Expert evidence — Property valuations — Whether defendant valuation surveyors entitled to call 29 experts in relation to 29 properties nationwide — Whether court should appoint expert under RSC Ord 40
In proceedings
against the defendant valuation surveyors, the plaintiff mortgagee alleged
negligence against the nine defendants in relation to the valuation of 29
properties in various parts of the country. Directions were given by the
official referee limiting each defendant to one expert and requiring the
parties to agree how each expert could incorporate in their evidence any
necessary information as to local conditions outside their personal knowledge.
The parties having failed to agree, the defendants renewed their applications
to call an expert in respect of each of the 29 properties and the plaintiff
applied for the appointment of a court valuation expert under RSC Ord 40.
allowed; an order was made for the appointment of a court valuation expert.
There is no initial presumption either in favour or against the making of such
an appointment. The assistance of a court expert is likely to be of substantial
advantage in the just resolution of issues as to the true value of property
where one depends on experience or ‘feel’, or on the balancing of unquantified
and imponderable considerations. A court appointed expert will add to costs if
the defendants call their own expert witnesses as well, but may promote
settlement. The distinctive features of the present case in relation to
property valuations in issue indicated more arguments in favour rather than
against a court appointed expert. A court appointed expert is not merely a
witness and, in giving him instructions under Ord 40 r 1(3) the court can
empower him to conduct his inquiry by any fair means authorised by those
instructions, even if that results in the incorporation in his report of
material, which in the evidence of a witness would be inadmissible hearsay. His
role will no doubt emerge in this case but the court appointed expert has no
delegated jurisdiction, as in the case of a special referee under Ord 40 r 10.
No cases are
referred to in this report.
This was the
hearing of summons for directions in relation to the calling of expert evidence
in proceedings by the plaintiff, Abbey National Mortgages plc (formerly CIBC
Mortgages plc), against the defendants, Key Surveyors Nationwide Ltd, G
Tudor-Price ARICS, J W Foot FRICS, Paul Jerome ARICS, K Johnson, A Marriott, B
R James ARICS and G Thurling ARICS. The ninth defendant, D Price, had not been
served with proceedings.
Simon Monty
(instructed by B P Collins & Co, of Gerrards Cross) appeared for the
plaintiff; Stuart Catchpole (instructed by Davis Arnold Cooper) represented the
first to eighth defendants; the ninth defendant did not appear and was not
represented.
Giving
judgment, JUDGE HICKS QC said: At the dates with which this action is
concerned the plaintiff was carrying on the business of providing mortgage
finance and the first defendant was carrying on the business of estate agents,
surveyors and valuers.
That is a very
familiar situation in litigation proceeding in this court. It is equally
familiar that: the first defendant should have carried out a survey and valuation
of residential property on the instructions of the plaintiff in connection with
a proposed mortgage advance to borrowers to be secured on that property; the
first defendant should have provided a report and valuation accordingly; the
mortgage should have been completed; the borrowers should have failed to fulfil
their obligations; and the plaintiff should allege that in consequence it has
suffered loss attributable to negligence on the part of the first defendant in
over valuing the property.
What is
unfamiliar is that although there is a single plaintiff mortgagee and a single
defendant surveying company the claims concern 29 properties in various parts
of the country. The second to ninth defendants are eight individual valuers
employed by the first defendant, each concerned in preparing the reports and
valuations relating to one or more of the properties. The ninth defendant has
not been served with the proceedings and the remaining defendants are jointly
represented.
At the first
hearing of the application for directions on July 8 1994 consideration was
given in the usual way to directions as to expert evidence. In the field of
valuation the defendants sought leave for 29 experts, one for each property, on
the basis that local experience would be necessary in each case. I made an
order limiting expert valuation evidence to one witness for each party, but
directed the parties to endeavour to agree means by which the valuation experts
could incorporate in their evidence any necessary information as to local
conditions outside their personal knowledge, with liberty to apply in case of
failure to agree.
The parties
failed to agree and the defendants on October 7 1994 issued a summons applying
for variation of the order of July 11 so as to give leave for a separate
valuation expert for each party for each property. The hearing of that summons
on November 11 1994 was adjourned to a date to be fixed and in the event was
never formally restored.
On December 2
1994 the plaintiff issued a summons applying for the appointment of a court
valuation expert under Ord 40. On the return of that summons on February 10
1995 it was agreed that the defendants’ summons of October 7 1994 should be
treated as restored by consent and heard together with the plaintiff’s. I made orders
which in substance granted the plaintiff’s application and dismissed the
defendants’, reserving my reasons, which now follow.
I shall
address first the application for the appointment of a court expert and shall
begin by setting out those parts of Ord 40 which seem to me to be of particular
relevance in deciding the issue of principle whether in the exercise of my
discretion this is an appropriate case in which to make such an appointment:
1.– (1) In
any cause or matter which is to be tried without a jury and in which any
question for an expert witness arises the Court may at any time, on the
application of any party, appoint an independent expert … to inquire and report upon any question of
fact or opinion not involving questions of law or of construction …
(3) The
question to be submitted to the court expert and the instructions (if any)
given to him shall, failing agreement between the parties, be settled by the
Court.
(4) In this
rule ‘expert’, in relation to any question arising in a cause or matter, means
any person who has such knowledge or experience of or in connection with that
question that his opinion on it would be admissible in evidence.
2.– (1) The
Court expert must send his report to the Court … and the proper officer must send copies of
the report to the parties or their solicitors …
(3) Any part
of a Court expert’s report which is not accepted by all the parties … shall be treated as information furnished to
the Court and be given such weight as the Court thinks fit.
4. — Any
party may, within 14 days after receiving a copy of the Court expert’s report,
apply to the Court for leave to cross-examine the expert on his report, and on
that application the Court shall make an order for the cross-examination of the
expert by all the parties either —
(a) at the
trial, or
(b) before an
examiner …
6. Where a
Court expert is appointed … any party
may, [on reasonable notice] call one expert witness … on the question reported on by the court
expert …
It is said in
the note as to practice under this order in the Supreme Court Practice that
applications have been very few ‘except orders by Official Referees’. That
must, I think, be a comment of some venerability, because, in my understanding,
there has been no such order in this court for many years, although it seems
that there was a time when such orders by official referees were indeed fairly
common. Why they died out does not seem to be known. A paucity of experience
elsewhere in the High Court is not subject to question. In those circumstances
I necessarily approach the issue without guidance from practice or authority,
that is as one of principle.
At the most
general level I see no reason for any initial presumption either in favour of,
or against, the making of an appointment. The question to be asked is whether
it is likely to assist in the just, expeditious and economical disposal of the
action.
Within that
inquiry I distinguish two stages of consideration in this instance. The first
concerns the field of expertise in question. Valuation experts in valuer’s
negligence litigation normally offer expert opinions on two main topics. The
first is as to the content and level of knowledge and performance to be
expected of a reasonably careful and competent valuer in the circumstances of
the instant case. The second is as to the true value of the property or
properties concerned and in purchase and mortgage cases particularly the true
value of the property valued by the defendant valuer at the date of the impugned
valuation.
The first of
these topics is common to most, if not all, professional negligence claims. In
valuation cases it is largely concerned with the bracket on either side of the
true value within which valuations by competent and careful valuers can be
expected to lie. It is often
significantly one way or the other here. On the one hand, a court expert’s
report on the subject is quite likely to pass unchallenged, but, on the other,
the amount of time and costs expended in dealing with it in the absence of such
an expert is likely to be comparatively small.
The second
topic, however, I do find significant. The evidence of an expert witness called
by a party must, like all evidence, be assessed by the tribunal of fact and
accepted or rejected, in whole or in part, with a view to arriving at findings
on the facts in issue. There are, however, in my observation and experience,
differences as between different topics in the ease, confidence and reliability
with which a judge, as the tribunal of fact, can assess the relative
credibility and weight of competing expert evidence. In particular, subjects
which depend a great deal on experience or ‘feel’, or on the balancing of
unquantified and imponderable considerations, are more difficult for a
non-expert in that field to appraise than those in which those characteristics
are less pervasive. Valuations are, in my view, paradigmatic examples of that
category. The assistance of a court expert is therefore likely to be of
substantial advantage in the just resolution of issues as to the true value of
property.
As to
expedition and economy the appointment of a court expert will advance both if
it promotes settlement, as in a significant proportion of cases it is likely to
do. It will not otherwise normally affect time one way or the other in this
court, where trial dates are fixed at the outset and are unlikely to be delayed
by such an order. It will add to the expense if the parties exercise their
right to call their own expert witnesses as well, but save costs if they do
not; it is impracticable without experience to assess the probable relative
frequency of these events.
The second
stage of consideration requires examination of the distinctive features of the
present case. As I indicated at the outset it is an entirely typical mortgage
valuer’s negligence action except as to the number and geographical spread of
the properties involved. Mr Stuart Catchpole, for the defendants, submitted
that was a decisive objection to the appointment of a court expert, Mr Tyrrell,
for the plaintiff, that it was an important factor in favour of that course.
The defendants
relied on a number of affidavits, most of which were originally sworn in
support of their application for leave to call 29 valuation experts per party,
but which they say equally militate against there being a court expert. The
burden of those affidavits is that the only satisfactory evidence of value is
that of a local valuer, because he alone has direct knowledge of comparable
properties and of the ‘flavour’ of the location. It is also suggested that the
prudence or otherwise of valuation ‘out of area’ may itself be in issue and
that a single valuer may be more expensive and time consuming.
The proposition
that it will actually cost more to have one valuer, or even three (the court
expert plus one each), rather than 58, seems to me too fanciful to merit
discussion. I take into account the defendants’ evidence that they have already
incurred the expense of engaging a number of local valuers, but that cannot
weigh very heavily in the balance for a number of reasons. In the first place,
the amounts involved in such preliminary exercises are likely to be
comparatively small. Second, some input of local experience and information
will be necessary in any event, so much of what has been done may well not be
wasted. Third, what the parties choose to do in that way, although not, if
reasonable, to be ignored, cannot preempt the court’s decision.
As to time I
can see that a number of local valuers could be working simultaneously, but as
I have explained that is unlikely in this court to affect the date of trial,
while at the trial itself the time advantage is decisively the other way.
There is no
allegation that any of the defendant valuers was negligent in valuing ‘out of
area’, nor can the plaintiff advance any such allegation consistently with its
stance as to expert evidence; apart from one property as to which there is a
separate allegation of failure to report a material fact the plea is in each
case simply that, ‘the size of the error [in valuation] is such that the … Defendant failed to exercise the standard of
skill and care to be expected of a reasonably competent valuer in carrying out
valuations of this sort for mortgage purposes’, and that is in truth the only
pleaded and only relevant issue of negligence.
It is a little
difficult to take seriously the argument that only one valuer per property will
do from defendants, who themselves covered 29 properties with eight valuers,
including: a Bedford based valuer, who reported on a Lowestoft property; a
Southampton based valuer who reported on a Weston-super-Mare property; a
Manchester based valuer, who reported on one in Llanrwst; and an Ipswich based
valuer who, reported on properties in Tilbury and Leigh-on-Sea. In any event
there can be no unfairness when both parties are in the same position; any
imbalance there may be is in truth in favour of the defendant valuers, who in
addition to the court expert’s report and, if they choose, their outside
expert’s evidence can each give their own. I do not doubt the advantages of the
knowledge of local flavour of which the defendants’ deponents speak, but this
court is concerned with doing justice, not with achieving a state of expensive
and unnecessary perfection.
That leaves
the question of comparables, where it is necessary both to draw attention to
features not elucidated in the affidavits and to examine more closely the
status and function of a court expert.
I accept that
valuers and valuation expert witnesses commonly rely heavily on comparables. In
professional practice information about the existence of comparables and
knowledge of the relevant facts about them is acquired in various ways, and
assessment of the weight to be given to each depends on the valuer’s judgment
as to the reliability of his sources as well as on the content of the
information and the closeness of the comparison in a variety of ways. In
litigation regard must be had to the rules of evidence. Unless the witness was
personally concerned in the relevant transaction his evidence about it is
necessarily hearsay. Almost invariably expert witnesses, however local, wish to
rely on comparables outside their own dealing experience, and since both
parties are in the same position in this respect an accommodation is normally
reached; it is rare for strict proof of comparables to be insisted upon. In
this respect the difference between local and non-local experts is one of
degree rather than of kind. There is indeed a substantial difference of degree
where such a number and spread of properties are involved as here, which is one
of the reasons why I originally directed consultation as to evidence on local
conditions rather than leaving it to the usual informal discussions at a late
stage of preparation for trial, but it is important to appreciate that as to
the parties’ own expert witnesses this is a factor which will have to be taken
into account, however many or few they may be.
Is a court
expert similarly restricted? So far as I am aware this is uncharted territory.
There are some features of Ord 40 which arguably point to his being simply a
witness, albeit one of a special kind. In particular he may be cross-examined
(r 4). On the other hand, there are features which point in the opposite
direction. Although his qualifications must by r 1(4) be those of an expert
witness that rule expresses the requirement as being that his opinion ‘would’,
not ‘will’, be admissible in evidence. He is to ‘inquire’ as well as ‘report’,
and to do so upon questions of fact as well as opinion — r 1(1). In r 6 his
description as the ‘court expert’ (without, the word ‘witness’) who reports is
set against that of the ‘expert witness’ who may be called by the party. There
is no provision for him to be sworn to his report, although it may be that he
would take the oath if cross-examined. Most importantly of all, however, r
2(3), which is specifically concerned with the status of his report, provides
that in the absence of acceptance by both parties it is to be treated as
‘information furnished to the court’. The word ‘evidence’ is avoided, I believe
advisedly.
Taking all
these factors into account I consider the better view to be that a court expert
is not merely a witness and that, in giving him instructions under r 1(3) the
court can empower him to conduct his inquiry by any fair means authorised by
those instructions, even if for example that results in the incorporation in
his report of material which in the evidence of a witness would be inadmissible
hearsay. That is, in my view, a significant further advantage in the
appointment
possible to define the exact status of a court expert at the present stage, but
although I have come to the conclusion that he is not merely a witness it is
clear that he has no delegated jurisdiction of the kind held by a special
referee under Ord 36, r 10, before whom questions or issues are to be ‘tried’,
and who has many of the powers of a judge. Further questions of detail as to
the role of the court expert in this case will no doubt emerge and have to be
decided as I give directions for the working out of the order for his or her
appointment.
I therefore
rejected the defendants’ objections. The plaintiff filed no evidence and as Mr
Tyrrell’s successful submissions on its behalf are sufficiently covered in the
discussion above it will not, I hope, be taken as discourteous if I do not
rehearse them further.
Those are my
reasons for granting the plaintiff’s application for the appointment of a court
expert. As to the defendants’ application for leave for additional valuation
expert witnesses, some, although of course not all, of the reasons given above
for the appointment of a court expert would equally sound in favour of
sustaining my order of July 8, even in the absence of the appointment of a
court expert, but I need not express a view as to what my decision would have
been in that event because the existence of a court expert is clearly material
to this application. Apart from any more general considerations Ord 40, r 6,
which I have already quoted in part, provides further that where a court expert
is appointed:
no party may
call more than one [expert] witness [on the same question] without the leave of
the Court, and the Court shall not grant leave unless it considers the
circumstances of the case to be exceptional.
I have already
rehearsed the material circumstances and need say no more than that in so far
as they are exceptional they are not so in any respect which would in my
judgment make it appropriate to give leave for more than one expert valuation
witness on behalf of each party in addition to the court expert.
When I
announced my decision I released the parties from any obligation to attend when
these reasons are delivered. By consent I directed that should be done in open
court, in view of the general interest of the subject-matter. Subject to any
appeal the plaintiff’s summons should be restored as soon as possible so that
supplementary directions can be given. The parties should exchange and lodge in
advance their proposals in that respect and reach agreement where possible.
Orders
accordingly.
