Company – Expert witness – Conflict of interest – Claimant applying to strike out proceedings on basis that expert with conflict of interest preparing report – Judge finding no conflict of interest and refusing strike out application – Defendant appealing – Whether judge erring in law in refusing to exclude expert report – Whether report being inadmissible for conflict of interest – Appeal dismissed
The appellant and the respondents were involved in a company. The respondents were shareholders and the second respondent was also its managing director. The appellant was the finance director. The company had raised capital by the issue of shares and loan notes, which were guaranteed by the respondents. The notes were held by the claimant in the main proceedings (R). As a result of financial difficulties, the company went into administration and R issued proceedings claiming £150,000, together with interest, under the terms of the guarantee. The respondents contended that they had been induced to enter into the guarantee as a result of misrepresentations concerning the financial position of the company allegedly made to them by the appellant.
The company and its administrators assigned claims against the appellant to another company (CFL) which in turn assigned the claims to the respondents, who made a CPR part 20 claim against the appellant in respect of the alleged misrepresentations. They also made an additional claim, alleging that he had breached his duty as a company director. The statement of case served by the respondents in support of the additional claim attached a draft expert accountancy report prepared by C, an accredited forensic accountant, who was also a partner in a firm of forensic chartered accountants (F). The senior partner and principal of F (S) was the sole director of CFL, paid at an hourly rate.
The appellant applied to the court to strike out the claim against him on the grounds, amongst others, that the report on which the claim was based was made by an expert with a conflict of interest such that the court should rule his report inadmissible. The judge held that there was no conflict of interest and refused to strike out the claim. The appellant appealed.
Held: The appeal was dismissed.
The essential character of expert evidence was that it should be the independent product of the expert uninfluenced by the pressures of litigation and that it should be objective and unbiased evidence on matters within the expert’s evidence: CPR PD 35, paragraphs 2.1 and 2.2. The qualities of independence and lack of bias might be compromised by the expert’s connections with the litigation or the parties or those who might benefit from the litigation. It was always a matter for the court to decide whether any such connections disqualified the expert from giving evidence or whether, as might often be the case, they went, not to the admissibility of the evidence, but to the weight to be attached to it. Such connections might take a number of forms. The expert might have a financial interest in the outcome of the litigation. Only rarely would the court admit the evidence of such an expert. Secondly, the expert might have a conflicting duty. Whether that would disqualify the expert from giving evidence would depend on the circumstances of the case. Thirdly, an expert might have a personal or other connection with a party, which might consciously, or subconsciously influence, or bias, his evidence. Such connections would not normally of themselves disqualify the witness, but would go to the weight to be attached to the evidence: Liverpool Roman Catholic Archdiocesan Trustees Inc v Goldberg (No 2) [2001] 1 WLR 2337, R (on the application of Factortame) v Secretary of State for Transport, Environment and the Regions [2002] EWCA Civ 932, [2003] QB 381 and Toth v Jarman [2006] EWCA Civ 1028 applied.
On the facts of the present case, the only connection between the expert (C) and CFL lay in the facts that C and S were both partners in F and that S was a director of CFL paid at an hourly rate. Nothing in the information led to the conclusion that C had any financial interest in the outcome of the additional claim against the appellant. The court was not justified on the evidence before it in finding that a conflict of interest existed.
Per curiam: There was force in the criticism that the expert witness had failed to disclose, in his report or in accompanying correspondence, his connection with S and S’s directorship of CFL. It was important that the other parties to the litigation and the court should have available to them information as to any connection of an expert to the litigation or to the parties to the litigation or to any person who might benefit from the litigation. It was only the disclosure of such information that would enable the court to determine whether the expert’s evidence was admissible and, if it was, the weight to be attached to it. The information provided by S showed that he and C had considered whether there was a conflict of interest and showed that they concluded that there was none. Although the court agreed with that conclusion, the very fact that they considered the matter showed that there was material information which needed to be disclosed. However, that non-disclosure did not lead to the conclusion that C’s report should be excluded.
Peter Irvin (instructed by Beswicks Solicitors LLP) appeared for the appellant; Camilla ter Haar (instructed by Shoosmiths) appeared for the defendants.
Eileen O’Grady, barrister
