The Case

The judge had determined in an earlier trial that the first defendant, Mr Jones, acted in breach of his fiduciary duties as a de facto director of Audiological Support Services Limited (‘ASS’) in causing ASS to transfer a number of assets (collectively comprising its business and undertaking) to Audiological Measurement and Reporting plc at roughly the same time as ASS entered administration.

 

This trial determined questions of quantum relating to the earlier judgment of liability, including how to assess the equitable damages relating to the value of the assets wrongly transferred.

 

The independence of the expert

The only witness at the quantum trial was Mark Fairhurst, a Forensic Accounting Consultant, who gave expert evidence on behalf of the claimant in respect of the loss of the value of the business and undertaking of ASS. The defendants did not file or serve any expert evidence.

 

During the course of the hearing, the claimant voluntarily disclosed a “Preliminary Quantum Appraisal” which Mr Fairhurst had prepared for them. The defendants argued that Mr Fairhurst could not be regarded as an independent expert because he had been engaged by the claimant at an earlier stage to provide advice on the claim.

 

The judge’s determination

The judge concluded that the purpose of the Preliminary Quantum Appraisal “was merely to provide a preliminary indication from the point of view of an expert forensic accountant as to the quantum aspects of the claim as it was being formulated.”

 

The judge went on to note that, “[w]hilst the document does deal with other heads of claim than those in respect of which Mr Fairhurst was ultimately asked to provide expert evidence for the quantum trial, I do not consider that advice given thereby impinges upon Mr Fairhurst’s ability to give independent expert forensic accounting evidence for the purposes thereof. I hasten to suggest that it would not be unusual for an expert identified as a potential expert to provide an expert report for trial to be asked, at an earlier stage of the proceedings, to give a preliminary indication, or appraisal, of the issues that arise regarding quantum.”

 

The judge also found that Mr Fairhurst was a good witness who gave his evidence impartially and provided clear and considered answers, including in some cases frank answers that did not necessarily assist the claimant’s case.

 

In these circumstances, the judge did not find any proper basis for ruling Mr Fairhurst’s evidence to be inadmissible as not independent expert evidence, deciding, instead, to place very considerable weight and reliance upon it.

 

The judge also commented on Mr Jones’ decision not to obtain expert evidence. “It is unfortunate that Mr Jones does not rely upon expert evidence in response to Mr Fairhurst’s report, which might have enabled the same to have been more closely tested. It is necessary for me, without the benefit of any expert evidence from Mr Jones, to determine whether the figure arrived at by Mr Fairhurst properly represents the amount of equitable compensation that ought to be awarded under this head.”

 

Learning points

Learning points for potential instructing parties:

 

• Always consider whether or not expert evidence is required to support your case.
• In determining whether you need an expert witness, take care in making assumptions about your ability to discredit the opposing party’s expert evidence without the support of an expert.

 

Learning points for experts are:

 

• Providing a preliminary indication, or appraisal, of the issues that arise regarding quantum, should not prevent an expert from subsequently acting as an expert witness in respect of the claim.
• It is important to keep in mind that once instructed as an expert witness, the expert’s overriding duty is to court and not the party instructing them.