AN EXPERT WITH A CONFLICT OF INTEREST: SHOULD NEVER HAVE BEEN INSTRUCTED

I am giving a webinar on the 29th June 2020 on the Perils and Pitfalls of Expert Evidence.  I have not found that there is any shortage of material.  That material is added to in the judgment of Mr Justice Pepperall in Essex County Council v UBB Waste (Essex) Ltd [2020] EWHC 1581 (TCC). The judge found that the expert was not “independent”, had been involved in the project that was under dispute

 

“… there was no excuse for failing properly to disclose the conflict of interest.”

THE CASE

The claimant local authority brought an action relating to the design and building of  a treatment plant. Each party called expert evidence on various points. The judge commented, specifically, on one expert who was called by the defendant.

THE JUDGMENT ON THE EXPERT WITNESS

The judge observed that an expert called on behalf of the defendant had a major conflict of interest.

DR JOHN WEATHERBY
  1. UBB called Dr John Weatherby in respect of all three technical issues. He is the managing director of Fichtner Consulting Engineers Limited and is plainly expert in the design, construction and operation of waste treatment facilities. Marcus Taverner QC, leading counsel for the Authority, argues, however, that there are substantial questions as to Dr Weatherby’s independence, impartiality and objectivity.
  1. Dr Weatherby’s company had a number of dealings with UBB upon this project:
46.1     Pre-contract: In May 2012, Fichtner was engaged to advise UBB upon the obligations and risks that it would assume under the contract. Specifically, Fichtner advised that UBB should ensure that proper allowance was made in the commissioning programme for the time taken to receive laboratory results from the BMc test method. No other concern was then raised about the BMc test.
46.2     Design advice:
  1. a)Dr Weatherby accepted in cross-examination that, post-contract, Fichtner had a “relatively substantial role in assisting UBB in the construction of the facility” between 2012 and 2014.  Indeed, a Fichtner employee, Andrew Wheeler, was seconded to work on the Essex project within UBB in 2013-4. Dr Weatherby could not place a precise value on Fichtner’s work but said that it would have run to hundreds of thousands of pounds.
  2. b)One particular aspect of Fichtner’s work was advising on the design interface between UBB’s various sub-contractors.
46.3     Revised MS17:
  1. a)In May 2017, Dr Weatherby provided consultancy input in respect of the redrafting of MS17. In doing so, he advised UBB upon the arguments that could be deployed.
  2. b)Subsequently, Dr Weatherby provided two expert reports on 31 August and 14 September 2017 in respect of the efficacy of the modifications to MS17 without disclosing his own role in its drafting.
46.4      Compost-like output:
  1. a)UBB has proposed that it could separate out the fine fraction from the SRF and dispose of it as compost-like output (“CLO”). It argues that it can thereby increase the level of recyclates.
    1. b)The proposed diversion of CLO was Dr Weatherby’s idea as,  in fairness, both he and Mr Faraldo make plain in their evidence. Nevertheless, Dr Weatherby has then proceeded to give expert evidence upon his own proposal.
  1. On 7 July 2015, UBB’s sister company wrote a pre-action letter to Fichtner asking that the company notify its professional indemnity insurers in respect of a likely claim arising out of its consultancy work on the Essex project. Specifically, it alleged:
“We consider that you may be responsible for defective design checking and or design validation at the facility and in part, responsible for the delays or remedial improvements necessary thereto.”
  1. The receipt of such a letter was unusual. Dr Weatherby told me that the company had traded since 1991 and never had an actual claim against it. He said that the company had received other similar letters but it was very rare. He estimated that there might have been fewer than five such occasions in 28 years of trading. On 13 July 2015, Dr Weatherby personally signed Fichtner’s reply. Dr Weatherby told me in his evidence that the receipt of the claim letter was a “big worry” but that Fichtner never received any further correspondence about the possible claim.
  1. In February 2016, UBB was in discussion with Dr Weatherby about his potential instruction as an expert. Mark Ashby of Balfour Beatty set up a telephone conference call with Dr Weatherby for 26 February together with Simon Ramsden of Norton Rose Fulbright  and representatives of Urbaser and UBB. In doing so, he recorded:
“I have discussed with John the value of his, and Fichtner’s, experience and views on the equivalency of LOI and BMc in determining BMW reduction, contrasting the merits of LOI with the demerits of BMc, and values comparator and alternative UK plants are managing to achieve with the same input waste streams.”
  1. On the evening of 25 February, Chris McCarthy of Urbaser expressed his enthusiasm for the instruction in his email to Mr Faraldo:
“I don’t know if Mark spoke to you about this but [Balfour Beatty] told us this morning that they had contacted Fichtner and that John Weatherby was apparently willing to do down BMc more than ORA and Motts have to date. If true, then we’re going to engage him and get him to add his views to the report.”
  1. Dr Weatherby denied that he would have used such loose language, but I am satisfied from the overall email thread that he had already indicated that he would be able to assist with expert evidence criticising BMc while promoting LOI as a more accurate test. Indeed, that is ultimately what he did. I note, with concern, that the thread was entitled “LOI Advocacy Telephone Conference”, but it appears that such title was ascribed to the thread by Mr Ashby.
  1. In any event, it appears that Dr Weatherby gave some indication as to his views on the merits of the LOI test and the problems with the BMc test both in discussion with Mr Ashby and then in the telephone conference call on 26 February. Its appetite whetted, UBB decided to retain Dr Weatherby as its expert. Dr Weatherby responded that he understood that his instruction would be to “provide some independent comment or evidence on why I consider the BMc test impractical and why the LOI method would be better.” He then referred to the claim letter:
“Lastly I would like some sort of statement from UBB regarding your claim letter. Whilst I understand this came from UBB EPC, not UBB SPV, we have had no further information from UBB since it was issued months ago. The letter itself was rather peremptory considering we considered we have a good relationship with you, even though I suspect the letter itself was dictated by your insurers. Notwithstanding this, if you want to use us to support you further, I would like the letter to be withdrawn, or at least a clear explanation of the current standing of the letter.”
  1. Subsequent emails clearly linked Dr Weatherby’s willingness to act an expert witness with UBB’s position in respect of the claim. The issue was considered internally by UBB who observed that Dr Weatherby was “unsurprisingly using [Fichtner’s input on the LOI issue] as leverage.” By a further email sent on 4 March 2016, Dr Weatherby sought an assurance that there was “no firm claim on the table against [Fichtner] currently.” He indicated that upon receipt of such assurance, Fichtner would be able to assist and that a call had been arranged for later that day. Ultimately an assurance was given that there was no current claim against Fichtner, but the company plainly remained vulnerable to a potential claim.
  1. These are, in my judgment, obvious and serious conflicts of interest:
54.1     First, Dr Weatherby should have recognised that the substantial role played by Fichtner on this very project over an extended period of time during which his company billed many hundreds of thousands of pounds was itself a conflict of interest.
54.2     Secondly, in respect of his work on MS17 and his advice on CLO, Dr Weatherby failed properly to differentiate between the provision of consultancy services to a client and the provision of independent expert evidence. He failed to appreciate the difficulty in both devising UBB’s strategy and then offering expert opinion evidence upon such strategy.
54.3     Thirdly, while Dr Weatherby was right to conclude that it would have been inappropriate to have acted as an expert while subject to an actual claim in respect of Fichtner’s consultancy work on the project, he ought also to have identified that UBB’s agreement that there was no current claim did not resolve the problem:
  1. a)The express linkage between UBB’s agreement that there was no current claim and Dr Weatherby’s willingness to give expert evidence supportive of UBB inevitably raises the question of whether Dr Weatherby’s evidence is independent, impartial and objective, or whether he has adopted positions in order to please UBB.
  2. b)In any event, the remaining possibility of a claim against Fichtner means that it is in the company’s interests – and therefore in Dr Weatherby’s interests as a significant shareholder in the company – to defeat the Authority’s claims against UBB.
  1. Dr Weatherby and UBB should each have recognised that he was conflicted. Prudence dictated that the instruction should either have been withdrawn or refused. Upon deciding instead that it could proceed, there was no excuse for failing properly to disclose the conflict of interest. Instead, Dr Weatherby wrote seven expert reports for use in adjudications and his main report in this litigation before the matter of the claim was first disclosed in his reply report on 15 March 2019. Further, he failed to disclose the claim when questioned about his independence by Kim Franklin QC in April 2017 in the context of adjudication number 3. Dr Weatherby’s failure to understand and declare the problem inevitably causes further concern that he does not really understand either the difference between acting as a consultant advising a client and acting as an independent, impartial and objective expert, or his duty to the court.
  1. Had the full extent of the conflict been identified at a case management conference, I doubt whether permission would have been given to UBB to rely upon Dr Weatherby’s evidence. Equally, it would have been open to the Authority to raise the question of the admissibility of Dr Weatherby’s evidence. Against that, it would no doubt have been argued – as UBB now argues – that in reality there are very few experts in this field and that since Mott MacDonald was conflicted, UBB had little choice but to call Dr Weatherby. I accept the broad submission that there is a small pool of potential experts and that one should not therefore be overly precious simply because Dr Weatherby had previous dealings with the usual lenders and with Urbaser. There is, however, no evidence before me that UBB could not have found someone without any connections to this project.
  1. I decline, however, simply to exclude Dr Weatherby’s evidence on the basis of admissibility at this late stage. Nevertheless, I treat his evidence with caution. Indeed, my concerns that he has failed properly to distinguish between advocacy for a client and the rigour required when acting as an independent expert are fortified by a number of matters:
57.1     First, even without knowledge of the full extent of the conflict, Ms Franklin observed that Dr Weatherby tended to act as an advocate for UBB and that she was “struck by how readily [he] seeks to undermine [Essex’s case on an issue] on the basis of argument and supposition, unsupported by facts.”
57.2     Secondly, Dr Weatherby adopted a position on the density issue that I would not expect an independent and objective expert to take. He reported at paragraph 1.16.1 of his report:
“I agreed that bulk density of the material fed to the biohalls is significantly lower than the design basis of 0.55 t/m3. The consequence of this is that the biohalls cannot process the design throughput of the Facility without using the Quick SRF line which means part of the material bypasses the biohalls. I do not consider that this falls short of Good Industry Practice. I base this conclusion on the fact that the design was provided by Taim Weser, a leading supplier of this type of equipment, and reviewed by UBB, AEA-Ricardo on behalf of the Authority and Mott Macdonald on behalf of the lenders. None of these experienced companies raised issues with the design assumption at the time. Moreover, the bulk density is affected by the waste composition and the composition of the waste currently processed is significantly different from the design waste composition.”
57.3     Thirdly, I was unimpressed by his refusal to accept that the BMW reduction guarantee appeared to have been bid in error.
57.4     Fourthly, I would not have expected an independent and objective expert to refuse to accept that the evidence suggested that the BMW reduction guarantee was not achievable. Indeed, I was unimpressed with his claim that he simply could not offer a view on the issue.
57.5     Fifthly, I was unimpressed with his assertion that the Throughput Test had been passed during the Quasi-Acceptance Tests (“QATs”) if one can include the QSRF in the measurement of Throughput. As discussed below, on proper analysis the required tonnage had not been achieved in accordance with the contractual limitations on days and hours of operation. Further, the Throughput Test is only passed if the required tonnage is processed in accordance with the performance guarantees. It patently was not.