IS AN EXPERT REALLY NECESSARY? TWO RECENT CASES

December 6, 2015 · by · in Civil evidence, Civil Procedure, Credibility of experts, Expert evidence, Experts, Uncategorized

The determination of the courts to restrict the use of expert evidence can be seen by the fact that the text of CPR 35.1 appears under the heading “duty to restrict expert evidence“. The rule itself states “Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings“. This test has been considered in two recent cases. Both provide a useful summary of the tests for considering whether expert evidence should be permitted.

“I am also concerned that, if unrestrained, there is a real risk that experts will provide swathes of commentary on each communication passing between the parties, giving their own slant or interpretation of what happened and what ought or ought not to have been advised: see the passage from Aikens J in J P Morgan cited above. That must not happen in this case. If evidence of that sort is provided, the Court will be able to make adverse orders for costs, even on an indemnity basis, against the party seeking to rely on such evidence.”
“There is a natural tendency of parties and their advisors to consider employing experts to assist in digesting this material, particularly if it relates to any area that might be recondite, such as trading in Russian debt in the 1990s. There is a tendency to think that a judge will be assisted by expert evidence in any area of fact that appears to be outside the ‘normal’ experience of a Commercial Court judge. The result is that, all too often, the judge is submerged in expert reports which are long, complicated and which stray far outside the particular issue that may be relevant to the case. Production of such expert reports is expensive, time-consuming and may ultimately be counter-productive. That is precisely why CPR Pt 35.1 exists. In my view it is the duty of parties, particularly those involved in large scale commercial litigation, to ensure that they adhere to both the letter and spirit of that rule. And it is the duty of the court, even if only for its own protection, to reject firmly all expert evidence that is not reasonably required to resolve the proceedings.”

KEY POINTS

  1. It is for the court, not the parties, to determine whether expert evidence is necessary.
  2. The first question is whether there is, in fact, a body of expertise which will assist the court. Without this any evidence is not admissible.
  3. If there is a body of expertise then the burden is on the party applying to satisfy the court that the expert evidence is reasonably required to resolve the proceedings.
  4. The court considers whether the evidence is “necessary”.
  5. If it is not “necessary” the court then considers whether it is “reasonably required”.

PRACTICE POINTS

  • These cases demonstrate the need for a party applying for permission to adduce expert evidence to put forward a case showing that there is a body of expertise.
  • The applicant must then go on to show why the evidence is “necessary” or is “reasonably required”.
  • Although it does not appear to be mentioned in these two cases the courts are also considered with issues of proportionality. CPR 35.4(2) imposes an obligation to provide an estimate of the costs of the proposed expert when making an application for permission.

THE RBS RIGHTS ISSUE LITIGATION

The issue was whether the “Investment Information/Equity Analysis” expert evidence was required.

THE TEST TO BE APPLIED

Mr Justice Hildyard (sitting with Chief Master Marsh) considered the relevant test, in the RBS Rights Issue Litigation [2015] EWHC 3433.

“Test to be applied
  1. Even where the parties are agreed, and a fortiori when they are not, it is for the Court to determine whether to give permission for particular expert evidence.
  2. The test to be applied is set out in CPR 35.1 which is headed “Duty to restrict expert evidence” and is in mandatory terms. There are two elements: (i) is the evidence admissible, and (ii) is the evidence reasonably required to resolve the proceedings?
  3. The Claimants suggest that the answer to both questions is “no”. The Defendants suggest a positive answer to each.
  4. The admissibility of expert evidence (as an exception to the general rule that opinion evidence is inadmissible) was summarised by Evans-Lombe J in Barings Plc v Coopers & Lybrand [2001] PNLR 22, §45 as follows:
“In my judgment the authorities which I have cited above establish the following propositions: expert evidence is admissible under section 3 of the Civil Evidence Act 1972 in any case where the Court accepts that there exists a recognised expertise governed by recognised standards and rules of conduct capable of influencing the Court’s decision on any of the issues which it has to decide and the witness to be called satisfies the Court that he has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of those issues.”
  1. Thus, the first issue is whether there is a recognised body of expertise governed by recognised standards and rules of conduct relevant to the question which the Court has to decide. Unless there is, the Court should decline to admit evidence which ex hypothesi is not evidence of any body of expertise but rather the subjective opinion of the intended witness.
  2. There are two further restrictions:
(1) An expert is not to find facts but to express an expert opinion on the basis of assumed facts (JP Morgan v Springwell [2007] 1 All ER (Comm) 549; [2006] EWHC 2755 (Comm) §21).
(2) An expression of the opinion of what the expert would have done in the hypothetical situation is inadmissible (Midland Bank Trust Company Ltd v Hetts Stubbs & Kemp [1979] 1 Ch 384, 402).
  1. If the evidence is admissible, CPR 35.1 provides:
“Expert evidence shall be restricted to what is reasonably required to resolve the proceedings.“
  1. In determining whether particular evidence is reasonably required a key question will be:
“…whether the subject matter of the opinion is such that a person without instruction or experience in the area of knowledge or human experience would be able to form a sound judgment on the matter without the assistance of witnesses possessing special knowledge or experience in the area.”
See R v Bonython (1984) 38 SASR 45 at 46, cited in JP Morgan Chase v Springwell at [20] and Barings at [38].
  1. The burden of establishing that expert evidence is both (i) admissible and (ii) reasonably required (i.e. not just potentially useful) is on the party which seeks permission to adduce the evidence concerned (see JP Morgan Chase at [19] per Aikens J (as he then was)). He continued (at [23]):
“I should mention one further practical matter, which I think is relevant to large commercial disputes. It is inevitable when there is a dispute between commercial entities that covers a long period of time (as this case does) and concerns a very large sum of money, that a huge amount of documents will have to be considered. There is a natural tendency of parties and their advisors to consider employing experts to assist in digesting this material, particularly if it relates to any area that might be recondite, such as trading in Russian debt in the 1990s. There is a tendency to think that a judge will be assisted by expert evidence in any area of fact that appears to be outside the ‘normal’ experience of a Commercial Court judge. The result is that, all too often, the judge is submerged in expert reports which are long, complicated and which stray far outside the particular issue that may be relevant to the case. Production of such expert reports is expensive, time-consuming and may ultimately be counter-productive. That is precisely why CPR Pt 35.1 exists. In my view it is the duty of parties, particularly those involved in large scale commercial litigation, to ensure that they adhere to both the letter and spirit of that rule. And it is the duty of the court, even if only for its own protection, to reject firmly all expert evidence that is not reasonably required to resolve the proceedings.”
  1. Further, in British Airways Plc v Spencer [2015] EWHC 2477 (Ch) Warren J (at [68]) has recently proposed a three-stage test for the application ofCPR 35.1 which brings out the sliding scale implicit in the assessment of what is “reasonably required”, from the essential to the useful (emphasis as in the original):
“(a) The first question is whether, looking at each issue, it is necessary for there to be expert evidence before that issue can be resolved. If it is necessary, rather than merely helpful, it seems to me that it must be admitted.
(b) If the evidence is not necessary, the second question is whether it would be of assistance to the court in resolving that issue. If it would be of assistance, but not necessary, then the court would be able to determine the issue without it (just as in Mitchell the court would have been able to resolve even the central issue without the expert evidence).
(c) Since, under the scenario in (b) above, the court will be able to resolve the issue without the evidence, the third question is whether, in the context of the proceedings as a whole, expert evidence on that issue is reasonably required to resolve the proceedings. In that case, the sort of questions I have identified in paragraph 63 above will fall to be taken into account. In addition, in the present case, there is the complication that a particular piece of expert evidence may go to more than one pleaded issue, or evidence necessary for one issue may need only slight expansion to cover another issue where it would be of assistance but not necessary.
Further, although CPR 35.1 does not refer to issues, but only to proceedings, if evidence is not reasonably required for resolving any particular issue, it is difficult to see how it could ever be reasonably required for resolving the proceedings. I therefore see a test directed at issues as a filter. That, at least, is an approach which can usefully be adopted.”
  1. As to Warren J’s reference to paragraph 63 in his judgment, he there said this:
“A judgment needs to be made in every case and, in making that judgment, it is relevant to consider whether, on the one hand, the evidence is necessary (in the sense that a decision cannot be made without it) or whether it is of very marginal relevance with the court being well able to decide the issue without it, in which case a balance has to be struck and the proportionality of its admission assessed. In striking that balance, the court should, in my judgment, be prepared to take into account disparate factors including the value of the claim, the effect of a judgment either way on the parties, who is to pay for the commissioning of the evidence on each side and the delay, if any, which the production of such evidence would entail (particularly delay which might result in the vacating of a trial date).”
Competing arguments as to the application of the test and guidelines
  1. In applying these criteria and guidelines to the present case, the starting point is to identify the questions which are ultimately to be resolved by the Court in relation to which it is suggested by the Defendants that (a) there is a recognised body of expertise and (b) in respect of which the relevant evidence is reasonably required
THE OUTCOME IN THE RBS CASE
The judge held that:
  • Equity analysts were unlikely to provide a standard by which the court could safely assess whether the statutory requirements that had to be considered in the case were satisfied.
  • It was not possible at this stage to determine the second test in relation to whether it would be of assistance to the court.

DEFERRING THE ISSUE UNTIL MORE INFORMATION WAS AVAILABLE

  1. I have ultimately concluded that, at least at this stage, and the burden under CPR 35.1 being on them, the Defendants have not justified the admission of the disputed evidence, but that I should permit the Defendants to renew their application, after the other experts have reported, and with a more refined list of questions, and (if they so elect) with a summary statement of what their witness’s evidence would be likely to be. I appreciate that this approach was very much not the Claimants’ preferred course, and the Defendants suggested it only as a “second best”. But I am comforted that it is becoming a not unusual recourse in very complex litigation and before the contours of the case are more clearly defined and the other more undisputedly necessary expert evidence is available: see, for example, the Springwell litigation.

EXPERT EVIDENCE KEPT UNDER CLOSE CONTROL

The principles governing the utility and relevance of expert evidence were considered by Mr Alexander Nissen QC (sitting as a Deputy High Court Judge)  in Wattret -v- Thomas Sands Consulting Limited [2015] EWHC 3455 (TCC)

THE CASE

The claimants brought an action against the defendant claiming negligence and breach of contract in the handling of an arbitration following a building contract.

THE ISSUE IN RELATION TO EXPERT EVIDENCE

The question was whether expert evidence was needed as to the steps that should have been taken by a firm of chartered quantity surveyors acting on the claimants’ behalf during an arbitration. The claimants contended that the situation was akin to an action against a firm of solicitors. There is a long established principle that a court rarely, if ever, hears expert evidence in relation to the duties owed by a solicitor.

THE JUDGE’S REVIEW OF THE LEGAL PRINCIPLES

  1. The burden of proof in relation to the requirement for expert evidence lies with the party seeking permission to adduce it: see JP Morgan Chase Bank v Springwell Navigation Corporation [2006] EWHC 2755 (Comm.) at paragraph 19. On that basis, I invited the Defendant to open the application….
  1. By way of introduction, I can do no better than respectfully adopt paragraphs 21 to 23 of Warren J’s decision in British Airways plc v Spencer[2015] EWHC 2477 (Ch):
“21 The starting point is CPR 35.1. It provides:

‘Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings.’

22 There is an instructive note at para 35.1.1 p 1161 of the White Book which repays reading. I do not propose to set it out at length but note the underlying policy objective of this rule which is to reduce the incidence of inappropriate use of experts to bolster cases. It is also to be noted that the rule refers to evidence required ‘to resolve the proceedings’. It does not refer, as well, to evidence required ‘to resolve any issue within the proceedings’. I will have more to say about this distinction later.
23 In the context of a suggestion that expert evidence is necessary in order to help understand the impact of actuarial considerations on how the Trustees should have acted, it is helpful to bear in mind what Aikens J said in his judgment in JP Morgan Chase v Spingwell at [23]:

‘I should mention one further practical matter, which I think is relevant to large commercial disputes. It is inevitable when there is a dispute between commercial entities that covers a long period of time (as this case does) and concerns a very large sum of money, that a huge amount of documents will have to be considered. There is a natural tendency of parties and their advisors to consider employing experts to assist in digesting this material, particularly if it relates to any area that might be recondite, such as trading in Russian debt in the 1990s. There is a tendency to think that a judge will be assisted by expert evidence in any area of fact that appears to be outside the “normal” experience of a Commercial Court judge. The result is that, all too often, the judge is submerged in expert reports which are long, complicated and which stray far outside the particular issue that may be relevant to the case. Production of such expert reports is expensive, time-consuming and may ultimately be counter-productive. That is precisely why CPR Pt 35.1 exists. In my view it is the duty of parties, particularly those involved in large scale commercial litigation, to ensure that they adhere to both the letter and spirit of that Rule. And it is the duty of the court, even if only for its own protection, to reject firmly all expert evidence that is not reasonably required to resolve the proceedings.'”

  1. At paragraph 68 he added:
“…it is necessary to look at the pleaded issues and, unless and until a particular issue is excluded from consideration under CPR 3.1(2)(k), the court must ask itself the following important questions:
(a) The first question is whether, looking at each issue, it is necessary for there to be expert evidence before that issue can be resolved. If it is necessary, rather than merely helpful, it seems to me that it must be admitted.
(b) If the evidence is not necessary, the second question is whether it would be of assistance to the court in resolving that issue. If it would be of assistance, but not necessary, then the court would be able to determine the issue without it (just as in Mitchell the court would have been able to resolve even the central issue without the expert evidence).
(c) Since, under the scenario in (b) above, the court will be able to resolve the issue without the evidence, the third question is whether, in the context of the proceedings as a whole, expert evidence on that issue is reasonably required to resolve the proceedings.”
  1. In my view it is necessary to have expert evidence in this case. There is authority of long standing which is applicable to cases of professional negligence. I refer particularly to Sansom v Metcalfe Hambleton [1998] PNLR 542 at 549 in which Butler-Sloss LJ said:
“A court should be slow to find a professionally qualified man guilty of a breach of his duty of skill and care towards a client (or third party) without evidence from those within the same profession as to the standard expected on the facts of the case and the failure of the professionally qualified man to measure up to that standard. It is not an absolute rule as Sachs LJ (in Worboys v Acme Investments Ltd[1969] 4 BLR 133 at 139) indicated in his example but unless it is an obvious case, in the absence of the relevant expert evidence, the claim will not be proved.”
  1. As was pointed out by Butler-Sloss LJ, this is not an absolute rule. One example in which expert evidence is not required is if the answer is obvious. Thus, one does not need an expert to provide an opinion that it was negligent to design a house without a front door. It is not suggested that this type of example applies in the present case. Another, more pertinent, example flows from the decision in Bown v Gould & Swayne. In that case the Court of Appeal applied the earlier judgment of Oliver J in Midland Bank Trust Company Ltd v Hett, Stubbs & Kemp [1979] 1 Ch 384. In the Court of Appeal, Simon Brown LJ said:
“Mr Pearce-Higgins submitted that what the solicitors should have done is a matter of practice such as falls into the category of evidence that is properly the subject of admissible expert evidence within Oliver J’s formulation in Midland Bank. That, however, in my judgment, is a fundamental misconception and it underlay all his submissions on the point. What solicitors should properly do in the very particular and highly individualistic circumstances of this case is by no means a matter of practice. It is a matter of law to be resolved by the judge.
Each of the seven respects in which the appellant’s solicitor’s first affidavit sought to contend that expert evidence would assist the court, proves, on analysis, to involve either a question of law or a question of fact. None of those matters can sensibly be regarded as inviting a view as to “some practice in [the solicitors’] profession, some accepted standard of conduct … laid down … or sanctioned by common usage”.
I entirely share the view of the judge below that, on the contrary, the evidence here sought to be adduced falls foul of Oliver J.’s dictum. It would amount to no more than an expression of opinion by the expert, either as to what he himself would have done, which could not assist, or as to what he thinks should have been done, which would have been the very issue for the judge to determine.”
  1. Millett LJ agreed with this and added:
“Good practice in establishing the existence of a right of way is the ordinary machinery of investigating title. That is a matter of law and not practice. It does not require to be established by an expert witness. It is also a question of law whether the purchaser’s solicitor was under a duty to inspect the property….
All these are matters of law, not practice…
If it is necessary to assist the judge to understand the proper machinery for the deduction and investigation of title, the proper way to do it is to cite the textbooks such as Emmett, Farrand, Williams and Dart, if necessary supplemented by Law Society opinions.”
  1. Paragraph 6-008 of Jackson & Powell 7th Edition cites two cases on this point. Archer v Hickmotts [1997] PNLR 318 was a decision in the County Court in which it was held that expert evidence in solicitors’ negligence cases is admissible depending upon the circumstances and context in which it is given and the issues to which it is directed. In May & anor. v Woollcombe Beer & Watts [1999] PNLR 283, HHJ Raymond Jack QC sitting in the High Court, allowed expert evidence in respect of conveyancing practice because there was a lack of guidance on the point from textbooks and the Law Society.
  2. In my view, the exception to be derived from Bown v Gould & Swayne does not apply to the present case. This is not a solicitors’ negligence case. It is a claim against a firm of quantity surveyors. It is true that the Claimants allege that the Defendant held itself out as at least as competent as lawyers but that allegation is pursued in the alternative and may not be proven on the facts. In those circumstances, it will be necessary to judge the Defendant solely by the standard of a reasonably competent quantity surveyor providing dispute resolution services. In respect of its defence to the holding out case, the Defendant does not seek to adduce expert evidence to demonstrate what a reasonably competent solicitor would have done in the circumstances. Had it done so, the question would have arisen as to whether it was necessary to adduce expert evidence and whether the contentions were matters of law or matters of practice. It seems to me that, unlike Bown, they would be largely, if not wholly, matters of practice. However, the Technology and Construction Court is a specialist Court. All its Judges have had considerable experience of dealing with construction disputes and, particularly, arbitrations relating to such disputes. I am quite sure that any Judge trying this case would not need any expert evidence to explain what a lawyer in a construction dispute should do or say. But, for the reasons I have given, that point does not arise.
  3. On the facts of this case, I can see that there may be instances where there may be differences between what a legal practitioner would do or say in a given situation and what a quantity surveyor might do or say. It will suffice to give three examples. In doing so, I make clear that I am making no finding that there is in fact a difference. I am merely identifying examples of situations in which I can see that there may be a difference. The first relates to ATE insurance. The Claimants complain that the Defendant should have alerted them to the existence of ATE insurance or other funding options. It may be that a reasonably competent quantity surveyor engaged in dispute resolution would be less well versed in that type of funding than would be a solicitor. The second example relates to the allegation that the Defendant should have obtained legal advice. By definition, this is not something which a solicitor would have needed to consider. The third example relates to the provision of advice on the merits. When advising on the merits of a final account claim, it may be (depending on the facts) that a quantity surveyor is fulfilling a different function from a lawyer. When advising on the merits, a solicitor will rely on the expert evidence which he has obtained from a quantity surveyor. The solicitor must then take into account his own views on the likelihood of that evidence being accepted from a forensic perspective. On the other hand, the quantity surveyor will be focussed on the valuation aspect of the case. As regards the valuation disputes, he will have a greater understanding of the underlying valuation issues than would a solicitor yet he may be less well placed to provide an independent view on the likelihood of that evidence being accepted from a forensic perspective. It all depends on what he is asked to do.
  4. In all the circumstances, I conclude that expert evidence is necessary. This is a case of professional negligence where evidence from someone in the same professional field is required. But, in any event, there are issues in respect of which the evidence would be of assistance and it is reasonable to require expert evidence to be given in the context of the proceedings as a whole.
THE OUTCOME IN THIS CASE
  1. Nonetheless, I agree with the Claimants’ submission that this evidence should be confined to that which is strictly required.
  2. I have therefore come to the clear conclusion that the appropriate course is to allow expert evidence on condition that it is subject to close control. I am mindful of the Court’s significant experience of dispute resolution in the construction sphere and in respect of which it will not require any assistance. I am also concerned that, if unrestrained, there is a real risk that experts will provide swathes of commentary on each communication passing between the parties, giving their own slant or interpretation of what happened and what ought or ought not to have been advised: see the passage from Aikens J in J P Morgan cited above. That must not happen in this case. If evidence of that sort is provided, the Court will be able to make adverse orders for costs, even on an indemnity basis, against the party seeking to rely on such evidence.
  3. The course I have decided to adopt is to require the Defendant to provide a list of issues by reference to the pleadings which identifies the specific points on which it intends to provide expert evidence and what the relevant question for the expert should be. The focus should obviously be on those points where the standard or duty is said to be different to that which would be applicable to a lawyer engaged in the business of construction disputes since the latter is a matter about which the Court will be familiar. The Claimants will have an opportunity to respond to the list. Thereafter, the parties should endeavour to agree a list. If there remains a disagreement about the scope of expert evidence to be obtained in light of these exchanges then the matter can be referred to the Court for determination on paper. Once the list has been finalised, it will provide an agenda on which the experts can report.
  4. Mr McNae suggested that a list of issues of the type described would serve as the basis for instruction of a single joint expert. In my view, this is not an appropriate case for a single joint expert. This is a claim of significant value and is one in which both parties should have an opportunity to call their own evidence. Whilst both parties accepted that expert evidence would be secondary to the findings of fact, that feature does not mean it will be wholly peripheral. In respect of a given issue it is possible that the evidence could be determinative.
  5. For the reasons given, I will permit expert evidence to be given, subject to the procedural constraints that I have identified.

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