Expert evidence — Property valuation — Whether defendant valuation surveyors entitled to call numerous experts in relation to 51 properties nationwide — Whether court should appoint expert under RSC Ord 40 — Hearsay valuation evidence
In proceedings against the defendant
valuation surveyors, the plaintiff mortgagee alleged negligence against the
nine defendants in relation to the valuation of 51 properties in various parts
of the country. The defendants desired to call an expert in respect of each
property. In the court below an order was made for the appointment of a court
valuation expert and that expert evidence on valuation be limited to one
witness for each side. The defendants appealed, contending, inter alia,
that a single witness cannot give reliable evidence relating to widely
separated areas of the country of which he will necessarily have no detailed
personal knowledge.
appointed expert should possess the expertise of his professional calling. A
valuation expert is not necessarily confined to giving evidence based on
comparables of which he has first-hand knowledge. There was a reasonable chance
that an expert appointed by the court, with no axe to grind but a clear
obligation to make a careful and objective valuation, may prove a reliable
source of expert opinion. It is not self-evident that a valuer cannot, having
made appropriate inquiries and investigations, express a reliable opinion on
values within an area where he has not himself worked. The orders made by the
judge were not necessarily final.
The following cases were referred to in
this report.
Banque Bruxelles Lambert SA v Eagle Star Insurance Co
Ltd unreported February 26 1993
English Exporters (London) Ltd v Eldonwall Ltd [1973]
Ch 415; [1973] 2 WLR 435; [1973] 1 All ER 726; (1972) 25 P&CR 379; [1973]
EGD 439; 225 EG 255 & 433
This was an appeal by the defendants, Key
Surveyors Nationwide Ltd, G Tudor-Price, JW Foot, Paul Jerome, K Johnson, A
Marriott, BR James and G Thurling, from the orders of Judge Hicks QC, sitting
as an official referee, at the hearing of a 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:
[1995] 2 EGLR 134. The ninth defendant, D Price, had not been served with
proceedings.
John Leighton Williams QC (instructed by
Davis Arnold Cooper) appeared for the appellants; Christopher Gibson QC and
William Bojczuk (instructed by Pettman Smith) represented the respondent; the
ninth defendant did not appear and was not represented.
Giving the judgment of the court, Sir Thomas Bingham Mr said: The
defendants in this consolidated action appeal against two orders made by Judge
Hicks QC, sitting as an official referee. The first of those orders was that a
court valuation expert be appointed under Ord 40 of the Rules of the Supreme
Court. The second order was that expert evidence on valuation be limited to one
witness for each side. The judge gave leave to appeal against his orders.
The orders were originally made in action
ORB 1993 No 822. The plaintiffs in that action were mortgage lenders. They had
made loans to purchasers of houses in reliance on valuations of those houses
made by valuation surveyors. Their complaint in the action was that the
surveyors’ valuations had been negligent; that the houses had as a result been
overvalued; and that the lenders had as a result entered into transactions
which they would not have entered into had the valuations been made with
reasonable care and skill.
The first named defendant, Key Surveyors
Nationwide Ltd, was a company providing professional valuations of properties.
The company is now insolvent and has ceased trading. The second to ninth
defendants in that action were individual surveyors who had made valuations on
which the lenders had relied. The ninth defendant has never been served.
The claim made in the writ related to
allegedly negligent valuations of 29 different houses. These houses were in
various parts of the country: Bedford, Milton Keynes, Luton, Lowestoft,
Peterborough, Fareham, Aldringham (Suffolk), Tilbury, Swanage, Corby,
Southampton, Weston-super-Mare, Stevenage, Norwich, Wellingborough, Ipswich,
Leigh-on-Sea, Banbury, Nuneaton, Llanrwst and Hunstanton.
Since the judge made his orders in action
ORB 1993 No 822, other actions have been consolidated with it. The plaintiffs
in the consolidated action are (to all intents and purposes) the same. The
first named defendant is the same. But additional individual surveyors have
been added as personal defendants, and it appears that there are now
effectively 11 personal defendants. Complaints are also made concerning the
valuation of additional houses in different locations, which include Worcester,
Sale, Cambridge, St John’s Wood and Rugby. Complaint is now made of the
allegedly negligent valuation of 51 houses, all of them the subject of claims
in the consolidated action. Subject to the outcome of this appeal, the judge’s
orders concerning appointment of a court expert and limitation of the number of
expert witnesses on valuation apply in the consolidated action.
Mr Leighton Williams QC, for the
defendants, argued that the judge had no power under the rules to appoint a
court valuation expert in a case such as this. Alternatively, if the order
could be brought within the letter of the rules, he argued that on the present
facts it represented an impermissible exercise of discretion. He also
challenged the limitation of expert valuation evidence imposed on the parties,
again as an impermissible exercise of discretion in this case. He relied on
affidavit evidence adduced by the defendants, and not challenged, which
highlighted the inappropriateness of such a limitation on the present facts.
Before turning to the detailed arguments,
the judge’s orders must be set in context. These were on any showing bold and
innovatory orders, and the judge plainly made them with his eyes wide open,
conscious that he was breaking new ground. What is now Ord 40 was introduced in
1934, but by 1937 notes to the White Book were already recording that
‘Applications under this rule have been but few in number’, an observation
which has continued to be made for the ensuing 60 years. Limitations on expert
evidence, although permissible under the rules, have rarely if ever been so
strictly applied in a case of this kind. There can be no doubt that the judge’s
orders were novel.
That is not of itself an argument against
them. There can be no purpose in commissioning expensive and far-reaching
reports on civil procedure if lessons which emerge are not heeded. Exhortations
to trial judges to be interventionist and managerial would be futile if every
managerial initiative by a trial judge were to be condemned as an unwarranted
departure from orthodoxy. It would be most unfortunate if the Court of Appeal
were to block reasonable attempts to mitigate the defects of established
practice. At the same time, of course, both trial judge and Court of Appeal
must be constantly alert to the paramount requirements of justice, justice to the
plaintiff and justice to the defendant. To expedite the just despatch of cases
is one thing; merely to expedite the despatch of cases is quite another. The
right of both parties to a fair trial of the issues between them cannot be
compromised.
The judge delivered a reserved judgment
in which he gave his reasons for making the orders he did. Having quoted the
terms of Ord 40, he held that there was no reason for any initial presumption
either in favour of or against the making of an order for the appointment of a
court expert under the rule. The question to be asked was whether it was likely
to assist in the just, expeditious and economical disposal of the action if
such an expert were appointed. He analysed the role of the expert in a
valuation case, distinguishing the expression of an opinion on a valuer’s
approach to his task and the expression of an opinion on the true value of the
properties in question at the relevant date. He concluded that the assistance
of a court expert was likely to be of substantial advantage in the just
resolution of issues as to the value of the properties involved in this case.
He thought that the appointment of a court expert would be likely to promote
settlement in a significant proportion of instances. He was unable to express
any conclusion whether such an appointment was likely to save costs or not. But
he thought it obvious that a court expert, even if supplemented by an
additional expert called by each party, would be less expensive than the
calling of 58 valuation experts (one per side in respect of each of the 29
properties which were in issue before the consolidation of the actions).
The judge referred to the defendants’
argument (discussed below) that first-hand familiarity with local conditions
was necessary for a valuer to give a reliable valuation, but was not persuaded
by it: he pointed out that the eight valuers who were then defendants had
between them covered 29 properties in several different areas; and added that
there could be no unfairness when both parties were in the same position.
He then turned to the issue of
comparables, on which valuers customarily rely when making a valuation. He
said*:
*Editor’s note: Reported at [1995] 2 EGLR
134 at p136
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.
He considered the position of a court
expert appointed under Ord 40, and concluded that such an expert was not merely
a witness but could incorporate in his report material which would under the
rules of evidence be inadmissible hearsay. He thought it appropriate to decide
on the precise role of the court expert at a later stage.
With reference to the limitation of
expert witnesses to one per side (in addition to the court expert) the judge
placed reliance on Ord 40 r6, which is quoted below.
Ord 40 r1 provides:
(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 or, if more than one such question arises, two or more such experts, to
inquire and report upon any question of fact or opinion not involving questions
of law or of construction.
An expert appointed under this paragraph
is referred to in this Order as a ‘court expert’.
(2) Any Court expert in a cause or matter
shall, if possible, be a person agreed between the parties and, failing
agreement, shall be nominated by the Court.
(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.
Under r2 of the order the court expert
sends his report to the court and the court sends copies to the parties or
their solicitors. Para (3) of r2 provides that any part of a court expert’s
report which is not accepted by all the parties to the cause or matter in which
it is made is to be treated as ‘information furnished to the Court and be given
such weight as the Court thinks fit’. R4 provides:
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 at such time and
place as may be specified in the order
R6 is in these terms:
Where a Court expert is appointed in a
cause or matter, any party may, on giving to the other parties a reasonable
time before the trial notice of his intention to do so, call one expert witness
to give evidence on the question reported on by the Court expert but no party
may call more than one such witness without the leave of the Court, and the
Court shall not grant leave unless it considers the circumstances of the case
to be exceptional.
A note in the 1995 White Book reads:
The object of the Order is presumably to
enable the parties to save costs and expenses in engaging separate experts in
respect of a technical or scientific question which can be resolved fully,
quickly and comparatively cheaply by an independent expert appointed by the
Court, and also possibly to prevent the Court being left without expert
assistance in cases in which the experts of the parties may well be giving
entirely contradictory evidence on technical or scientific questions.
In submitting that the judge had no power
under the order to make the order he did for appointment of a court expert, Mr
Leighton Williams advanced four main submissions. These were: (1) that the
order was only applicable to questions of a scientific or technical kind; (2)
that it was only appropriate to appoint an expert under the order to give an
opinion on a subsidiary question, and not on the major issue which the court
had to resolve; (3) that a court expert appointed in present circumstances
would not be an ‘expert’ within the meaning of the order, since he would
necessarily lack personal knowledge or experience of market conditions and
values in many of the areas upon which he would have to report; and (4) that
the court expert was in truth being invited to give an opinion on the answer to
51 questions and not to one, so that the parties were each entitled under r6 to
call a witness to give evidence on each of those 51 questions.
As to the first of these contentions, we
strongly suspect that the draftsman of the order did indeed envisage its use to
resolve questions of a scientific or technical kind. The draftsman may also
have envisaged the use of the order to resolve subsidiary questions and not the
major issues in the case. We do not, however, find anything in the language of
the order which restricts its use to cases in which the assistance of a court
expert is sought to resolve questions which are scientific or technical or
subsidiary. Times change and procedure develops. We do not think that the terms
of the order forbid an appointment such as the judge made if it was otherwise
appropriate. We do not accept the third contention, that a court expert so
appointed would not be ‘expert’. R1(1) envisages that a court expert may be
appointed to inquire and report. He may therefore have to qualify himself to
give expert evidence. What is required is that the expert, when so qualified,
should possess the expertise of his professional calling. So far as the fourth
contention, based on r6, is concerned, we think that ‘the question reported on
by the court expert’ must be read to mean ‘the question or questions …’. If
more than one question is asked of the court expert, it does not in our view
follow that each party is entitled to call one expert on each of the questions
so asked.
The reference in r2(3) to the treatment
of the court expert’s report, as ‘information furnished to the Court’, does in
our view give colour to the suggestion that a court expert is not strictly
bound by the rules of evidence. We do not, however, accept that any valuation expert
is confined to giving evidence based on comparables of which he has direct
first-hand knowledge. In the course of his everyday practice, a surveyor asked
to express a view on the open market value of a particular property will of
course have regard to his own personal experience, if he has any relevant
experience. He will also, however, have regard to the sales experience of his
office, whether that is within his direct first-hand knowledge or not. He will
also have regard to all sources from which information can be gleaned
concerning market trends and conditions. This is the sort of information which
customarily circulates among practitioners in any particular market, and it is
information to which a competent surveyor will properly pay attention so long
as the information appears to be reasonably reliable.
All this Mr Leighton Williams, as we
understand, accepts. But he argues that the position of an expert is different:
an expert, he says, is in a different position from the ordinary practitioner, and
is confined to that body of information which he can personally verify. If this
were so, it would seem to us highly unfortunate, since it would mean that the
opinion of the expert was liable to diverge from that of even a careful and
skilful practitioner. But we do not accept the proposition. An expert opinion
on the value of a car is habitually based on the standard guide, adjusted to
reflect any peculiar features of the car in question. The same approach is
adopted in relation to ships, attention being paid to published records of sale
prices, and appropriate comparisons then being made. In neither case is direct
first-hand knowledge required of the information upon which the guide or the
published record is based. We can see no reason why a different approach is
called for in relation to houses. A valuation surveyor, having made careful and
appropriate inquiries, so far as necessary, is in our judgment fully entitled
to rely on what reasonably appears to him to be reliable information. So is an
expert. Both will be concerned to satisfy themselves that an allegedly
comparable transaction in fact took place, that there was not some special
factor which produced an atypical result and that an allegedly comparable
transaction was in truth comparable. These matters are likely to be explored in
court when evidence is given.
In reaching this conclusion we are
fortified by reference to a ruling given by Phillips J in Banque Bruxelles
Lambert SA v Eagle Star Insurance Co Ltd unreported February 26
1993. That was a valuation case, and it was argued for the valuer that the
claimant lenders should be put to strict proof of any comparables upon which
they relied. Phillips J distinguished English Exporters (London) Ltd v Eldonwall
Ltd [1973] Ch 415 and held:
The unchallenged evidence has established
that competent valuers make valuations on the basis of market intelligence
which is hearsay, as one would expect. They do not and cannot apply the hearsay
rule to the material they take into consideration.
It seemed and still seems to me that in
considering whether [the valuer’s] valuation was or was not negligent, I not
only may but must have regard to the hearsay material that a competent valuer
could and should have had regard to when performing the valuation. That of course
requires proof of the hearsay material that would have been available to such a
valuer, but such proof is a very different exercise from that which [counsel
for the valuers] has contended is necessary.
The true position is, in our opinion,
that both a valuer and a valuation expert may have regard to market
intelligence, but it is of course open to anyone challenging the valuation to
seek to show, for any one of a number of possible reasons, that the
intelligence relied on
The defendants’ objection to the judge’s
exercise of discretion to appoint a court expert (assuming, contrary to their
primary submission, that the judge had such a discretion), and their objection
to the limitation on the number of experts whom the parties might respectively
call, rested in the main on two affidavits sworn by expert surveyors and
submitted to the judge. These affidavits, which the plaintiffs did not seek to
answer, were to the effect that an expert valuer needs to have intimate
first-hand knowledge of property values and market conditions in the area of
the property to be valued, and that a single witness cannot give reliable
evidence relating to widely separated areas of the country of which he will
necessarily have no detailed personal knowledge. The defendants’ solicitor
deposed that this was a view shared by 10 independent valuers whom the
defendants had already consulted by the time the judge made his orders.
There is no doubt a measure of force in
this: a locally based valuer will know that certain parts of an area are more
favoured than others; and will know of local factors (such as the threat of a
bypass or the presence of a railway) which may serve to depress prices within a
given district. But even a locally based valuer, asked for an opinion on the
appropriate range of prices for a given property some years before, will be
most unlikely to have this information at his fingertips. He will have to
consult the records, and refresh his memory of prevailing conditions at the
relevant time. This is not very different from the task which a valuer who is
not locally based will have to undertake. It is not in our judgment
self-evident that a valuer cannot, having made appropriate inquiries and
investigations, express a reliable opinion on values within an area where he
has not himself worked.
In our judgment, the judge did not exceed
his jurisdiction in making an order for appointment of a court expert. But this
appeal comes at a very early stage in the process. No expert has been agreed or
nominated by the court in default of agreement. No question for submission to
the court expert has yet been agreed or settled by the court in default of
agreement. It may be (we express no opinion one way or the other) that the
court expert, once agreed or nominated, will himself advance the contention put
forward by the defendants. He may, in other words, profess inability to express
a reliable opinion on values in areas of the country with which he has no
familiarity. In such an event, it will be necessary for the judge to reconsider
the appointment, and to consider also the advisability of appointing additional
court experts to deal with such areas. The defendants now acknowledge that
perhaps 12 or so experts might between them be able to express reliable
opinions on value in different parts of the country, and this in itself
represents some modification of their earlier contention that there should be
one expert for each property, save where a number of properties were situated
in the same town. The first steps must, we think, be to implement the order
which the judge has made, and then to await its immediate outcome.
It was argued that appointment of a court
expert was pointless, since it merely meant the instruction of an additional
expert whose opinion would carry no more weight than any other. We feel bound
to say that in our opinion this argument ignores the experience of the courts
over many years. For whatever reason, and whether consciously or unconsciously,
the fact is that expert witnesses instructed on behalf of parties to litigation
often tend, if called as witnesses at all, to espouse the cause of those
instructing them to a greater or lesser extent, on occasion becoming more
partisan than the parties. There must be at least a reasonable chance that an
expert appointed by the court, with no axe to grind but a clear obligation to
make a careful and objective valuation, may prove a reliable source of expert
opinion. If so, there must be a reasonable chance at least that such an opinion
may lead to settlement of a number of valuation issues.
Assuming that the appointment of a court
expert or experts stands, it seems to us impossible at this stage to form a
final opinion whether there are exceptional circumstances such as would justify
the giving of leave to the parties under r6 to call more than one expert
witness for each side. This will be affected by the decision whether it is
necessary to appoint more than one court expert; by the incidence of settlement;
and by any other circumstances on which the defendants (having received and
studied the court expert’s report) are able to rely.
We do not regard the judge’s orders under
appeal as necessarily final. In considering any further application, the judge
will plainly have regard to the defendants’ contentions that this consolidated
action embraces an exceptionally large number of separate claims and that the
professional reputations of the individual defendants are at stake. On the
other hand, the judge will bear in mind that a number of the claims which are
made are, in modern terms, relatively small, the average advance being under
£65,000 per house. The judge was naturally concerned that, on estimates made at
an earlier stage of the time needed to resolve each claim, the costs of the
litigation would (as in so many cases) greatly outweigh the fruits of success.
There is a difficult, and continuing, judgment to be made of what justice
requires, and the judge is best placed to make it.
We would dismiss this appeal.
Appeal dismissed.
