses and disruption arising from ICI’s repudiation but which are substantial and do come within the scope of conventional principles.”
    1. An order had been made in relation to the split trials of liability and quantum by Coulson J (as he then was) on 12 February 2016. He ordered that the liability trial would deal with “all issues of liability arising out of the allegations of termination and repudiation, including issues of breach, welding defects, contractual payment issues in principle, the consequences of finding that either party was in repudiatory breach and the principle of ICI’s claim for unjust enrichment”. The quantum trial was ordered to deal with “the detailed accounting, damages for breach of contract, and other outstanding issues”. Although I granted MMT permission to amend its counterclaim in some respects in July 2017, I concluded that a small number of amendments ought not to be allowed. This was because they required new issues of liability to be resolved in MMT’s favour, those issues not having been dealt with in accordance with the order of Coulson J, and no evidence having been served by MMT to support them in that respect. The amendments that were not allowed were (in summary) that by attending to issues caused by ICI’s repudiation, the management of MMT had been prevented from winning new work for MMT; that MMT’s position and reputation in the market, both for existing and prospective customers, had been damaged; and that this had caused “loss of income, including (a) loss of contribution to overhead, and (b) loss of profit”. MMT sought to appeal my ruling on that application but were refused permission to do so by Jackson LJ.
    2. Notwithstanding that ruling, MMT seeks to advance two heads of claim in its evidence for the quantum trial which ICI maintains are not pleaded. These are (1) loss of profits on works not instructed to MMT, but which were part of Project Fresco works generally, and which were awarded or instructed to other contractors; and (2) the cost of what is called a “rebranding exercise”.
    3. The loss of profits claim is in relation to work which had not been instructed to MMT at all – it formed no part of MMT’s scope of works – but which MMT argues would or should have been awarded to it, had the repudiatory breach not occurred. Mr Wells sensibly accepted that there was no contractual obligation upon ICI to instruct this work to MMT, rather than the other contractors to whom it was instructed.
    4. The rebranding exercise arose in the following way. Before the issue of the adjudicator’s decision in the first adjudication between MMT and ICI, that decision having been issued in March 2016, MMT had been starved of any cashflow on this project due to ICI’s commercial strategy as I have found in the liability judgment. In fact, no money at all was paid to MMT by ICI in respect of its interim applications from October 2014 onwards. Not only that, but due to the fact that MMT was (at least up to and into the New Year 2015) working towards satisfaction of the conditions in the 10 Point Letter, MMT had believed for a large part of this period that it was on the verge of receiving £2.5 million from ICI. Eventually in January 2015, the penny finally dropped with MMT, and Mr Wells and his co-directors realised that they would have to change their strategy in order to receive some payment from ICI. This led to the commencement of the first adjudication. The evidence however from Mr Wells and Mr McGrady was that the industry had already realised MMT was in trouble and at least one other contractor, Murphy, stopped paying it too as a result.
    5. Accordingly, the directors of MMT took specialist professional advice about the company’s future and instituted the preparatory steps for MMT to seek a creditors’ voluntary arrangement, or CVA. The day this was going to be initiated, was coincidentally the day after ICI finally paid MMT the money the subject of the first adjudicator’s decision in MMT’s favour, namely £7.9 million. Together with interest and VAT the actual gross total was £9.1 million. MMT received this decision and had issued proceedings to enforce it in the Technology and Construction Court. Those proceedings were issued on 11 March 2015 and were given action number HT-2015-000161. Expedited directions were made on paper by the then-Judge in Charge of the Technology and Construction Court, Edwards-Stuart J, on 12 March 2015, and a hearing was ordered to take place on 16 April 2015. ICI did however pay the money and that hearing was not required. All seemed dramatically rescued, and the need for the CVA no longer arose. However, later on the day of payment the Bank of Scotland, having credited MMT’s account with the funds, immediately withdrew all MMT’s credit facilities. The CVA did not occur, but MMT remained in deep financial trouble as a result of this behaviour by its own bank. An alternative approach was therefore adopted by the directors. Instead of a CVA, the business of MMT was transferred to its holding company, Merit Holdings Ltd (“MHL”), which began to trade in its stead. The creditors of MMT had their debts transferred on a pound for pound basis, and MHL was paid a dividend of £2 million by MMT to strengthen its balance sheet and allow MHL to bid for new contracts. This group reorganisation was referred to, colloquially, by the witnesses and during the trial as “the hive up”. The dividend was paid to MHL on 31 March 2015. The transfer of assets and liabilities took place the day after that, on 1 April 2015.
    6. The rebranding costs in the evidence for this trial relate to costs said to have been incurred by the trading of the group (which had been MMT) being undertaken or performed by MHL, whereas prior to 1 April 2015, these works had been done by MMT. Some invoices were produced which were for items used in contracting work (for example hi-visibility clothing) with the new name of MHL shown on it.
    7. In my judgment neither of these heads of counterclaim are currently pleaded. This is, I consider, rather obvious when one reads the counterclaim (as amended). The general approach of the courts under the Civil Procedure Rules, and specifically the specialist courts, is to take a pragmatic approach to pleadings and not to shut a party out from having its case heard on overly literal analysis of such a document. Technical pleading objections are certainly not encouraged, although very occasionally they are justified. I consider that here, however, the objections are justified. I therefore consider whether, were MMT to make an application to amend, such an application should be permitted, even though no application to amend has been made. CPR Part 17 governs amendments to statements of case, and the notes at CPR Part 17.3.5 state this, and also recite the dicta of Peter Gibson LJ in Cobbold v Greenwich LBC 9 August 1999 (unrep.) CA which stated:
“The overriding objective (of the CPR) is that the court should deal with cases justly. That includes, so far as is practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party caused by the amendment can be compensated for in costs, and the public interest in the administration of justice is not significantly harmed.”
  1. However, here, the following points arise, which I consider would militate against the success of such an application (were one to be made), and which are fatal to these heads of counterclaim. Firstly, I refused MMT permission to amend its counterclaim to seek and recover lost profits on future work. The lost profits sought here are on work instructed by ICI before the repudiation. They cannot therefore arise as a result of the repudiation, which had not occurred when they were instructed. Also, it is accepted that this is work which ICI was under no contractual obligation to instruct MMT to perform. Accordingly, no possible breach of contract can arise on the part of ICI in instructing this work to be performed by one of the many other contractors on the project. Mr Mort relies upon the dicta of Patten LJ in Durham Tees Valley Airport Ltd v BMIBABY Ltd [2010] EWCA Civ 485, [2011] 1 Lloyds LR 68, 85 where at [79] he referred to the factual enquiry necessary “as to how the contract would have been performed had it not been repudiated. Its performance is the only counter-factual assumption in the exercise”. However, the exercise to which he was referring was in that case the one necessary to determine how the contract would have been operated post-repudiation. This is clear from the judgment.
  2. As is made clear from the terms of the contract, the airline in that case had a discretion as to how many flights, and to where, it would operate. The court had to decide how, counter-factually, that would have unfolded had the repudiation not occurred. As stated in [59] “token flights or a complete absence of any flights (which is this case) clearly would not amount to operating the aircraft. Subject to this, the question of how many times and to where are matters for the airline’s discretion”. The court in that case therefore had to decide the scope of a contractual obligation. That is different to the case here.
  3. I consider that MMT are misconceived in attempting to rely upon this authority in the respect it does in its dispute with ICI. In the instant case, the question of what works MMT was obliged to perform contractually (and entitled to perform, absence the repudiatory breach) is not in issue; ICI accept that MMT would be entitled to profit lost on that work. Here, the work in question is non-contractual and the counter-factual scenario relates, not to what would have occurred had the repudiatory breach not occurred, but rather an imaginary world where Mr Boerboom had never appeared, or where ICI had always behaved as MMT wished ICI had behaved, but in respect of which ICI had no contractual obligations, namely by instructing it to perform a great deal more work. Durham Tees Valley Airport Ltd v BMIBABY Ltd concerns a contractual obligation upon the airline to operate aircraft from the airport; ICI had no contractual obligation to instruct MMT to perform the works that form the underlying subject matter of this element of the counterclaim.
  4. Although MMT might argue that it was part of Mr Boerboom’s strategy not to issue further work to it, and that might be right, there are a host of reasons why a company in ICI’s position could choose to instruct work to another contractor. That other contractor might be cheaper. Where two companies are in dispute, as MMT and ICI were here – regardless of the merits of the dispute – it could be seen as counter-intuitive to issue new work to the contractor.
  5. Mr Mort also submitted that the court should approach the contract between MMT and ICI as though it were a Framework Contract. That term refers to a contract – often used, for example, by Local Authorities – where an employer instructs work to be performed over the duration of the Framework Contract, for which the contractor charges pre-agreed prices. However, this is not such a contract. A Framework Contract would usually (but not inevitably) be exclusive, whereas the contract between ICI and MMT imposed no obligation upon ICI to instruct MMT to perform any extra works. I do not consider that this approach would be legitimate. Framework Contracts often impose an obligation upon an employer only to instruct work to its framework contractors, whether there is one or more of them. There was no such limitation upon ICI here. The lack of any contractual obligation in this respect is fatal to MMT’s arguments.
  6. In my judgment, the whole basis of this part of the counterclaim by MMT is flawed in principle, and a proposed amendment must have some prospect of success to be allowed; CPR Part 17.3.6 and Groveholt Ltd v Hughes [2010] EWCA Civ 538. Therefore even if an application to amend were to be made, I would refuse it.

WITNESSES OF FACT

Witnesses of fact were criticised in the first judgment. Undeterred the parties appear to have adopted the same approach as before, some of them electing to ignore the trial judge’s findings.

 

VII The witnesses of fact

    1. I will now turn to the witnesses of fact. ICI called two witnesses of fact, namely Mr Henk Boerboom and Mr Greg Brownlee. Mr Boerboom was the only one of these two gentlemen who had been involved in the works on site at all, and Mr Brownlee only became involved in January 2015.
“Mr Boerboom
  1. Mr Henk Boerboom’s 3rd witness statement was said to be a “reply witness statement” to the statements of Mr Wells, Mr McGrady and Mr Riley. Before he was sworn, I raised with Mr Bowdery my concern that Mr Boerboom’s written evidence contained matters of evidence that were directly contrary to findings that had been made in the liability judgment. Mr Bowdery assured me that, as he put it, “no disrespect was intended”. Whilst, of course, this was reassuring, that was not the point. Evidence must be relevant to be admissible, and if a binding finding has been made on a particular point in the liability judgment, then further evidence on the same point in the quantum proceedings (particularly evidence directly contrary to that finding) cannot be relevant. If it is not relevant, it cannot be admissible in strict terms. Rather than take time, in a time-limited trial, dealing with an application to strike through passages, the more cost-effective approach was to allow the whole statement in without ruling on the specific admissibility of particular sentences, with Mr Mort having the opportunity to make submissions in due course. That was the course which I adopted. However, it is of note that Mr Boerboom had not changed his views of the rights and wrongs of what had happened in 2014 and 2015 as a result of the liability judgment in 2017.
    1. I reject Mr Boerboom’s evidence in this trial, that Mr Barton resigned because he had “personal problems at home”. There is nothing whatsoever to support it, and I consider that statement to be plainly factually wrong. No explanation was proffered by Mr Boerboom for why he did not give this evidence last year, when he expressly said that he did not know why Mr Barton resigned. Nor is it corroborated in any document whatsoever, and by now I have reached the point where I would not accept anything Mr Boerboom says about this project without some sort of independent corroboration. His statement about why Mr Barton left could also be interpreted as exposing Mr Barton to some criticism of his professionalism. This was a high profile project that was considerably over budget and in considerable delay, and Mr Barton was the Project Manager, tasked with a very important, if not the central, role in administering the contract with MMT. One imagines that a professional person in this situation would wish to see the project through to its conclusion, not abandon it a few months from the end when it is essentially at crisis point with its most centrally involved contractor MMT (save in the severest personal circumstances of an extreme kind). Yet this is what Mr Boerboom is now saying that Mr Barton did, by springing upon him his resignation which was “a surprise”. Mr Barton himself in an email of 9 October 2014 explained his decision, and I deal with this at [137] of the liability judgment. Mr Boerboom’s evidence is to the effect that what Mr Barton said in his e mail was not the real reason. I find this attitude by Mr Boerboom to the facts to be reprehensible. I consider that this evidence has been advanced now because I rejected Mr Boerboom’s evidence in the liability trial that he had no idea whatsoever why Mr Barton resigned. When he realised that this was simply inconceivable, this new reason is one designed to avoid any blame attaching to ICI’s behaviour at the time. The fact that this new explanation puts Mr Barton is an unfavourable light in terms of his professionalism does not concern Mr Boerboom. His explanation is also entirely at odds with the documents, and with the evidence from the MMT witnesses.
    2. Further, Mr Boerboom expressly stated in paragraph 12 of his witness statement for the quantum trial that:
“I did not interfere in the work of Andy Barton and/or Jeff Conrad in dealing with the MMT situation”.
This again is contrary to the express finding I had made at [37] of the liability judgment so far as Mr Barton was concerned, but also directly contrary to the contemporaneous documents so far as both Mr Conrad and Mr Barton are concerned. Not only that, but in this trial further evidence has emerged of what had occurred regarding MMT’s valuations after Mr Barton resigned. On 4 December 2014 Mr Hall, who is a qualified quantity surveyor, sent Mr Boerboom an e mail in relation to MMT’s application for November 2014. Mr Hall sent Mr Boerboom what he called two “options” for the payment certificate. Option 1 did not allow for any progress by MMT during the month of October, resulting in a figure for the certificate of minus £12,000, which would mean that MMT would owe ICI money that month, rather than receiving an interim payment. Option 2 was not quite so draconian, allowing MMT some progress, but included a set-off for the allegedly defective welds of £1.3 million. To put that into context, that figure is ten times greater than the figure agreed by the parties to be the correct figure for defects. This option would have resulted in a figure for the certificate in MMT’s favour of £113,000, which at least would have resulted in some payment.
  1. Mr Hall, quite wrongly, gave Mr Boerboom the option of paying MMT whatever figure Mr Boerboom chose. This is made clear in the final sentence of his email, where he stated “Please note these are only draft and we can adjust the contra charge value to suit our level we are happy with”. For anyone familiar with the intended operation of the NEC3 contract form – or indeed, any standard form construction contract – this behaviour is extraordinary, and wholly incapable of being justified on the contract terms. It shows ICI were plainly adjusting the figures in a wholly improper way.

IDENTICAL WITNESSES FOR THE DEFENDANT

This was a feature of the trial on damages.  Nothing, it appears, had been learned.
  1. However, both the witness statements of Mr McGrady and Mr Wells served for the quantum trial by MMT had some peculiarities. Both of these witnesses served very lengthy witness statements. Upon analysis, it was realised that they were, for considerable passages, simply the same text, with the first person having been changed to the third person where necessary grammatically, and vice versa. These were the only differences for over one hundred paragraphs. This was unusual, but was particularly notable as being almost the converse to the unusual situation that had occurred concerning Mr Wells’ and Mr McGrady’s witness statements for the liability trial. For that trial, MMT had three witnesses, Messrs Wells, McGrady and Conn. Each of the witness statements of Mr McGrady and Mr Conn were curiously worded and extraordinarily brief. Mr McGrady had simply stated in his paragraph 5 that he had read Mr Wells’ statement and agreed with everything Mr Wells had said. Mr Conn stated that he too agreed with what Mr Wells had said, but identified certain passages in respect of which he had no knowledge of his own, and therefore which he could not corroborate. This led to an application by ICI, at the 2nd Pre-Trial Review seven days before the liability trial was to start, to strike out both these witness statements as failing to comply with the rules and not being in the witnesses’ own words. I refused that application, not least due to its lateness, but also because ICI had had the statements for eight months, including participating in the 1st Pre-Trial Review, before raising any objections at all. I did however give a warning at [52] of the liability judgment that the result in other cases would not necessarily be the same.
  2. The peculiar approach to witness statements for the quantum trial may therefore have been adopted as a rather misguided attempt at avoiding what had occurred for the liability trial, but still failed to grasp the essential point that written witness evidence is supposed to be in a witness’ own words. ICI therefore issued an application to strike out large parts of the witness evidence served by MMT for the quantum trial on the basis of this wholesale duplication. This was heard by me on 15 March 2018 at the Pre-Trial Review. One submission made by Mr Bowdery for ICI on that application was that MMT’s approach to their witness statements for the quantum trial was verging on contemptuous (whether in a grammatical, or technical, sense) given the history of the MMT witness statements for the first trial. Presenting the evidence in this way also raised practical trial-management difficulties for ICI, as Mr Bowdery would not know which witness was the correct person to ask about particular points during cross-examination. I ordered MMT to re-serve the witness statements of Mr Wells and Mr McGrady striking out the duplication, so that ICI would know which witness was giving evidence about which events. This was done on 27 March 2018, shortly after the order was made.
  3. I do not know why this approach to witness evidence was taken by those at MMT, or by those advising MMT, but the reasons behind it do not matter. The rules concerning witness statements are clear; they are included at CPR Part 32 and are available to be consulted by all litigants and their advisers. At Part 32.4.5 guidance is given on “preparation and content of witness statements”. Modern litigation depends upon witnesses setting out (with the necessary degree of assistance) their factual evidence in writing, served on the other parties in the litigation in advance. Much time and costs should be saved by doing this. It avoids what is now seen as the old-fashioned approach in civil cases, where a witness would give their evidence in chief orally, which takes some time. Indeed, I am firmly of the view that the specialist courts could not conduct the number of trials they currently do without the use of witness statements; I doubt judicial resources could be stretched to accommodate the extra court time that would be required for oral evidence in chief. Somewhat presciently so far as this case is concerned, the notes to CPR Part 32.4.5 state “Unfortunately, rules, practice directions and guidance as to the content of witness statements appear to be habitually ignored by practitioners”. I would draw the attention of practitioners in the specialist courts in particular to the requirements in the rules for such documents. Statements are not supposed to be drafted by those who equate length with substance, and regardless of expertise with the copy and paste functions of word processing programmes, witness statements must be drafted in accordance with the Civil Procedure Rules. Nor should such documents include lengthy quotations from contemporary documents. Inevitably, judges are, notwithstanding these clear rules, regularly confronted with lengthy statements that do exactly that. It may be that this is done in an attempt to impress the other side in adversarial proceedings with the weight of evidence in party’s favour. Not only is this usually counter-productive, it is also wholly wasteful in terms of legal costs, but importantly also judicial resources. These documents are invariably read by the court prior to the witness being called. There is absolutely no good reason, in any case, for the regular and continuing failure to pay attention to the rules concerning witness statements. Attention is also drawn to the likely consequences if such rules are ignored, and to the Review of Civil Litigation Costs: Final Report (December 2009) by Jackson LJ (as he then was) Chapter 38.
  4. Although both Mr McGrady and Mr Wells were starting from the position of having had their evidence accepted in the liability trial, that of itself does not mean that their evidence would or should be accepted uncritically in the quantum phase. Both witnesses were cross-examined by Mr Bowdery for a reasonable period of time, and Mr Bowdery put all of ICI’s points to them in a sensible way, doubtless on instruction. That is not, however, to say that the points themselves were sensible. Given that both Mr Wells and Mr McGrady had been very closely involved in the works, and neither of the ICI witnesses of fact had been to the same extent (and so far as Mr Brownlee was concerned, had not been involved at all) the majority, if not all, of these points were wholly artificial.
  5. An example of such an artificial point will suffice. It was put to Mr McGrady that the hours claimed by MMT for PMI 208, pipework modifications, “were absurd”. The title of this PMI is “works to revised models” and it relates to work performed by MMT when the design models were revised, as they were constantly. Such revisions required modifications to the existing work that had been installed to the pre-revision model, prior to the design change, and new work to have the work conform with the revised model. The hours for this PMI were said, by ICI in the quantum trial, to be very excessive for modifications. The stark difficulty with this point for ICI was that the Project Manager himself had approved these hours at the time for this PMI. PROJEN had designed the works, had instructed the modifications required as a result of the design changes in the revised models (which changed a great deal), and had a detailed knowledge both of the work originally done, and the work required to modify it. These costs had been approved by the Project Manager in April 2014, and reviewed in July 2014 and paid in full from that point. ICI did not call any witness of fact at all from April 2014. Mr Boerboom did not even arrive on site until three months after that. There was no ICI evidence of fact about what these works involved.
  6. Mr McGrady gave a lengthy and patient explanation on this PMI and these hours, which I accept, which demonstrated that simply because one of the lengths of pipe that was being modified was only 1 metre long, did not mean that ICI could now assume (as it did in the quantum trial) there was not much work involved, still less conclude hours approved by the Project Manager were absurd. The fundamental issue, and it is one that came up during the quantum trial innumerable times, is that at the time, those tasked by ICI with administering the contract fairly, namely the Project Manager, and with extensive and detailed knowledge of the works, did not remotely share ICI’s concern now in the litigation (whether genuine concern, or contrived to suit its strategy) that there was anything wrong or excessive either with the hours, or the costs, attributed to this PMI by MMT, nor with the sums claimed in respect thereof. Quite to the contrary, in fact, these costs were both approved by the Project Manager, and paid by ICI. In my judgment, challenges of the nature raised by Mr Bowdery could only be credible if they were made or explained by someone – indeed, anyone – at ICI who had been actually involved in the works, who knew something about the subject matter, and who had some direct evidence to give on the point. For whatever reason, this was not the case. There was no direct evidence from ICI in this respect at all, and any evidence about it (which for the most case simply did not exist) did not have any credibility. The challenges seemed to have their origin in either Mr Brownlee, and/or ICI’s experts, and/or ICI’s advisers, trawling through the documents and seeking to raise points of criticism that might be superficially justified, but without any evidential basis. The fact that a measurement on a document showed lengths of pipe of 1m did not remotely assist in the circumstances of this case, and this project.
  7. I found both Mr McGrady and Mr Wells impressive and truthful witnesses, and I accept their evidence. I do not unhesitatingly accept their evidence about causation and the liquidation of MMT as I explain below in that section of the judgment dealing with that head of the counterclaim, but that is a different matter. Subjectively, they believe that to be the case, so the fact that I do not accept their evidence on that point does not diminish its value on all the other points in dispute in these proceedings. So far as MMT’s actual works on site, the effect upon MMT of what occurred in 2014 and 2015, and all the valuation issues are concerned, they are wholly reliable. Both of them were involved during the project at the time, had a detailed knowledge of the works, and were credible and honest. Indeed, as their cross-examination unfolded, not only was their evidence not damaged in any appreciable respect, but the patent unreality of the case being run by ICI became more and more apparent. The greater that Mr Bowdery went into detail, the more stark the lack of direct evidence from ICI became.

 

EXPERT EVIDENCE

The judgment really gets interesting when it gets to expert witnesses
    1. There were two disciplines of expert for whom permission was given. These were quantum experts, who in this case were quantity surveyors, and accountants. I shall deal with each discipline in turn.
The quantum experts
    1. ICI called Mr Kitt, and MMT called Mr Linnett. Both are highly experienced, both as quantity surveyors, and also as quantum experts. Ordinarily, in a quantum trial, one would expect the two quantum experts to meet, and agree at least one but usually more joint statements, as the areas of dispute between them narrowed or were resolved. Indeed, given the fundamental issues on the works were the proper valuation of the MMT works as at the date of the repudiation, and the fact that those works took place between the end of 2012 and February 2015, and were (even on ICI’s pleaded case) worth in excess of £10 million, the court would usually expect to rely heavily upon expert quantity surveying evidence to arrive at the correct valuation. No judge, even in the Technology and Construction Court, can be expected to embark him or herself upon a detailed valuation of every part of a contractor’s final account or final assessment, particular when the works were (as here) very detailed and the project had developed through numerous design changes over a long period of time.
    2. However, in this case the Joint Statement by the Quantum Experts is a most unhelpful document. It is not possible to identify why that is, as discussions between experts are without prejudice. The Joint Statement essentially amounts to a recitation of each expert’s view, with the occasional exception where a minor item was in fact agreed. However, such items are few and far between.
    3. The parties each produced what was called a Scott Schedule. The reason there were two was because the parties could not agree on a single one. No such document, which is akin to a pleading, was ordered by the court in this case, and, had I been asked at an interlocutory stage to make such an order, I would have refused. This is because in this case, with the parties at daggers drawn over practically everything, the use of such a document would not be effective in terms of narrowing disputes and enabling a saving of costs. I consider it would be contrary to that. Had I been asked to order one in this particular case, I would have found it contrary to the overriding objective in CPR Part 1. Even if I had been minded to order one, the format of the document would have been discussed, and either agreed or ordered, in a form that would have helped efficient resolution of the different items. As it is, certain issues that arose throughout the different items were extracted and separately identified as “Scott Schedule Sub-Issues” which form a separate part of this judgment.
    4. There may be many reasons behind this unsatisfactory state of affairs. However, the significant reason is that the two quantum experts have approached their tasks in two starkly different ways. In order properly to understand how this has come about, it is necessary first to consider the position under the contract itself and also the position of the Project Manager. In the liability judgment, I made certain findings that were directly relevant in respect of the latter. I have summarised these at [9] above, but further to the resignation of Mr Barton, Mr Boerboom sought to become the Project Manager in Mr Barton’s place. I found in the liability judgment that this was invalid, in the following terms at [134] – [139]:
134. It is contrary to the whole way in which the contractual mechanism is structured, and intended to work, to have the employer seek to appoint itself (or one of its employees, or an employee of its parent) as the decision maker. As Scheldebouw [full case title Scheldebouw BV v St James Homes (Grosvenor Dock) Ltd [2006] EWHC 89 (TCC), a decision of Jackson J as he then was] makes clear, “the whole structure of the …. contract is built upon the premise” that the employer and the decision maker are separate entities, and “endless anomalies arise if the employer and the [decision maker] become one and the same”. It can be seen that, so far as the alternative argument put forward by the employer concerning contractual termination is concerned, the giving of notices under the termination procedures in clause 91 of the contract are required to be given by the Project Manager, not by the employer. If the employer and the Project Manager are the same entity, then notices would be coming from the employer in reality, but dressed up as though they were from the Project Manager, and notification(s) would be given by the employer (as though it were the Project Manager) to itself. This is not how the contract is designed to work, either by intention, or indeed by its terms.
135. In my judgment, one need go no further than the reasons in Scheldebouw at [45](1), (2) and (3) to conclude that the arguments by MMT on this point are plainly to be preferred. Such a situation is so unusual that an express term is required. There is no such express term here. The situation which ICI sought to impose upon MMT by appointing Mr Boerboom as the Project Manager was fundamentally different to that for which MMT tendered, and contracted. This is the case even though Mr Boerboom was formally employed by AkzoNobel and not ICI. AkzoNobel was and is the parent company of ICI, and he was acting as the project manager for ICI prior to his purported “appointment” as the Project Manager. He was the very opposite of independent on the facts of this case.
136. Mr Barton himself plainly realised the difficulties in the position in which AkzoNobel had placed him. Mr Conrad of AkzoNobel sent an e mail to Mr Barton on 8 October 2014 which stated the following:

“This e mail is an official instruction to you that any revision of assessments on PMIs with Merit Merrell will need to be signed off by myself and Theo Brugman before they will be included in the certification each month. This goes for upwards and downwards revisions.”

137. In an e mail of reply dated 9 October 2014 copied Mr Conrad of ICI and copied to Mr Boerboom and Mr Brugman, Mr Barton stated:

“Further to your e mail below and the previous instruction from [Mr Boerboom] and [Mr Brugman] I believe that an amendment to the Contract is now required to give AkzoNobel full responsibility for the contractors.

As you are aware Projen plc are named in the Contracts with [MMT and others] as the Project Manager. Under the NEC3 Contract the Project Manager carries a lot of responsibilities in terms of the administration of the Contract. As I am no longer empowered by the Employer to carry out these responsibilities it is, I believe, time to change the Project Manager to AkzoNobel”.

Mr Barton was wholly correct; the instruction to him that AkzoNobel had to “sign off” – which means agree with – any revisions of assessments before they could be included in the monthly certification meant that AkzoNobel had removed certain (if not all) of the powers that were essential for Mr Barton to act as the Project Manager. He had no option but to resign.

138. As this and other similar correspondence shows, prior to PROJEN’s resignation AkzoNobel had interfered with the proper exercise by PROJEN of its duties and I find as a fact that this is why PROJEN resigned.
139. AkzoNobel and any of its employees or officers were not sufficiently independent – indeed, were effectively the employer under the contract by another name – to act as Project Manager. I find that no proper appointment was made of a replacement Project Manager under the NEC3 terms, following Mr Barton’s resignation which occurred on 9 October 2014 “effective immediately”. Further, I find that the purported appointment of Mr Boerboom as his replacement was a breach of contract by ICI.
    1. Following Mr Boerboom’s “appointment” of himself as Project Manager, the project stuttered on, but with increasing difficulties for MMT. These included the 10 Point Letter agreement wherein ICI said a further payment of £2.5 million would be made to MMT if certain conditions were met, but internally had decided not to pay this sum regardless of satisfaction of conditions. Eventually, ICI dismissed MMT from the site with 24 hours’ notice, but supposedly in an act of acceptance of (non-existent) repudiatory breaches. The reason that this is relevant to valuation of MMT’s works as at 17 February 2015 is threefold.
1. Mr Boerboom engaged Blake Newport to perform what was called a Project Manager’s Final Assessment, but without the involvement of any Project Manager under the NEC3 Contract because there was none.
2. There was no replacement Project Manager validly appointed at any time following Mr Barton’s resignation.
3. Agreements previously reached between MMT and the Project Manager on a wide number of compensation events were simply ignored by Mr Brownlee, and treated as being of no consequence. Mr Boerboom said he did not tell Mr Brownlee about them, but even when Mr Brownlee learned of some of these in October 2015, he ignored them in any event.
  1. Accordingly, the correct approach of the quantum experts to the proper valuation of MMT’s works should have been as follows. Firstly, to consider the liability judgment and take express note of the relevant findings as to how the role of the Project Manager was interfered with, leading to Mr Barton’s resignation. Secondly, to consider the contemporaneous agreements reached between Mr Barton, others acting for ICI such as Mr Hall, and MMT. Thirdly, to consider the factual evidence (for example of Mr Riley for MMT, and any evidence from ICI) and to conduct at least alternative valuations on the basis that the court may accept such evidence. This would essentially consist of addressing outstanding quantum issues on the two different factual cases advanced by ICI and MMT, insofar as an alternative factual case was advanced by ICI. ICI’s case was essentially contained within the assessment done by Mr Brownlee; MMT’s case was contained within the valuation predominantly prepared by Mr McGrady, but also supported by other factual evidence such as that of Mr Riley.
  2. The degree to which either Mr Kitt or Mr Linnett performed that task will now be considered. There were substantial differences in their approach.
    1. ICI called Mr Thompson from Grant Thornton, and MMT called Mrs Barker from KPMG. Their approaches and instructions were, again, rather different to one another. The question of permission for such evidence was raised by the parties following the liability judgment. MMT issued an application dated 21 July 2017 which, as well as seeking to amend the counterclaim (some of those amendments being permitted, some refused) sought permission to call expert evidence “to address such accountancy issues as arise out of [MMT’s] counterclaim”. The evidence in support from Mr Mills, MMT’s solicitor, stated “it is also necessary to call an accountancy expert witness to support the aforesaid business losses”. In the Order of 26 July 2018, I did not make such an order but allowed the parties time to consider whether such an order was necessary, given permission was only given for some of the amendments. Permission was subsequently given in an Order of 22 December 2018, that order stating “permission is given to the parties to rely upon the evidence of an expert witness specialising in accountancy in order to address such accountancy issues as arise out of the Defendant’s counterclaim”.
    2. The witness statement supporting that application (which was made by consent) was Mr Mills’ 6th statement. This stated that there were certain issues that required specialist accountancy evidence that were outside the scope of expertise of a quantity surveyor, and also expressly stated in paragraph 12:
“The issues that the expert will address are:

a) The cost of professional advice arising out of the repudiation including

the need for that advice and whether those costs are reasonable.

b) The cost of management time arising out of the repudiation including the

need for that time to have been expended.

c) Whether it was necessary for the Defendant to negotiate reduced

payments on other projects and whether that action was reasonable.

d) The additional cost of financing, credit insurance, lost trade discounts

and lost trade rebates arising out of the repudiation.

e) Additional tax liabilities arising out of the repudiation.”

    1. This permission was granted. I agreed that the issues identified by Mr Mills required an expert accountant rather than evidence from the quantity surveyors (for whom permission had already been granted). It might therefore be thought that the instructions given to the expert accountants would at least be framed on the issues identified by Mr Mills.
    2. However, this was not the case as will be seen.
Mr Thompson
    1. ICI called Mr Thompson, who is a chartered accountant and a Director at Grant Thornton UK LLP. He was at KPMG LLP for 27 years, moved to Grant Thornton in 2013 and so has over 30 years of experience. He has specialised in forensic accounting for the last 25 years.
    2. His instructions formed part of his report and ICI’s solicitors drew his attention both to the Order giving permission for such evidence, and also specifically instructed him (in paragraph 4.5 of his instructions) to opine on losses at paragraphs 115(3) to 115(8) of the Re-Amended Defence and Counterclaim. These broadly matched the categories identified in Mr Mills’ 6th witness statement.
    3. However, paragraph 4.6 of his instructions stated the following:
“In relation to the foregoing heads of loss, you are instructed to opine both on the quantum of the loss claimed and on the extent to which such losses might be considered, from an accountancy perspective, to arise as a consequence of ICI’s repudiation of the Contract. In particular the extent to which MMT’s financial position post the repudiation of the Contract (and the losses it says flowed therefrom) resulted from the repudiation.”
    1. These instructions clearly sought to have Mr Thompson give his opinion on causation to the court. The inclusion of the phrase “from an accountancy perspective” in the first sentence of the extract above does not dilute that fact. The final sentence asking for his opinion on “the extent to which MMT’s financial position post the repudiation of the Contract (and the losses it says flowed therefrom) resulted from the repudiation” could not, in my judgment, be a clearer request (actually, an instruction) for Mr Thompson to opine on causation. Given these were Mr Thompson’s instructions, it is difficult to criticise him unduly for following them, although the way in which he did so can, as will be seen, justifiably be criticised. Criticism is however justified for the instructions themselves. Whether losses flowed from a repudiation and other similar matters of causation in this case are matters for the court. They are not matters for accountancy expert evidence, and they were not an area in which permission was given for accountancy evidence. The proper approach was not to excise those matters from his report, but to leave the report and for me as the trial judge only to consider those parts that were admissible. This is consistent with the dicta of Henry Carr J at [4] in Moylett v Geldof [2018] EWHC 893 (Ch) and Thomas LJ (as he then was) at [117] in Secretary of State for Business Enterprise and Regulatory Reform v Aaron [2008] EWCA Civ 1146. This is the approach I adopted.
    2. One of the heads of claim advanced by MMT in its counterclaim relates to costs incurred by MMT as a result of having to switch its banking facilities from April 2015. It had banked, prior to that, with Bank of Scotland. Given its financial predicament, once the payment (in gross terms, £9.1 million) due from ICI under the decision in Adjudication No.1 was banked, that Bank immediately withdrew all of MMT’s credit facilities. The overdraft facility previously available had been £4 million. Mr Wells gave cogent evidence on this subject in the liability trial. MMT then (and after some time) managed to switch to Santander, but on less beneficial terms.
    3. Mr Thompson dealt with this in Section 22 of his report. Statements demonstrating Mr Thompson taking a partisan stance on matters of fact pepper his report, for example at paragraph 22.2 where he stated “it is not evident to me how these costs are linked to the repudiation”. At paragraph 22.7 he stated “MMT claims that Bank of Scotland made the decision because of ICI’s repudiation of the Contract” and at paragraph 22.12 “Without further disclosure, it is unclear to me whether the repudiation on 17 February 2015 was the reason for Bank of Scotland deciding to review its facility with the Merit Group……”
    4. This evidence from an expert who is supposed to be independent is wholly surprising. Firstly, it is taking a view on the facts. Secondly, however, and more important, this specific point was the subject of a specific finding in the liability judgment at [55], when dealing with the consequences of MMT being required to leave the site and the effects of that when I found:
“It was undoubtedly a major reason for MMT’s bank to withdraw its borrowing facilities the moment that the money from ICI in satisfaction of Adjudicator’s Decision No.1 was banked”.
    1. Mr Thompson was asked in cross-examination about this wholesale ignoring of the liability judgment. He accepted that he had been given the judgment, said he had read it carefully, thought it “might” be binding, but said that he had read it towards the beginning of performing his exercise. When [55] of the judgment was put to him, he said he had forgotten the detail of it. The exact question and answer was as follows:
“Q: So you read that, but then you put it to one side and your thirst for knowledge about accounting matters caused you to forget the detail of it, is that what happened?
A. Yes.”
    1. He explained in his own words “I read the judgment, but that was at the start of the case, and the instructions were to look at the heads of the counterclaim made — pleaded by MMT and to assist the court from an accountant’s perspective in those heads of counterclaim.”
    2. There are other examples of his wholly unhelpful approach, and the way in which his report approached the issues presented for him to deal with a partisan way. He completely omitted to deal with the fact that following the proposed CVA in early 2015 (and before receipt of the funds from ICI paid under the decision in Adjudication No.1) MMT’s ability to institute adjudications on other projects was directly and obviously damaged as a result of the principles applied by the court on enforcement in respect of companies whose financial situation has significantly deteriorated. He produced a graph of MMT’s financial position, heavily relied upon by Mr Bowdery, that had completely omitted to identify that between March and May 2015 MMT had no overdraft facilities whatsoever. He commented on an internal email that he found in disclosure dated 13 December 2016 from Mr Mills to Mr Wells and Mr McGrady (and others) and stated in conclusion:
“I understand this paragraph to say that following ICI’s payment of £9.1 million on 17 March 2015, the cash flow position had been resolved.”
    1. This conclusion was not an accurate summary of the email, was directly contrary to the findings in the liability judgment, and was directly contrary to the evidence being adduced by MMT by its factual witnesses. Expert witnesses should not embark upon such primary challenges to the facts. If there are two versions of the facts, experts should consider them both. They should not choose which version is correct; that is the function of the court.
    2. Mr Thompson has been subject to judicial criticism before. In Genesisuk.net Ltd v Allianz Insurance Ltd [2014] EWHC 3676 (QB) he was said by HHJ Mackie QC to have ignored the business context of certain accounting issues and presented an “over-optimistic picture”. This was put to Mr Thompson who said that this was not a fair criticism. Simply because an expert has been criticised by a court before does not mean that they cannot give reliable and helpful independent evidence in other cases, of course. However, this previous judgment demonstrates two things. Firstly, that Mr Thompson had presented a one-sided picture before, favouring one party over another. Secondly, the criticism that he had done so had not led to him changing his approach. Judges do not lightly criticise independent experts. If criticism is made, in whatever terms, the expert in question ought to review matters and reconsider their approach. If criticism by an impartial tribunal is simply dismissed as “unfair”, then remediation of an expert’s approach is unlikely to occur, with, as here, presentation of evidence to the court in future cases that remains partisan.
    3. Another aspect of his evidence that was, rightly in my judgment, heavily criticised by Mr Mort was his direct factual inaccuracy concerning his opposite number. He recited in paragraph 1.22 of his report that “Mrs Barker agreed that further information was needed to fulfil her own instructions…” The accurate situation was rather the opposite to this. Mr Thompson took some time to arrive at his eventual answer on this point, but the final relevant passages of his cross-examination were as follows:
“Q: So what you mean, Mr Thompson, is that it is your opinion that Ms Barker does not have the information she needs to fulfil her instructions. This is not something she has agreed, it is your assessment.
A. Not in words in the joint statements, but I felt it was implicit for us having to pursue further information to do the work. What we were doing at the time of the joint statement is working consensually. We had, you know — I think we had four calls. And what I wanted to do as part of the joint statement process in fact was to agree with her an additional disclosure request, so we could exercise some proportionality as to what information we needed. But given that the joint statement was before we did our reports, I felt, and I think Ms Barker would agree, that it formed an important part of the process in getting to what information we’d need to fulfil our report. I wanted to agree with her an additional disclosure request, but because of her instructions she wouldn’t agree with me.
    1. This shows that, directly contrary to what Mr Thompson expressly stated in his report, he knew (because the Joint Statement came before the reports) that he wanted to agree this with Mrs Barker, but she “wouldn’t agree with him”. Quite how that was then changed by him into an express statement in his report that she did agree with him is unclear, remarkable, highly regrettable, and simply a demonstration of the further lack of reliability of his evidence. One expert should not misrepresent the views of their opposite number in such a way.
    2. Finally, Mr Thompson was not helped by the lack of communication to him from ICI’s solicitors about potential further documentation he could review. In a letter dated 3 January 2018 MMT’s solicitors explained, in relation to a request by Clyde & Co for a very considerable quantity of documentation:
“It is a massive and disproportionate task for our client to extract thousands of invoices and applications for payment to match the project across a detailed report. If your client would like to visit our client’s office in order to spot check and audit the project cost detailed report, then facilities can be made available.”
    1. This offer was never communicated to Mr Thompson, who was unaware it had been made.
Mrs Barker
    1. The expert accountant called by MMT was Mrs Barker. She is a partner in KPMG and is a Fellow of the Institute of Chartered Accountants. She has been an accountant for 23 years and has worked in the Forensic Accounting team for 20 years. She is now the Head of KPMG Forensic in the North of England.
    2. Her approach was far more balanced and independent than that of Mr Thompson. She simply made assumptions that both the CVA and the liquidation of MMT were caused by the repudiation, and expressly made those assumptions clear in her report. She did not take a position on disputed matters of fact.
    3. Mr Bowdery sought to challenge her independence by pointing out that a different department of KPMG had advised MMT at one stage in relation to financial restructuring, and fees in respect of this formed part of the counterclaim. Mrs Barker wholly satisfied me that this did not affect her independence, and that she had had nothing to do with that aspect of the case. Effectively there was a Chinese wall between the financial restructuring department and the one in which she was involved. Mr Bowdery sought to elevate this to her having a conflict of interest. Given the size of KPMG and the way that she had approached her task – as was clearly shown in her report itself – I consider this to be a weak point. He also relied upon the fact that she had provided some advice to Mr McGrady on the way the management time claim should be structured; she explained that this consisted of an explanation of how such a claim should be presented, the giving of examples to him of other claims in other cases. I do not accept that this involvement by her casts any shadow on her conclusions, or her independence.
    4. The difference between the parties’ approach to their respective accountants’ exercises can be shown from the way that Mrs Barker was criticised in her cross-examination for not doing the same as Mr Thompson had done, so far as taking a position on factual causation was concerned:
“Q: But if one is investigating as to what caused MMT to go into liquidation, one does need to look at their financial position.
A. I haven’t been asked to investigate why MMT had gone into liquidation. I was told to assume that MMT had gone into liquidation as a consequence of the repudiatory breach.”
  1. This demonstrates the gulf between the two parties on this issue. I prefer the approach of Ms Barker (and MMT, in terms of instructions) in this respect, which is entirely conventional, in line with the expert accountancy issues as presented to the court when permission was sought, and orthodox.
  2. I also prefer the expert evidence of Mrs Barker to that of Mr Thompson. Her evidence did not suffer from any of the structural defects of her opposite number, was not given from a partisan standpoint, and appeared to be entirely in keeping with the principles of expert evidence and the fulfilment of her duties to the court. In all instances therefore, where their evidence does not align, I prefer her expert evidence.
    1. There is one further matter. I have considered each of the expert disciplines separately, and specifically not allowed my conclusion on any expert to impact upon my assessment of the evidence of any of other others in this respect, which has been reached independently of my conclusions on others. It is, however, the case that my considered conclusion on each of ICI’s experts is that their evidence is not sufficiently independent of the party who has instructed them, and that the evidence of their opposite numbers is to be preferred.
    2. This happens to match my broad conclusion on Mr Millwood, one of the ICI welding experts in the liability trial, in respect of whom I said at [74] that “an expert’s role is not to decide issues of fact themselves, and choose what facts to believe and what not to believe”. I also criticised him for attempting to construct a case on reliance by ICI upon MMT, which was not even pleaded. Other criticisms of both of the ICI’s technical experts in that trial are at [71] to [86] in the liability judgment. It cannot pass unremarked that all four of the different experts called to substantiate ICI’s case in these proceedings have all been found to have been lacking in independence. That number excludes, for obvious reasons, Mr Brownlee, who although professionally qualified, was not called as an expert but as a witness of fact.
    3. I do not know whether this preponderance of lack of independence on the part of a number of experts called by ICI is a coincidence. If it is a coincidence, it is a remarkable one. Whether it is coincidental or not, of those involved at the time, one important independent (in the sense of not being an officer or employee of either MMT or ICI) person involved in the project was Mr Barton. His views, which have the evidential weight that I have explained, have been roundly ignored by ICI and by ICI’s experts. The circumstances of Mr Barton’s departure from the project have been dealt with fully. The only other independent evidence is from MMT’s experts.
    4. It is also a matter of concern that in a TCC case, with the sums are stake exceeding 10 million, there should be such a preponderance of partisan experts, all called by the same party. In Bank of Ireland v Watts Group plc [2017] EWHC 1667 (TCC) Coulson J (as he then was) stated the following:
“69. ….In my view, this was yet further evidence of unreasonableness, an expert insisting on making criticisms which the Bank have deliberately chosen not to plead.
70. The duties of an independent expert are set out in the well-known passages of the judgment in The Ikarian Reefer [2000] 1 WLR 603. For the reasons set out above, Mr Vosser did not comply with those duties and I was not confident that he was aware of them or had had them explained. For him, it might be said that The Ikarian Reefer was a ship that passed in the night.”
    1. The principles that govern expert evidence must be carefully adhered to, both by the experts themselves, and the legal advisers who instruct them. If experts are unaware of these principles, they must have them explained to them by their instructing solicitors. This applies regardless of the amounts at stake in any particular case, and is a foundation stone of expert evidence. There is a lengthy practice direction to CPR Part 35, Practice Direction 35. Every expert should read it. In order to emphasise this point to experts in future cases, the following points ought to be borne in mind. These do not dilute, or change, the approach in The Ikarian Reefer. They are examples of the application of those principles in practice.
1. Experts of like discipline should have access to the same material. No party should provide its own independent expert with material which is not made available to his or her opposite number.
2. Where there is an issue, or are issues, of fact which are relevant to the opinion of an independent expert on any particular matter upon which they will be giving their opinion, it is not the place of an independent expert to identify which version of the facts they prefer. That is a matter for the court.
3. Experts should not take a partisan stance on interlocutory applications to the court by a particular party (almost invariably the party who has instructed them). This is not to say that a party cannot apply for disclosure of documents which its expert has said he or she requires. However, the CPR provides a comprehensive code and it may be that disclosure is not ordered for reasons of disproportionality. However, if documents are considered to be necessary, and they are not available (for whatever reason), then an opinion in a report can be qualified to that extent.
4. The process of experts meeting under CPR Part 35.12, discussing the case and producing an agreement (where possible) is an important one. It is meant to be a constructive and co-operative process. It is governed by the CPR, which means that the Overriding Objective should be considered to apply. This requires the parties (and their experts) to save expense and deal with the case in a proportionate way.
5. Where late material emerges close to a trial, and if any expert considers that is going to lead to further analysis, consideration or testing, notice of this should be given to that expert’s opposite number as soon as possible. Save in exceptional circumstances where it is unavoidable, no expert should produce a further report actually during a trial that takes the opposing party completely by surprise.
6. No expert should allow the necessary adherence to the principles in The Ikarian Reefer to be loosened.
It is to be hoped that expert evidence such as that called by ICI in this case, and also in Bank of Ireland v Watts Group plc, does not become part of a worrying trend in this respect. There are some jurisdictions where partisan expert evidence is the norm. For the avoidance of any doubt, this jurisdiction is not one of them. Not only experts, but the legal advisers who instruct them, should take very careful note of the principles which govern expert evidence.

 

THE JUDGE’S FINAL WORDS

  1. This judgment may not be the final act in this long-running and bitter dispute. It is, however, the sixth first-instance judgment concerning this matter, and, one hopes, the last. This litigation also stands as something of an advertisement for adjudication. The amount of the MMT account for the works, finally determined after the expenditure of legal and experts’ fees measured in millions of pounds, is barely 1% more than the amount awarded to MMT in the adjudications. The issue of who repudiated the contract was resolved in the litigation in the liability judgment with the same result as that given by the adjudicator in the 3rd adjudication. The only outstanding matters now are interest and costs. I will refrain from expressing the naïve hope that these matters might, perhaps, be agreed.