EXPERTS IN COURT: THE DUTY TO POINT OUT CONFLICTS OF INTERESTS AND COMPLY WITH THE RULES
There have been a few cases recently where the actions of expert witnesses have come under the spotlight. I am grateful to barrister Henry Bankes-Jones for sending me a copy of the judgment of HHJ Baucher in Arrassey Properties Limited -v- Nelsons Solicitors, a copy of which is available here. ARRASSEY v NELSONS SOLICITORS – Judgment It is a case where the judge sets out the mandatory obligations imposed on an expert witness in some considerable detail. The judge was extremely critical of the expert evidence called on behalf of the claimant. In particular there was a failure to consider and point out a conflict of interest.
“He should have drawn the very conflict he accepted in the witness box to those that instructed him and at the very least specifically identified it in his report. That in itself is a serious failing and causes the court to question the entirety of his evidence and whether he is sufficiently au fait with the CPR 35 provisions. As the notes to the White Book state, it is a matter for the court then to consider the conflict and whether it affects the expert’s evidence and then to give the expert’s evidence whatever weight it can in the circumstances”
THE CASE
The claimant property company brought a claim in negligence against the defendant solicitors. It alleged that the solicitors had been negligent in failing to draw its attention to certain parts of the ground rent terms and that these constituted a “hazard”. The claimant’s action failed. Here we concentrate on the judge’s observation in relation to expert evidence.
A STARK CONTRAST BETWEEN THE TWO EXPERTS
28. On the issue of expert evidence, I consider there was a stark contrast between the two experts. In cross-examination and in his closing submissions, Mr Bankes-Jones, whoappeared on behalf of the defendant, highlighted what he considered to be “misleading and alarming” aspects of Mr Balcombe’s evidence. He referred to a conflict of interest, errors within the joint statement, double-counting, issues on valuation and the failure to check details in the embodiment of Mr Balcombe’s report and the joint statement. I consider there was force in those submissions.
29. I should say at the outset that Mr Balcombe was the claimant’s second expert. Unfortunately, Ms Mariner, also from Strettons, fell seriously ill shortly before the matter was due for trial in December 2021. Thereafter, Mr Balcombe assumed conduct. He was instructed on 8th December 2021 and prepared his report on 24th January 2022. Regretfully, I do not consider that Mr Balcombe attended to the task required in the manner the court is entitled to expect from a Part 35-compliant expert.
THE GUIDANCE GIVEN TO EXPERTS
Pausing here the judge provides a helpful “cut out and keep” guide to the requirements imposed on experts.
30 The starting point for consideration of any expert evidence is the requirements under the CPR which govern the provision of opinion evidence by expert witnesses.
31. CPR 10, so far as material, provides, Sub-section (1):
“An expert’s report must comply with the requirements set out in Practice Direction 35”.
Sub-section (2):
“At the end of an expert’s report, there must be a statement that the expert understands and has complied with their duty to the court”.
Sub-section (3):
“The expert’s report must state the substance of all material instructions, whether written or oral, on the basis of which the report was written”.
32. The notes to the 2022 edition of the White Book state at 10.1 and following:
“Effect of rule. An expert’s report does not serve the same purpose as a statement of case. Its function is to provide opinion evidence, agreeing or disagreeing with allegations which are contained in the claimant’s case and not to advance a party’s case. (See Pacific Biosciences of California Incorporated v Oxford Nanopore Technologies Limited [2018] EWHC 806 Chancery at 46) An expert’s report must comply with the provisions of this rule and the requirements set out in the relevant Practice Direction. (See paragraph 35, Practice Direction 1)
The purpose of the requirement in 35.10(2) is to remind the expert preparing the report that their duty to help the court overrides any obligation to the person from whom they have received instructions or by whom they have been paid. Full compliance with this duty will include ensuring that the report includes everything which the expert regards as being relevant to the opinion which they have expressed and that any matter which would affect the validity of that opinion has been drawn to the attention of the court”.
33. The notes continue:
“Form and content of expert’s report. Practice Direction 35 paragraph 3.1 states that an expert’s report should be addressed to the court and not to the party from whom the expert has received the instructions. The report must deal with the matters itemised in paragraph 3.2 of that Practice Direction. In addition by paragraph 3.2 sub-section (9)(b) it should comply with the guidance in Guidance for the Instruction of Experts in Civil Claims, 2014”.
34. And under “Material Instructions”:
“The requirement that the expert’s report must state the substance of all material instructions, whether written or oral, adds considerably to the value to the court of the expert’s report received. Further, the discipline of reciting instructions serves to reinforce the expert’s overriding duty to the court and ensures that relevant material, whether it supports the case of the party instructing the expert or does not, is before the court so that it can properly carry out its role as trier of fact”.
35. As the notes to the White Book state: “The Practice Direction provides further guidance and again so far as material provides:
“Expert evidence, general requirements, 2.1. Expert evidence should be the independent product of the expert and uninfluenced by the pressures of litigation. 2.2. Experts should assist the court by providing objective unbiased opinions on matters within their expertise and should not assume the role of an advocate”.
36. Further: “Form and context of an expert’s
- An expert’s report should be addressed to the court and not to the party from whom the expert has received instructions. 2. An expert’s report must, sub-section (3), contain a statement setting out the substance of all facts and instructions which are material to the opinions expressed in the report and upon which those opinions are based”.
37. The editors of the White Book also draw attention to the Civil Justice Council’s Guidance for the Instruction of Experts in Civil Claims, 2014. Again, this provides so far as is relevant at paragraph 13:
“Experts should take into account all material facts before them. Their report should set out those facts and any literature or material on which they have relied in forming their opinions. They should indicate if an opinion is provisional, or qualified, or where they consider that further information is required, or if, for any other reason they are not satisfied that an opinion can be expressed finally and without qualification”.
Paragraph 23:
“They should also inform those instructing them (whether on initial instructions or at any later stage) without delay, if…… (d) the instructions and/or work have for any reason placed them in conflict with their duties as an expert. Where an expert adviser is approached to act as an expert witness they will need to consider carefully whether they can accept a role as expert witness”.
38. Paragraph 30:
“Experts should try to ensure that they have access to all relevant information held by the parties and that the same information has been disclosed to each expert in the same discipline. Experts should seek to confirm this soon after accepting instructions, notifying instructing solicitors of any omissions”.
39. Paragraph 55:
“The mandatory statement of the substance of all material instructions should not be incomplete or otherwise tend to mislead. The imperative is transparency. The term ‘Instructions’ includes all material that solicitors send to experts. These should be listed with dates in the report or appendix”.
40. Paragraph 71:
“The purpose of discussions between experts should, wherever possible:….. (b) reach agreed opinions on those issues that narrow the issues… (c) identify those issues on which they agree and disagree and summarise their reasons for disagreement on any issue”.
41. Finally, I consider the note in the White Book, 2022 at P1236 re conflict of interest, to be relevant. The notes beginning at 35.3.5. headed: “Experts and conflict of interest” state:
“The overriding duty of the expert owed to the court carries with it an obligation to disclose to the court as well as the party instructing him or her the existence of any conflict or potential conflict of interest. A party should disclose details of any such conflict at as early a stage in the proceedings as possible. It is for the court, not the parties, to adjudge whether a conflict of interest is material or not. In this regard, best practice dictates that an expert make additional declarations at the end of his or her report along the lines of those recommended by the Court of Appeal at 120 in Toth v Jarman [2006] EWCA Civ 1028”. “The existence of a conflict or potential conflict of interest will not automatically disqualify an expert from acting as such, but depending upon the circumstances it may do so or may render his or her evidence of reduced weight, or lead to an expert witness being publicly criticised in a judgment. (See also
ex parte Barker [2007] EWCA Civ)”
THE CLAIMANT’S EXPERT IN THE CURRENT CASE
The expert worked for the firm that had carried out negotiations in relation to the lease in 2018. The sums that the claimant was seeking to recover were the premiums that had been paid.
42. Prior to Mr Balcombe’s instruction, the claimant amended its pleadings on 28th January 2021 to plead in relation to the particulars of loss the premiums the claimant paid for extending the sub-lease of the remaining three flats. It is apparent from Ms Mariner’s report dated 24th June 2021 at paragraph 1.9:
“My firm was originally instructed in late November 2018 by Arrassey Properties in connection with their desire to acquire extended leases from the landlord under the Leasehold Reform Housing and Urban Development Act 1993, and I acted for Arrassey in relation to the lease extensions, those instructions concerning flats 308, 403 and 508 only and all three flats were inspected at that time. I proceeded to negotiate the lease extension premiums”.
43. Thus, Strettons acted for the claimant in relation to the extension of the leases and indeed negotiated the very premiums that the claimant seeks to recover in these proceedings.When Mr Balcombe was asked about this in evidence, he said that he was not employed by Strettons at that time, and he was giving evidence as an employee of Strettons. However, he conceded that on its face there was an appearance of a conflict of interest.
44. Mr Balcombe then said that he had not been asked to consider whether the figures negotiated in 2020 were justified but had considered what figures would have been paid in 2007 for lease extensions and to eradicate the ground rent in 2007.
45. The further evidence from Mr Balcombe on this issue was pursued with vigour by Mr Fowler in his closing submissions. He sought to persuade me that there was no conflict of interest as Mr Balcombe had not commented in his report as to the reasonableness or otherwise of the 2020 figures and therefore any conflict of interest was illusory. Mr Fowler also argued that as the defendant had not challenged the figures paid in its defence, then there was no need for the court to be concerned with the question of Strettons prior engagement.
THE EXPERT SHOULD HAVE DECLARED THE CONFLICT OF INTEREST
50. Further, irrespective of whether the payments for the lease extensions and the removal of the ground rent provisions required further evidence, I consider that the submission advanced by Mr Fowler that Mr Balcombe was not required to declare the conflict of interest as he was not being asked to substantiate them to be an inaccurate reflection of the CPR provisions and guidance to experts.
51. The guidance I have referred to above mandates an expert to record a conflict or potential conflict. Until I allowed the late amendment at the closing of its case, the entirety of the claimant’s claim for loss for the three remaining flats rested on the cost of buying out the hazard. Even Mr Balcombe recognised that at the very least it had the appearance of a conflict. I am not persuaded his failure to declare the conflict relates to the fact that he was employed by the company and effectively had no knowledge of it because of the later evidence he gave in relation to Ms. Mariner’s reports, to which I shall return, which I also found unsatisfactor51y. Further, in his own report under the heading: “Information relied upon” he made reference to the Amended Particulars of Claim. Paragraph 33(2)(iii) made specific reference to Strettons fees of £2,655. So, at the very least Mr Balcombe knew Strettons had been paid for some advice in relation to the lease extensions. In short, he was on notice of the very potential conflict he conceded in the witness box.
52. In any event I am satisfied there was a conflict of interest, as opposed to an apparent conflict, because the Claimant’s claim was pursued on the basis of the costs of the work undertaken by Strettons. The conflict should have been set out in the embodiment of the Mr Balcombe should then have stated why he considered the conflict of interest had no material bearing on his instructions. On its face, as Mr Bankes-Jones aptly put it in closing, Strettons appeared to be “judge, jury and executioner”. In failing to declare the conflict, I consider Mr Balcombe failed to have proper regard to his obligations under CPR 35, the Practice Direction and the guidance given by the Civil Justice Council. He should have drawn the very conflict he accepted in the witness box to those that instructed him and at the very least specifically identified it in his report. That in itself is a serious failing and causes the court to question the entirety of his evidence and whether he is sufficiently au fait with the CPR 35 provisions. As the notes to the White Book state, it is a matter for the court then to consider the conflict and whether it affects the expert’s evidence and then to give the expert’s evidence whatever weight it can in the circumstances. Mr Balcombe’s primary duty was to the court and not his client.
53. Further issues arise in relation to how Mr Balcombe dealt with Ms Mariner’s report. On the first day of his evidence, Mr Balcombe said that he did not consider it was appropriate to read her report and he had not read it. On the second day his evidence changed. He said that he had read Ms Mariner’s report but failed to mention it in his report. He then said he could not remember whether he had read the responses to part 35 questions in relation to Ms Mariner’s report or the joint statement between Ms Mariner and Mr Kaye. After further questioning he then changed his evidence to say that he must have seen those reports and part 35 answers but omitted to mention them in his report. Mr Balcombe was then asked to clarify why he had initially said it was “improper” to consider Ms Mariner’s report. He said that was because he was “hot and flustered” when he entered the witness box. I did not find any of his explanations satisfactory and at the conclusion of the exchange my distinct impression was that Mr Balcombe had no idea in reality whether he had considered the reports and the joint statement or Again, he failed to comply with the clear requirement of the CPR in that he was obligated to set out the materials upon which his opinion was based. This is emphasised and reiterated in the Civil Justice Guidance. If Mr Balcombe had read the reports, the joint statement and the response to the part 35 questions they should have been listed in section 7 of his report. That he did not do so either means that he read them and then provided no view as to where his opinion differed or where it was the same, or as I find more likely, he did not read them as he did not consider it appropriate to do so as per his initial response in the witness box. In so finding I reject any suggestion that if Mr Balcombe was hot and flustered that that somehow explained why he said it was “inproper” to look at Ms. Mariner’s report. I do not consider that any expert would use the word “inproper” without careful consideration. Indeed, my distinct impression when he proffered that explanation was that he was somewhat affronted by the suggestion he should have looked at it. In my view, the further clarification on Mr Balcombe’s part compounded the unsatisfactory state of his evidence and what he had considered when preparing his report.
54. Further, whilst mistakes do occur, it was somewhat unfortunate that at the commencement of his evidence Mr Balcombe had to correct the figures in their entirety in relation to columns 1 and 2 of tables 3 and 4 in the joint statement. Whilst the difference in value remained the same, the basis for that difference was changed entirely. The amendment to table 4 came as a total surprise to his own counsel, Mr Fowler. That is a matter which had he been attending to the necessary detail Mr Balcombe should have noted at the time the joint statement was signed and not a matter of days before trial. The joint statement was also endorsed with a statement of truth. I am left with a lacuna as to whether he noted the amendment to table 4 at the last moment or whether he drew that along with the required amendment table 3 to the attention of instructing solicitors a matter of days before the trial. If the inaccuracy of table 4 was only noted as Mr Balcombe entered the witness box it would suggest even further failure to attend to the required precision and care required when signing a joint statement.
INSTRUCTION OF THE CLAIMANT’S EXPERT
55. In cross-examination, Mr Balcombe conceded he had looked at the cost of buying out the onerous leases in 2007 on an individual flat basis when he knew that the claimant had sold one of the flats and therefore there was no claim in that regard. He was then asked a standard question about the costs of the matter being referred to the Tribunal and why that was recoverable in the circumstances of this case, and in my view he became very flustered. He accepted that in 2020 there had been no reference by the leaseholder to the Tribunal but said that was not the question he had been asked when collating his report. However, on the face of the report he was not asked to consider the position in 2007 re the purchase of an extension to the lease. In the summary of instructions section of his report he said at paragraph 5:
“I was appointed on 8th December 2021 by Messrs. Whitehead Monckton to provide an assessment of the diminution of the value of all the flats with specific reference to the effect of the onerous rent review provisions which were not known to Arrassey when they acquired the properties. The date of assessments on 8th January 2007 for all the flats plus 28th November 2007 for flats 308 to 403; 3rd December 2007 for flats 505 and 508”.
That was the extent of the summary of his instructions.
COMPARE AND CONTRAST: THE DEFENDANT’S EXPERT
63. In contrast, Mr Kaye was an impressive witness. First, upon receipt of instructions he carried out a conflict check and set out the details of such in a letter dated 29th April 2021. Secondly, he also set out in a schedule 19 all the documents he had considered for his initial report. Thirdly, he carefully identified what documents he had been provided with for the purpose of his supplemental valuation report dated 8th April 2022, even to the extent of advising he had not received the appendices to Mr Balcombe’s report, which is a clear indication that he was fully au fait with the requirements under the CPR and in particular the guidance given by the Civil Justice Council at paragraph 30 of that guidance. Fourthly, no amendments were necessary to any of the matters he opined upon in his reports or the joint statement. Fifthly his reports were well-reasoned and supported by detailed calculations. In keeping with the careful manner in which he prepared his reports and the joint statement, I found he presented his evidence in a similar manner. Mr Fowler made no inroads in relation to that evidence during cross-examination. I found his evidence on all issues to be clear, logical and compelling. It was tendered in a measured fashion. I have no hesitation in accepting Mr Kaye’s evidence in its entirety.