THIS IS NOT EXPERT OPINION BUT “ARGUMENTS” SAYS THE JUDGE: PERMISSION TO RELY ON EXPERT NOT GIVEN

In  Norman v N & CJ Horton Property [2024] EWHC 2994 (Ch) Master Clark found that proposed “expert evidence” was not evidence at all but simply opinions.  The person preparing the report was not allowed to give expert evidence on the issue of whether money laundering had taken place, this was a question of fact for the trial judge. The judge declined to allow expert evidence into the case and found that the report was simply arguments based on incomplete materials.

“I approach Mr Care’s evidence therefore on the basis that he puts forward arguments, albeit based on limited and incomplete materials, that could be put forward by the Horton parties, but that those arguments are no more than that, and are not matters of expert opinion.”

WEBINAR – EXPERTS IN THE COURTS IN 2024 11th DECEMBER 2024

On the 11th December 2024 I am giving a webinar reviewing the key cases and comments on expert evidence throughout the year (this is another hour long webinar that could easily be extended to last a whole day).

Matters to be considered include:

• Experts reporting outside their expertise
• Experts in fundamental dishonesty cases
• Compliance with the rules
• Conduct and alleged misconduct.

Booking details are available here.

THE CASE

The claimants sued for the repayment of loans.  They sought permission to amend the particulars to plead money laundering as an issue.

THE EXPERT EVIDENCE IN SUPPORT

The claimants sought permission to rely on expert evidence in support of their case that there had been money laundering.

THE JUDGMENT ON EXPERT EVIDENCE

1. 1. In making their case, the Horton parties apply for permission to rely upon evidence which, they submit, is expert evidence.

1. 1. This evidence is contained in 3 reports of Tim Care dated:

(1) 23 February 2023 (“Care 1“);

(2) 2 June 2023 (“Care 2“);

(3) 5 June 2024 (“Care 3“).

Expert evidence – legal principles

1. 1. Section 3 of the Civil Evidence Act 1972 provides:

“3.— Admissibility of expert opinion and certain expressions of non-expert opinion.

(1) Subject to any rules of court made in pursuance of this Act, where a person is called as a witness in any civil proceedings, his opinion on any relevant matter on which he is qualified to give expert evidence shall be admissible in evidence.

…

(3) In this section “relevant matter” includes an issue in the proceedings in question.”

1. 1. As noted in Expert Evidence: Law and Practice (5^th edn.) at [1-001], fn 4, the effect of ss.3(1) and 3(3) of the 1972 Act was to abolish the common law rule against an expert giving evidence on the ultimate issue; although, obviously, the mere fact that the expert’s opinion is admissible does not mean that the court is bound to follow it.

1. 1. CPR 35.1 provides:

“Expert evidence shall be restricted to what is reasonably required to resolve the proceedings.”

1. 1. The first task for the court is to determine whether the proposed issues for expert evidence 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.

1. 1. In Barings Plc v Coopers & Lybrand (No 2) [2001] EWHC 17 (Ch); [2001] PNLR 22 Evans-Lombe J reviewed the authorities, and extracted from them at [45] 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. 1. However, this is not entirely consistent with Bingham LJ (as he was) in R v Robb (1991) 93 Cr. App. R. 161, in which, after referring to Lord Russell’s judgment in R v Silverlock [1894] 2 QB 766, he said, at 165,

“… the essential questions are whether study and experience will give a witness’s opinion an authority which the opinion of one not so qualified will lack, and (if so) whether the witness in question is peritus [skilled] in Lord Russell’s sense. If these conditions are met the evidence of the witness is in law admissible, although the weight to be attached to his opinion must of course be assessed by the tribunal of fact.”

1. 1. Robb requires the court to assess whether the witness is skilled and has the relevant expertise by reason of their study (knowledge) and experience in the relevant field. For example, in R v Silverlock [1894] 7 QB 766, a witness was permitted to give expert handwriting evidence, although his profession was that of a solicitor:

“the witness who is called upon to give evidence founded on a comparison of handwritings must be peritus; he must be skilled in doing; but we cannot say that he must have become peritus in the way of his business or any other business. The question is, is he peritus?”

1. 1. This is a broader test, and more accurately reflects the current practice in litigation, and I adopt it.

1. 1. If the evidence is admissible, then, as set out in The RBS Rights Litigation [2015] EWHC 3433 (Ch), the position is as follows.

1. 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 v Springwell [2006] EWHC 2755 (Comm); [2007] 1 All ER (Comm) 549 at [20] and Barings at [38].

1. 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 was)).

1. 1. In British Airways Plc v Spencer [2015] EWHC 2477 (Ch), [2015] Pens. L.R. 519 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:

“(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.”

(emphasis as in the original)

1. 1. As to Warren J’s reference to [63] in his judgment, he said in that paragraph:

“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).”

Expert evidence – discussion and conclusion

1. 1. The starting point is to identify the issue to which the expert evidence is said to be directed. This is found at paragraph 23A of the re-am PoC: whether the existence of Dean’s money laundering scheme is to be inferred from the facts and circumstances set out in that paragraph.

1. 1. I note at the outset that that is not sufficient for the Horton parties to succeed. As I have held above, they must plead and prove an irresistible inference.

1. 1. In their instructions to Mr Care, the Horton parties asked him to give his opinion as to whether there are reasonable grounds to believe that:

(1) Dean committed one or more of the offences as alleged at paragraphs 23A to 23B of the re-am PoC;

(2) Ivan Norman committed one or more of the offences as alleged at paragraphs 15A to 15C of the re-am Def;

(3) the Crump parties committed one or more of the offences as alleged at paragraphs 43 to 45 of the Defence in the Crump claim.

1. 1. Turning to the admissibility of Mr Care’s evidence, the matters set out in paragraph 66 above were not addressed by the Horton parties. There is no evidence that Mr Care has a recognised expertise governed by recognised standards and rules of conduct. However, applying the test in Re Robb, this is not an absolute bar to its admissibility.

Expertise

1. 1. Mr Care describes himself as a “financial crime subject matter expert with a background in law enforcement, retail banking and financial services enforcement”. His relevant qualifications are an Anti-Money Laundering Diploma (International Compliance Association) and a BTEC Professional Diploma in Financial Investigation (Met Police). He has 20 years of experience in investigating and prosecuting financial crime and money laundering, including in the police, the banking industry, the Financial Action Task Force (which he describes as the global standard setter for combatting money laundering) and the Financial Conduct Authority.

1. 1. The Horton parties assumed that Mr Care’s expertise would be accepted by the court, describing him as very experienced in the investigation and detection of money laundering offences. However, as set out in Namli (see para 52 above), whether an adverse inference can be drawn will inevitably depend on the detailed circumstances of each individual case. Furthermore, whether the inference of money laundering can be drawn from those facts is a matter of law, to be determined by the judge. Mr Care has knowledge and experience of factual situations in which a judge may (or may not, if no judicial determination has been made) have found money laundering. That does not, in my judgment, confer expertise on him to give an opinion as to whether money laundering has occurred. The Horton parties did not refer me to any case in which expert evidence as to money laundering was adduced; and it was not adduced in the cases to which the other parties referred me.

1. 1. If I am wrong on whether Mr Care’s evidence is admissible, then nevertheless I consider that his evidence is neither necessary, nor of assistance to the court. My reasons for this conclusion are the same as those set out above. It is for the judge, once they have found the facts as to the detailed circumstances of the case, to decide whether the required irresistible inference can be drawn. Mr Care has no role to play in this process.

1. 1. This is highlighted by the fact that in Care 1 and Care 2, Mr Care does not apply the appropriate legal test. He only addresses whether certain facts are “indicative” of money laundering, and does not consider whether the test of “irresistible inference” would be met. It is only in Care 3, the stated purpose of which is to address the impact (if any) of the subsequent developments in these proceedings, that Mr Care amends the test applied by him, and then states that it is met in respect of 3 matters: circuitous payments ([22]), absence of commercial rationale ([31]) and the absence of the payments being recorded in the accounts of APL ([33]) (as to which see paragraph 145 below). None of the other factors are said to justify this irresistible inference.

1. 1. Finally, Mr Care was not provided with the evidence filed after he prepared Care 3, in particular, the 1^st witness statement dated 11 July 2024 of Mr Crump (“Crump 1“) which addresses:

(1) the trackable and auditable record of loans by and repayments to the Crump parties;

(2) written requests for loans; and discussion of security and interest;

(3) similar informal loans without security having been made by Select to Horton Motorcycles and to Select by a third party lender;

(4) the facts that the loans were (contrary to Mr Care’s assumption) recorded in APL’s accounts;

(5) the source of the Crump parties’ funds.

1. I approach Mr Care’s evidence therefore on the basis that he puts forward arguments, albeit based on limited and incomplete materials, that could be put forward by the Horton parties, but that those arguments are no more than that, and are not matters of expert opinion.