EXPERT EVIDENCE NOT ADMITTED: IT WAS NOT NECESSARY AND TOO COSTLY

It must be disheartening  for parties who get to trial to find that the judge does not think that the “experts” they have  instructed (at great cost) are not regarded by the courts as experts at all.  This is exactly what happened to the litigants in Devon Commercial Property Ltd v Barnett & Anor [2019] EWHC 700 (Ch), where two of the “experts” were held not to hold a “recognised expertise” at all.  The judgment of Master Clark in Davies v Ford & Ors [2020] EWHC 3063 (Ch), not granting permission for expert evidence on an issue,  probably represents a major saving for all the parties concerned.

An important factor is the cost of the evidence.”

 

THE CASE

The claimant had succeeded at a liability trial in showing that the defendants had played a part in diverting the claimant’s waste collection business to another company.  The court was now concerned with the assessment of damages.

The parties had agreed that accountancy evidence was necessary, but could not agree on its scope.

THE SECOND DEFENDANT’S APPLICATION

One of the defendants made an application that a “waste management expert” be instructed.

    1. The application I am now asked to determine is a response to my decision at the first CCMC. The defendants no longer seek to adduce expert accountancy evidence, but evidence from a “waste management consultant” on the following issues:
(1) whether it would have been possible for GBR to continue trading given its regulatory and financial position in early 2011 (and, if so, for what period); and
(2) if GBR had been able to trade, what its net profits would have been by (i) 18 October 2011; and (ii) 1 January 2013.
(“the proposed issues”)
  1. The application was not made by application notice, and there is no formal evidence in support of it. The only evidence before me was the CV of the proposed expert, Stephen Bell, to which I will return. Mr Bell has quoted a fee of £20,000-£25,000 for the preparation of a report, excluding VAT and expenses. He has quoted £30,000 to act as a single joint expert.”

THE RELEVANT PRINCIPLES

The Master reviewed the relevant principles relating to the admissibility of expert evidence and whether that evidence was “reasonably required”.

    1. CPR 35.1 provides:
“Expert evidence shall be restricted to what is reasonably required to resolve the proceedings.”
    1. The first task for the court is to determine whether the proposed issues are issues arising on the statements of case. CPR 35.1 does not refer to issues, but only to proceedings. However, as noted by Warren J in British Airways Plc v Spencer [2015] EWHC 2477 (Ch), [2015] Pens. L.R. 519 at [68], 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.
    2. If the proposed issues do arise on the statements of case, then the next question is whether the evidence is admissible:
(1) Is there a recognised expertise governed by recognised standards and rules of conduct relevant to the proposed issues?; and
(2) Does the expert have sufficient familiarity with and knowledge of the expertise in question to render their opinion potentially of value in resolving any of those issues?
See Barings Plc v Coopers & Lybrand [2001] PNLR 22, at [45].
    1. If the evidence is admissible, then as set out in The RBS Rights Litigation [2015] EWHC 3433 (Ch), the position is as follows.
    2. 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 v Springwell [2007] 1 All ER (Comm) 549; [2006] EWHC 2755 (Comm) 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], Aikens J (as he then was)).
    2. In British Airways Plc v Spencer [2015] EWHC 2477 (Ch) Warren J (at [68]) set out a three-stage test for the application of CPR 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.”
    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).”

APPLYING THAT TEST TO THIS CASE

The Master refused the application for expert evidence on this issue.

    1. I have sent out the parties’ contentions in their statements of case at such length to demonstrate the nature and extent of the issues between them in this part of the claim. They are, in my judgment, primarily factual.
The proposed issues
    1. Issue (1) of the proposed issues reflects issue (e) in the List of Issues and does, in my judgment, arise on the statements of case. The issue of the period for which GBR would have traded does arise on the face of the statements of case, but the defendants’ primary case is that there were a number of insuperable obstacles to GBR trading at all.
    2. As to issue (2), the defendants do allege in the PoD that GBR would not have traded profitably in the period up to 18 October 2011. This is the consequence of, on the defendants’ case, the obstacles to its ability to trade at all. As to GBR’s net profits as at 1 January 2013, again the defendant’s case is that these would have been nil, because GBR would not have been able to trade. In neither case do the defendants attempt to quantify the position; and its case does not require the judge to do so. Indeed, it is difficult to see how the judge (or an expert) could do so, when there are so many different factors capable of affecting GBR’s ability to trade.
The proposed expert
    1. Mr Bell is put forward as an expert who would be able to assist the court in determining (i) whether GBR would have traded at all, and (ii) what its profits would have been by the two dates. His expertise is said to be in the waste management industry.
    2. The only evidence relied upon by the defendants as to this being a recognised body of expertise was the existence of the Chartered Institution of Wastes Management, which is referred to in Mr Bell’s CV and of which he is a member. I have no evidence as the nature and extent of the expertise required to be a member of this body; and its mere existence does not, in my judgment, establish the existence of a recognised expertise governed by recognised standards and rules of conduct.
    3. Turning to Mr Bell himself, he has a BSc in Civil Engineering and a Diploma in Management Studies. He describes himself as having over 30 years’ experience of the waste management industry. Reviewing his CV, the vast majority of his roles have been in providing technical advice and support. I accept he has expertise in the technical aspects of waste management; he does not have and is not put forward as having expertise in accountancy.
Whether the expertise is relevant to the proposed issues
    1. However, the proposed issues are not technical issues. There is no real disagreement between the parties as to the regulatory requirements to be satisfied, and the equipment which GBR would have needed to have traded. The regulatory requirements themselves are matters of environmental law. As to how long it takes to acquire particular permits, this is a matter of fact which could be ascertained by inquiries made of the relevant regulatory authorities, and should be capable of being agreed by the parties.
    2. As to the financial constraints alleged to have prevented GBR from trading, these are also matters as to which Mr Bell’s technical expertise has no relevance. The defendants’ counsel submitted that Mr Bell could give evidence as to whether in waste management businesses, lenders normally require a personal guarantee. This is not, however, an issue on the face of the statements of case; and, in any event, there is no reason to suppose that the relevant banking practice in relation to waste management businesses differs from any other business.
    3. The defendants’ counsel also submitted that Mr Bell could give helpful evidence as to the likely profits which GBR would have made. However, as discussed above, the defendants’ case does not require quantification of those profits. Even if it did, that issue is a marginal one. In addition, Mr Bell’s technical expertise does not, in my judgment, equip him to carry out this task – the relevant expertise would be accountancy expertise.
    4. I am not therefore satisfied that Mr Bell has expertise relevant to the proposed issues, or indeed, that the proposed issues require any expertise for their resolution.
Other factors
    1. Furthermore, if I am wrong about the above, since the evidence is not contended to be necessary, only helpful, it would also be necessary to consider the other factors identified by Warren J in British Airways in determining whether it should be admitted.
    2. An important factor is the cost of the evidence. A single joint expert would not be appropriate for a contentious issue of this type. The figures quoted by Mr Bell are only for his report, and do not include conferences or giving evidence at trial. To this must be added the parties’ lawyers’ costs of instructing their respective experts, considering the expert evidence, and attending trial for the additional time that the expert evidence would take. The likely increase in both sides’ costs if this evidence is permitted would be (as the parties accepted) about £100,000. This is a substantial amount to add to the costs of this part of the claim, where the parties have already agreed a combined sum of about £250,000 for expert evidence; even taking into account the substantial amount claimed (unquantified but well in excess of £1 million). It is also an excessive amount for evidence which at best would relate to a marginal part of the defendants’ case.
Conclusion
  1. For the reasons set out above, therefore, I refuse the application.