Bank of Ireland & Anr v Watts Group Plc

[2017] EWHC 1667 (TCC)

One of the key issues in this case which came before Mr Justice Coulson, one of the last cases before his elevation to the Court of Appeal, was the reliability or otherwise of the expert valuation evidence. 

The Judge concluded that the Bank’s expert was not a properly independent witness. This was because the Bank was the expert’s principal client, providing the vast majority of his work (and fees). Further, the expert in question had spent most of the past few years acting for the Bank as an expert witness in actions against monitoring quantity surveyors arising out of the 2008–2009 financial crash. This was the first time any of the cases had reached the courts, the others having been resolved by ADR. The Judge was concerned that the expert was unaware of the difference between acting as the Bank’s advocate in a mediation, and the duties owed to the court when giving expert evidence.

Further, the Judge noted that Watts were paid £1,500 for producing the Report which was in dispute before the court. This was a modest fee which, it turned out, reflected the fact that they were not expected to do their own detailed calculations of cost, time or cash flow, but instead had to check the calculations and proposals which had been undertaken by the Borrower. The small size of the fee was good evidence of the limited nature of the service that Watts were expected to provide.

In contrast, the expert, in addressing the Report, in his first report (and he produced more than one), incurred fees of £24,000, and the Bank’s solicitors incurred a similar sum in respect of their commissioning, checking and liaison work in connection with that same report. This led the Judge to conclude that this was a “clear indication” that the criticisms that had been generated were based on an entirely unrealistic expectation of what it was that Watts were required to do. What the expert should have done was to establish what a reasonably competent monitoring surveyor would have done in the circumstances, and to test Watt’s performance against that benchmark.

The Judge considered that the expert’s approach was “thoroughly unreasonable”. The agreed note demonstrated that he made no concessions at the experts’ “without prejudice meetings”. Apparently the expert used the meeting “quite deliberately” to raise new matters with his opposite number. In fact the Judge observed at the beginning of the trial that he had never seen a Joint Statement between experts that contained no agreement at all. The main reason for this was due to the complete failure to make any concessions at all.

Unsurprisingly, the Judge did not accept the evidence of the expert concerned.

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