THE ASSESSMENT OF EXPERT WITNESS CREDIBILITY: THE EARLIER THE BETTER (PARTICULARLY IF IT COSTS SOMEONE £7.5 MILLION)

The judgment of Mr Justice Snowden in  Davey v Money & Anor [2019] EWHC 997 (Ch) will, no doubt, be read anxiously by all litigation funders. The judge held that the “Arkin cap” – a limit on the liability of funders to contribute to adverse costs orders – should not apply. The funders were found liable to pay the costs estimated at £7.5 million rather than simply the £1,275,166.34 it had contributed to funding the costs of the unsuccessful party.  However that judgment also contains an issue of considerable relevance to virtually all litigators – the treatment of expert evidence. In particular the manifest dangers of failing to scrutinise you own expert evidence.  There are numerous posts on this blog discussing cases where the evidence of experts has been found wanting, and sometimes considerably more than that.  The Davey case provides an insight into the dangers of failing to scrutinise expert evidence in care.

THE CASE

The claimant brought an action against administrators of a company and of Dunbar Assets plc.   The allegations were tantamount to allegations of dishonesty. All of those allegations were roundly rejected at trial.

THE EXPERT EVIDENCE

The unusual aspect of this case is that this judgment gives us an insight into the view that the legal team were taking on the expert evidence as to valuation prior to trial

1. In his opinion [leading counsel for the claimant] noted that a proper assessment of quantum could not be made until after receipt of expert evidence from Dunbar and the Administrators. However, [leading counsel] plainly regarded as credible the expert opinion of Ms. Davey’s expert, Mr. Wolfenden, that the true value of Angel House at the time of its sale was between £31.6 million and £43.6 million (depending on the grant of planning permission). Mr. Wolfenden had also suggested that even allowing for the fact that in order to procure funding for her attempt to rescue AHDL, Ms. Davey had agreed to part with 50% of the shares in AHDL to her putative backer, a Mr. Bernard Eastwood, Ms. Davey’s losses from the alleged rejection of her funded rescue could have been as high as £49 million.

This view was repeated later where leading counsel   “also repeated his views on the quantum of the claims, describing Mr. Wolfenden’s valuation report as, on its face, well-prepared and fully-reasoned.”

THE JUDGE’S ASSESSMENT OF THE EXPERT EVIDENCE AT TRIAL

This is a rare case where we can contrast the know views of the claimant’s legal team prior to trial with the judge’s assessment of that expert.

Paul Wolfenden

1. Mr. Wolfenden is a chartered surveyor, a Fellow of the Royal Institution of Chartered Surveyors and the principal of an eponymous real estate advisory business. He was previously employed as a director of DTZ, and was a consultant to a newly formed firm of commercial real estate advisers that acquired the trading name of John D. Wood in 2009 after the collapse of the long-established firm of the same name. He was instructed by Ms. Davey’s solicitors to give his opinion on the marketing and value of Angel House.

2. Whilst there were some aspects of his evidence that I thought were helpful, I regret that I did not find Mr. Wolfenden to be a satisfactory expert witness. The tenor of his reports and many of his answers in cross-examination seemed to me to be designed to advance Ms. Davey’s case rather than give independent evidence. Mr. Wolfenden was also rather inaccurate and at times (for example in relation to his use of comparables) his evidence as to his method and sources was very vague. Moreover, as I shall explain later in this judgment, some of his critical opinions, for example as to the price per square foot (psf) that might be achieved for sale of completed residential flats after redevelopment of Angel House, seemed to be entirely subjective and not supported by adequate objective evidence or explanation. As I shall explain, he also made a significant error in his report in this regard which he then sought to justify on other grounds.

And later in the judgment.

1. I was not impressed by that evidence from Mr. Wolfenden. He seemed very dogmatic and unwilling to explain his views, and his evidence concerning Capital & Oriental was simply wrong. Although Capital & Oriental had not been on APAM’s “soft marketing” list, representatives of Capital & Oriental had been in contact with APAM in early October 2013 to express interest in Angel House, Mr. Money then met Mr. Connaughton on 15 October 2013, and Capital & Oriental was included in APAM’s Targeted Parties List.

THE NEED FOR CAREFUL SCRUTINY OF YOUR OWN EXPERT EVIDENCE

The point here is not that the lawyers for the claimant were wrong in their assessment of their expert evidence. Such a point can probably be made in 95% of the cases that end up at trial where experts are involved. Every practising litigator is going to have to make judgment calls in relation to expert evidence, and this judgment will not always be right.

The point is that many cases are heavily reliant on expert evidence. In cases involving valuation that evidence is often central to the case.   There are still a regular number of cases where the expert evidence is found severely wanting, or not “expert” evidence at all.

ANOTHER EXAMPLE

In Devon Commercial Property Ltd v Barnett & Anor [2019] EWHC 700 (Ch) the judge noted that the claimant’s valuer went far outside his area of expertise.

Mr Neason’s approach to its valuation is to assess the level of special value by reference to how much it might have been worth to Aston Manor. This leads him to give an opinion about the strength of the cider market, something which (as I say) lies outside his expertise. For example, in paragraph 11.46 of his first report, he says

“There is sufficient published information relating to the growth of the cider market from 2010 onwards, details of some of which is attached at the Appendix 7, to suggest that there would have been demand from this sector of the market.”

Moreover, he has gathered information relevant to this question by himself, using the Internet. His conclusion, “to suggest that there would have been demand” (emphasis supplied) is in any event weak. But in my judgment, so far as Mr Neason’s opinion on the level of special value depends upon the strength of the cider market, in suggesting how much cider companies might be prepared to pay for premises such as the Property, it is simply inadmissible

The judgment went on, in relation to that expert’s evidence.

“To admit that there is no evidence, but nevertheless to assert that a reasonable figure “could have been in the region of X”, is just not the language of valuation. Instead, it looks to me like guesswork”

“In the light of these matters, I do not think that I can place any reliance on Mr Neason’s opinion evidence of valuation at all. It is based on a false premise, partly inadmissible, partly unsupported by appropriate reasoning, and in its conclusions frankly incredible”

SO A LITIGATOR SHOULD NEVER TAKE AN EXPERT REPORT AT FACE VALUE

A careful assessment is needed of (i) the expert’s actual expertise; (ii) whether the report is within that level and area of expertise; (iii) whether the report is based on facts that are both admissible and credible.  As these cases show a failure to scrutinise your own expert evidence  with care can lead to expensive (and fruitless) litigation.    Expert “credibility”, like witness credibility,  is not a matter of honesty or competence. It is a question of assessing the report in the light of the scrutiny that it will undergo at trial, and the view that the judge is likely to take.