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02 Nov 2018

Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd – Who would be an expert?

by Mark Woodward-Smith, Group Managing Director -

Introduction
Merit Merrell Technology Ltd (MMT) were employed by ICI on a new paint making plant for the manufacture, supply, installation and commissioning of steelwork together with offloading and positioning free issue equipment. An NEC3 contract was entered for £1.9m. However, significant change occurred and by 2018 MMT had been paid in excess of £20m by ICI for work undertaken between late 2012 and early 2015. Matters on the project were being resolved amicably until mid-2014 when ICI’s parent company’s (Akzo Nobel) sent their Director of Engineering Excellence, Henk Boerboom, to reduce the cost of the project in line with Akzo Nobel’s expectations.

At this time Akzo Nobel effectively took over administration of the contract leading to the resignation of the independent project manager. There were subsequently four adjudications and multiple hearings at the Technology and Construction Court. The last two court cases related to liability and quantum and were heard by Mr Justice Fraser where ICI received severe criticism from the Judge in respect of the approach adopted by both their witnesses of fact and their expert witnesses.

Witness of fact
During the previous judgement on liability in 2017 Mr Justice Fraser found substantially in favour of MMT and determined that: –

  • The project manager resigned due to interference in the administration of the contract by Mr Boerboom
  • Mr Boerboom’s assumption of the role of the project manager was invalid
  • Mr Boerboom and Akzo Nobel had decided on a course of action designed to force MMT into insolvency and limit ICI and Akzo Nobel financial exposure
  • ICI had repudiated the contract
  • There were also various other findings that were highly critical of ICI and their approach

Despite this, in the quantum case heard in 2018, ICI (and Mr Boerboom in particular) ignored the earlier findings where it suited them. In his 2018 judgement, Mr Justice Fraser included a particularly scathing appraisal of Mr Boerboom’s honesty and approach: Mr Boerboom wilfully ignored the findings from the previous judgement; displayed an “extraordinarily selective memory…” and was “simply pretending not to have any knowledge” of certain matters; that his evidence was “not remotely accurate, … wholly disingenuous, … positively misleading, and … contrary to the text of a vast number of contemporary emails”; that the judge had reached the point where he “..would not accept anything Mr Boerboom says …”; that the “… attitude by Mr Boerboom to the facts to be reprehensible”; he also concluded that Mr Boerboom’s evidence “… bears remarkably little, if any, resemblance to the truth…” and finally “.. should there be any room for doubt … Mr Boerboom is a wholly unreliable witness”. On the whole, it is difficult to understand how Mr Justice Fraser’s opinion of the evidence provided by ICI’s key witness of fact could have been any worse.

Expert witnesses
Mr Justice Fraser criticism of witnesses was not limited to Mr Boerboom and he also had concerns about the quality of expert evidence, the usefulness of the joint statements, the (unrequested) Scott Schedule and the fact that the court had been left to determine the correct valuation.

Again, ICI and their ‘independent’ experts were on the receiving end of particular criticism.

ICI’s experts were not considered to be independent and their quantum expert particularly was heavily criticised. In an attempt to justify ICI’s stance that MMT had been overpaid by £10m ICI’s expert had to open up all of the agreements that had been contemporaneously reached with the independent Project Manager as well as the sums that had been certified on an interim basis. Whilst the court accepted that in principle it was possible to open up these sums in order to determine their true value (there was an express term allowing this) the onus was on those challenging the values to demonstrate that these were not appropriate. Whilst previous agreements and values might not be cast in stone they were contemporaneous assessments that were independently arrived at by those familiar with the work and would consequently attract “powerful evidential weight”.

ICI’s expert, Mr Kitt from Arcadis, totally ignored these values and instead took a position on what was an issue of fact and law in order to depress the value to suit ICI. The judge made it clear that the question of which facts were to be preferred was a matter for the court to decide and Mr Kitt had gone beyond his remit as an independent expert and had adopted a highly partisan approach in order to support ICI’s position. Mr Kitt also incorrectly ignored a schedule of rates that were contained in the contract that should have been used to value change. Instead of adopting this schedule, or even considering the possibility that this might be preferred by the court, he argued that the works should be valued based upon cost – an approach that was not provided for in the Contract. In what the judge described as a “wholly artificial and contrived” argument, Mr Kitt attempted to portray the schedule of rates as ‘Daywork Rates’ that would result in MMT receiving a windfall. The judge found this to be inexplicable and demonstrated an approach of working towards a desired result rather than allowing the correct value to emerge from the application of due process. The inconvenient fact was that adopting the schedule of rates would not have given the answer ICI wanted and hence these rates were ignored!

The judge found Mr Kitt’s approach as an independent expert was “wholly unsatisfactory” and further comments were made included:

  • Despite saying he could not support either party’s valuation he then concluded that he could “do no better than to include ICI’s valuation”
  • He chose to entirely ignore agreements that had been reached and took a position on an issue of fact and law that is not within the sphere of an expert witness
  • He provided evidence that an independent expert, complying with their duty to the court, should not be giving
  • He had not prepared his evidence with sufficient attention to his duty to the court as an independent expert
  • He made witness statements in support of ICI’s contention that certain documents were necessary to enable him to perform his expert function. The judge expressed surprise at this and concluded that the requested information was far more extensive than what could reasonably be required and that would ordinarily be available
  • He was ignorant of a report that vindicated MMT’s costs and sought to repeat the exercise afresh
  • Most importantly, he failed to grasp that he was required to provide an independent valuation and not argue for ICI or “adopt points in a partisan fashion”

To summarise, Mr Kitt had not satisfied his duty to the court and actively sought to favour ICI instead of providing impartial assistance. The judge found a remarkable contrast between the approach adopted by the respective quantum experts and preferred the evidence of MMT’s expert in all respects.

Similarly, the biased approach adopted by ICI’s accountancy expert was also questionable. ICI’s expert, Mr Thompson, was found to have made a statement that he must have known to be incorrect, namely that MMT’s expert, Mrs Baker, “agreed that further information was needed to fulfil her instructions”. Under cross-examination it became clear that he knew that Mrs Baker did not and would not agree with this and the judge stated that “quite how this was then changed by him into an express statement … that she did agree with him is unclear, remarkable, highly regrettable, and simply a demonstration of the further lack of credibility of his evidence”.

Additionally, statements demonstrating Mr Thompson taking a partisan stance on matters of fact were evident throughout his report and he also ignored or contradicted the previous judgment on liability. It was also noted that Mr Thompson had previously been the subject of judicial criticism for presenting a one-sided picture and favouring one party over another and that this had not led to him modifying his approach.

As with quantum, the judge concluded that wherever the accountancy experts differed he preferred the evidence of MMT’s expert in all instances.

The judge also noted that there was “such a preponderance of partisan experts, all called by the same party” and that “if it is a coincidence, it is a remarkable one”. The implication of this is that the experts had allowed themselves to be unduly influenced by ICI and the resultant lack of impartiality was contrary to the overriding obligation to the court set out in the Civil Procedure Rules.

Obligations of the expert
The judge made it clear that the principles governing expert evidence should be carefully adhered to and that any necessary guidance should be sought from instructing solicitors. He referred to the duties of expert witnesses that was set out by Mr Justice Cresswell in what is known as The Ikarian Reefer case, namely:

  1. Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation (Whitehouse v. Jordan, [1981] 1 W.L.R. 246 at p. 256, per Lord Wilberforce).
  2. An expert witness should provide independent assistance to the Court by way of objective unbiased opinion in relation to matters within his expertise (see Polivitte Ltd. v. Commercial Union Assurance Co. Plc., [1987] 1 Lloyd’s Rep. 379 at p. 386 per Mr. Justice Garland and Re J, [1990] F.C.R. 193 per Mr. Justice Cazalet). An expert witness in the High Court should never assume the role of an advocate.
  3. An expert witness should state the facts or assumption upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion (Re J sup.).
  4. An expert witness should make it clear when a particular question or issue falls outside his expertise.
  5. If an expert’s opinion is not properly researched because he considers that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one (Re J sup.). In cases where an expert witness who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report (Derby & Co. Ltd. and Others v. Weldon and Others, The Times, Nov. 9, 1990 per Lord Justice Staughton).
  6.  If, after exchange of reports, an expert witness changes his view on a material matter having read the other side’s expert’s report or for any other reason, such change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the Court.
  7. Where expert evidence refers to photographs, plans, calculations, analyses, measurements, survey reports or other similar documents, these must be provided to the opposite party at the same time as the exchange of reports (see 15.5 of the Guide to Commercial Court Practice).

Mr Justice Fraser then expanded upon this indicating:

  • Experts should have equal access to the same material
  • Where there are matters of fact that affect the expert’s opinion it is not the place of an independent expert to determine the version of facts that they prefer – this is a matter for the court
  • Experts should not take a partisan stance in favour of the party that appointed them
  • Experts should seek to narrow the issues in line with CPR 35.12 and adopt a constructive and cooperative process that is governed by the overriding obligation to help the court.
  • Where late material arises that requires further consideration then notice of this should be given to their opposite number as soon as possible and only in exceptional circumstances should further reports be produced during the trial.
  • No expert should allow the principles in The Ikarian Reefer to be loosened

Takeaways of this case
The courts will give “powerful evidential weight” to contemporaneous interim assessments and agreements and it will only be in exceptional circumstances that these will be opened up and overturned. In such instances the onus will be on the party disputing the contemporaneous position to demonstrate why this position should not be upheld. Experts should consider any such agreements or interim positions together with any other relevant matters.

Experts should consider all of the facts, including those that are not in favour of the party that appointed them, and should arrive at a range of outcomes based upon the various views on the facts – it is not the job of the expert to determine which version of these ‘facts’ are preferred.

Experts should be independent, objective and unbiased and have an overriding obligation to assist the court in line with Part 35 of the Civil Procedure Rules, the associated Practice Directive and the principles set out in The Ikarian Reefer. This duty to the court overrides any obligation to the instructing party or those paying for the expert services.

Failure to comply with the rules and consider relevant evidence will be rightly criticised and may be costly in terms of court time, the outcome of proceedings and reputation.

Finally, and as an aside, it goes without saying that it is never a good idea for any party (in this case exclusively ICI) to ignore previous findings on associated matters, particularly when appearing before the same judge. Whilst a somewhat piqued Mr Justice Fraser was reassured that “no disrespect was intended” he made clear that evidence must be relevant to be admissible and if a binding finding is made previously then evidence contrary to this cannot be relevant and is hence not admissible. If you poke the bear it might not come as a surprise that you get bitten…

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