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12 Jul 2021

When an independent expert has 'unfettered and unsupervised access' to the client - A cautionary tale

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Background

The TCC has found a defendant in breach of a Pre Trial Review Order, CPR Part 35 and the Guidance for the Instruction of Experts in Civil Claims 2014 (the "2014 Guidance") in what should stand as a cautionary tale for parties, independent experts and solicitors.

In Dana UK AXLE Ltd v Freudenberg FST GmbH [2021] EWHC 1413, Mrs Justice Joanna Smith granted the Claimant’s ("Dana") mid-trial application to exclude the Defendant’s ("FST") three expert reports in their entirety. Subsequently, the court has found entirely in Dana's favour, awarding it £11 million in damages.

Dana’s application had been preceded by the following key events:

a)   Both parties had been invited to serve expert evidence in the fields of engineering and materials/polymer science (the dispute between the parties having concerned the alleged premature failure of pinion seals manufactured by FST);

b)   FST’s reports were filed late but Dana elected not to object, on the basis that various defects in the reports be remedied including:

  • none of the reports identified the documents upon which the expert had relied;
  • two of FST’s experts had undertaken site visits to FST factories without putting Dana on notice and without providing Dana’s experts a similar opportunity and the reports of those experts did not provide any photographs taken or notes made during those visits; and
  • sources of data and other information were often not provided.

c)   At the Pre Trial Review, FST was granted relief from sanctions in respect of the late service and permitted to rely on the reports at trial subject to filing and serving revised reports amended to comply fully with the CPR including:

  • providing full details of all materials provided to the experts by FST / its solicitors;
  • disclosing all documents produced by or provided to each expert during any site visit including for example any notes taken; and
  • identifying the source and details of any data or other information relied on.

d)   Dana also served targeted CPR Part 35 questions to each of FST’s experts.

e)   FST served two revised reports, which Dana considered unsatisfactory. In its openings, Dana expressed concern that information had been provided directly by FST to its experts rather than via FST’s solicitors. Dana said this was particularly concerning in circumstances where FST alone had knowledge of its manufacturing processes and procedures and had served no factual witness evidence, such that Dana, the experts and the court were dependent upon FST’s disclosure.

f)   In the light of Dana’s submissions, Mrs Justice Smith directed FST's solicitors to provide a witness statement setting out its understanding of all of the contact the experts had had with FST. The witness statement revealed that:

  • there had been phone calls between FST and its experts regarding assistance locating documents and technical information but there were no records of those calls;
  • FST’s experts had had direct communications with FST personnel regarding the commercial terms of the experts’ engagements and logistical support;
  • FST’s experts had in fact undertaken more site visits than disclosed in the reports. No disclosure was provided in relation to these visits; and
  • there were 175 new documents to disclose, said to comprise the relevant correspondence including FST and one or more of its experts.

As a result, Dana invited the Court to exclude FST’s technical expert evidence.

Breaches of the PTR Order

Mrs Justice Smith held that there had been a serious breach of the requirement to provide full details of all materials provided to the experts by FST / its solicitors.  Crucially:

  • Whilst FST had provided lists of documents, it had failed to identify all of the materials provided to the experts;
  • FST solicitor’s first witness statement failed to provide details of any factual information provided orally by FST to its experts;
  • FST’s new disclosure demonstrated that "a significant amount of information" was provided to each expert over a long period of time, which was never disclosed to Dana or otherwise identified – indeed, the experts had had "unfettered and unsupervised access to [FST’s] personnel" including calls and virtual meetings (of which there were no records) and correspondence that went "far beyond contact limited to locating documents or technical information, or the provision of logistical assistance".

This was "not just a technical or unimportant breach", because it is:

"essential for the Court to understand what information and instructions have been provided to each side’s experts, not least so that it can be clear as to whether the experts are operating on the basis of the same information and thus on a level playing field".

The Judge considered that FST’s conduct was particularly egregious given that FST had called no factual witness evidence, making this "exactly the sort of case" where the experts on both sides ought to have cooperated in relation to the obtaining of the primary factual evidence they required.

Mrs Justice Smith was "amply satisfied" that FST had breached the letter and spirit of the relevant parts of the PTR Order. All of these breaches were "serious and unexplained". She also agreed with Dana’s suggestion that it was clear from FST’s new disclosure that FST’s failure to comply with the relevant parts of the PTR Order was "unlikely to have been inadvertent", because FST could not have complied without revealing the nature and extent of the communications between it and its experts.

Mrs Justice Smith identified the following breaches of CPR Part 35 and the 2014 Guidance:

  • There was a "free flow exchange of information" between FST and its experts with seemingly little to no oversight from FST's solicitors, making it inevitable that the experts had been privy to information not shared with Dana’s experts;
  • The flow of information continued between the joint expert meetings and the signing of the joint statement, which should not have happened. Whilst the TCC Guide is clear that legal advisors should not be involved in negotiating or drafting joint statements, it must follow that the same prohibition applies to the parties themselves;
  • As referred to above, FST’s experts had attended site visits without informing Dana;
  • The analyses and opinions of FST’s experts appeared to have been "directly influenced by FST" (for example, one expert had asked an in-house specialist at FST to "correct any mistakes or mis-informed opinions" in his assessment and asked whether his draft report was "the type of report that you were looking for").

Conclusions

The case is a stark reminder of the obligations of parties, independent experts and solicitors and the importance that complying with those obligations has on ensuring transparency and equality of arms in proceedings – particularly where one party to the proceedings has unique knowledge and chooses not to adduce any factual witness evidence. It is not unusual for parties to have a high degree of direct contact with their independent experts, particularly in circumstances where the expert evidence is highly technical in nature, however the decision is an important reminder to ensure that:

  • If possible, solicitors should be in attendance at meetings between clients and experts. Either way, records must taken of all meetings / calls between the experts and the client (particularly if lawyers are not in attendance).Where facts and information have been passed to the expert verbally, a note needs to be taken by the expert of this;
  • Instructing solicitors should be copied to all communications between experts and the client. Communications of this nature should be limited to the provision of information and should not continue between joint expert meetings and joint expert statements beyond the joint expert meetings;
  • Reports must disclose all such interactions including site visits;
  • Reports must also disclose the source of all information / data in support of each factual statement / opinion;
  • All such factual information and relevant documents must be disclosed to the other side;
  • The other side’s experts must be informed of site visits and must also be given opportunity to attend site.

The issue of transparency in expert evidence and maintaining impartiality is clearly an issue of which the TCC is acutely aware at present.  Indeed, in the recent costs judgment of Beattie Passive Norse Limited v Canham Consulting Limited [2021] EWHC 1414 (TCC), Mr Justice Fraser commented:

"There is a worrying trend generally which seems to be developing in terms of failures by experts generally in litigation complying with their duties."

This follows comments from Lord Hodge, Deputy President of the Supreme Court and president of the Expert Witness Institute at the Institute’s recent annual conference that: "It was disappointing that the [recent survey carried out by the Expert Witness Institute]… points to evidence of instructing parties putting pressure on experts to change their evidence in a way which they feel damages their impartiality.  Lawyers must do better."

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