It's Getting Hot in Here: Experts and Conflicts of Interest

WHEELDON BROTHERS WASTE LIMITED v. MILLENIUM INSURANCE COMPANY LIMITED [2017] EWHC 218 (TCC)

Introduction

Although, arguably, it does not happen often, it sometimes occurs that the same expert is wanted by two parties on related matters, or that a certain expert who has been previously instructed by a party is now wanted by another to use that expert against the expert’s old client. Alternatively, in cases where the issues that initially gave rise to the dispute have been repaired or covered over (and where only one expert was initially instructed to document the facts as they were at the time the issues occurred), there is also a risk that parties will raise arguments about conflicts of interest.

The case before Mr Justice Coulson was rather unique in the sense that the parties agreed the defendant’s expert could be instructed by the claimant to assist the claimant in examining whether a third party could be liable for the losses the claimant had initially sought to claim from the defendant insurer, but for which the defendant had declined cover. However, the principles considered and the reasons given by the learned judge easily have application to other situations where conflicts of interest in relation to experts could arise.

Background

There was fire at the claimant's waste processing plant. The Defendant insurer instructed Mr Braund, a forensic expert employed by Hawkins. The following day, Mr Braund visited the site and carried out post-fire investigations.

Mr Braund reported to the defendant insurers that the cause of the fire was frictional heating, or hot metal fragments, or hot sparks, which ignited combustible material under the conveyor. He thought the cause of the heating/fragments/sparks was a bearing on the conveyor. Relying on Mr Braund's report, the defendant declined liability under the policy, on the grounds that the presence of the combustible material and/or the state of the conveyor was contrary to a number of the terms of the policy.

As a result of the report, the claimant wanted to know the extent to which it might have a claim against third parties. The claimant therefore approached Mr Braund to see if he could assist "with its proposed recovery" against those third parties. It was on this basis, namely that the claim under the insurance policy had been rejected and Mr Braund was simply helping with the claimant's proposed recovery against third parties, that the loss adjusters gave permission for the claimant to engage Mr Braund. Mr Braund's subsequent report for the claimant reached the same conclusion that he had reached the previous year for the defendant insurers.

The claimant later commenced proceedings against the defendant insurer.  During the first CMC, the claimant sought to prohibit the defendant from relying upon Mr Braund’s report.

Arguments

The claimant referred the court to Prince Jeffri Bolkiah v KPMG [1999] 2 AC 222. In that case, the defendant accountants had previously carried out an extensive amount of work for the claimant personally, including the provision of litigation services and was the subject of major litigation. As a result, it was not in dispute that they were in possession of information confidential to the claimant. The defendants were then instructed to act as auditors for the agency and the claimant objected to their appointment. It was not a case about the instruction of an expert under CPR Part 35. 

The House of Lords concluded that, since it had been established that the defendants were in possession of confidential information originating from the claimant, the burden was on them to show that there was no risk that the information would come into the possession of those acting for the other party. Lord Millett said: "It is in any case difficult to discern any justification in principle for a rule which exposes a former client without his consent to any avoidable risk, however slight, that information which he has imparted in confidence in the course of a fiduciary relationship may come into the possession of a third party and be used to his disadvantage. Where in addition the information in question is not only confidential but also privileged, the case for a strict approach is unanswerable…?I prefer simply to say that the court should intervene unless it is satisfied that there is no risk of disclosure. It goes without saying that the risk must be a real one, and not merely fanciful or theoretical. But it need not be substantial."

The Defendant referred the court to Meat Corporation of Namibia Limited v Dawn Meats (UK) Limited [2011] EWHC 474 (Ch). That was a case about the appointment of an expert under CPR Part 35. The expert had been given some privileged and confidential information when she had been previously contacted by the claimant, but she had warned the claimant that the defendant was likely to offer her a consultancy which would mean that she could no longer act for the claimant. When that consultancy materialised, the claimant objected to her giving expert evidence on behalf of the defendant. It was concluded that the application of the strict test and the strict requirements in Prince Jeffri should not be imposed. In that case, the judge said that there was no evidence of any risk that confidential information would be disclosed by the expert: she had made it plain from the outset that it would not be. The judge therefore rejected the application to prevent the defendant from relying on their chosen expert. 

Judgment

Mr Justice Coulson held that there was no basis for preventing the defendant insurers from relying on Mr Braund’s evidence. His reasons were as follows:

1.    Mr Braund was in the best position to assist the court on the background issues surrounding the fire. He was the only one who had attended immediately after the fire and carried out all the investigations typical of fire experts in this situation. The learned judge stated: “In those circumstances it would be absurd if Mr Braund was prevented from providing the necessary assistance on those issues to the court.” It was not known at the time of the CMC whether the claimant would challenge Mr Braund's opinion as to the cause of the fire: it had pleaded no case on causation in the Particulars of Claim and had not served a Reply. Mr Justice Coulson considered, however, that it would be “contrary to the interests of justice for the court's inquiry into causation to be carried out without the assistance of the fire expert who undertook the contemporaneous investigation.”

2.    Mr Justice Coulson did not see any overlap or conflict between what Mr Braund was instructed to do by the claimant, and what he was instructed to do by the defendant. The latter was, in the learned judge’s view, solely interested in the cause of the fire. The claimant, however, was interested in Mr Braund's view if, assuming that the cause of the fire was the bearing on the conveyor, there was any claim over against third parties. The defendant has no interest in that issue at all. Thus these were two separate areas of investigation: “it was on that basis that the claimant asked for Mr Braund's assistance; it was on that basis that the loss adjusters agreed to the proposal; and it was on that basis that Mr Braund himself also agreed to assist the claimant”. Mr Justice Coulson therefore said that: “the court should not now ignore the clear view that everyone had at the time, that the arrangement did not give rise to any conflict of interest or difficulties of confidentiality.”

3.    An expert instructed under Part 35 has an overriding duty to the court, a duty which trumps everything else. Mr Justice Coulson noted that this was not a factor that was present in Prince Jeffri (because that was not a case about expert evidence), but it was a factor relevant to the outcome in Dawn Meats. In the learned judge’s view, the existence of that overriding duty modified the strict application of the rule in Prince Jeffri. 

4.    In Dawn Meats, confidential information had been provided to the expert but there was no risk it would be passed on. Mr Justice Coulson stated that in his view the present case was even more clear-cut: there was no evidence that confidential information had been passed to Mr Braund, and no risk it would be passed on to the defendant. There was no evidence that any privileged or confidential matters were raised with Mr Braund, or which had (or could have had) an impact on his opinion as to the cause of the fire. 

5.    What had happened in the present case had been, in the judge’s view, inadvertent. When the request was made and accepted, both sides had been acting in good faith, but Mr Justice Coulson considered that it was possible to see how, “with other parties in other circumstances, a request by a claimant to use the defendant's expert, ostensibly for good reason, might later be used as a vehicle to prevent that expert giving evidence at all”. 

The judge therefore concluded that there was no proper basis for the court to deprive the defendant from relying on the expert evidence of Mr Braund.

Conclusion

The main balancing act, it is submitted, is between the probative value of the evidence in reaching the right conclusion on the facts at trial, against the harm that the passing of (or risk of passing) confidential information from one party to another can cause. In this case, the judge found that there was no confidential information passed on. It is submitted that, had there been more evidence that confidential information been something which had been passed to the expert, the result may have likely been the other way. 

There are at least two practical difficulties faced by parties seeking to argue that there is a risk that confidential information will be/has been passed to another party. The first is proving that the information given to the expert was actually confidential and/or privileged. The difficulty lies in a party attempting to put the information to the court when the information in itself ought not to be before the court i.e. because it is privileged. The second is proving that the information either has been passed on, or that there is a risk that the information will be passed on. If the expert says that he/she will not pass the said information on, is this sufficient, in the court’s eyes, to reduce the risk of the information being passed on so as to enable the court to say that there is no conflict of interest? In the latter situation, it may be that the reversal of the burden of proof discussed in Prince Jeffri may assist. In any event, it is submitted that the party alleging the conflict may actually have the harder task than may otherwise have been thought.

The judgment is available here: https://www.bailii.org/ew/cases/EWHC/TCC/2017/218.html

Katie is a barrister practising at Hardwicke Chambers, London, and specialises in construction litigation, adjudication and other forms of ADR. 

This article is for information only. It should not be relied upon and is not to be used as a substitute for seeking legal advice.