Issue 147 September 2012

Dispatch
Dispatch highlights some of the most important legal developments during
the last month, relating to the building, engineering and energy sectors.

Expert Evidence
Guidance for the Instruction of Experts
The Civil Justice Council has published revised guidance for the
instruction of experts in giving evidence in civil claims. Whilst there
is little new of substance, the publication of the guidance serves
as a useful reminder of some of the key issues which need to be
considered by both those instructing and the expert himself. The
guidance is expected to be annexed to Practice Direction 35. The
objectives underpinning the instruction of experts remain to:
(i) Encourage the exchange of early and full information about the
expert issues involved in the prospective legal claim;
(ii) Enable the parties to avoid or reduce the scope of litigation
by agreeing the whole or part of an expert issue before the
commencement of proceedings; and
(iii) Support the efficient management of proceedings where
litigation cannot be avoided.
Above all else, whilst experts owe a duty of reasonable skill and
care to those instructing them, they have an overriding duty to the
court, over and above the obligation to those paying them. The
guidance states that if an expert has previously acted in an advisory
capacity, they will need to give careful consideration as to whether
they can accept a role as expert witness bearing in mind the need
to ensure there is no conflict between their advisory role and their
duties to the court as an expert in proceedings.
For example, those instructing experts must not do so in such a
way as to encourage experts to avoid reaching agreement or to
defer doing so. An expert cannot ignore arguments raised by the
other side. Where there are material facts in dispute, it is said that
experts should express separate opinions on each hypothesis put
forward. It is also suggested that those instructing experts should
seek to agree, where possible, the details of the instructions for the
experts, which should include any difference in the factual material
that they are to consider.
Conditional or contingency fee arrangements remain prohibited, as
this goes against the presumption of independence and objectivity.
The new guidance states that the court may require experts to
provide an estimate of their costs, and that the experts fees and
expenses may be limited by the court. Experts should also be aware
that any excessive delay or failure to comply with court orders may
result in adverse costs orders.
Finally, the guidance suggests that a useful test of independence
is whether the expert would express the same opinion if given the
same instruction by the other side.

Expert evidence: delay, snagging and practical

completion
Walter Lilly & Company Ltd v Mackay and DMW
Developments
[2012] EWHC 1773 (TCC)
We discussed this case back in July (Issue 145). In the course of
his judgment Mr. Justice Akenhead made a number of interesting
comments about the approach to the expert evidence. In terms
of the delay evidence, he preferred the approach of establishing
critical delay by reference to the logical sequence(s) of events which
marked the longest path through the project. This was both logical
and conventional.
Regard should be had to the likely longest sequence of the
outstanding work on a monthly basis as being the primary pointer
to what was delaying the work at any one time. This the Judge
thought was a wholly logical approach and, indeed is the approach
used by most delay experts when there is a usable baseline
programme from which to work. The logic, explained the Judge, is
simply that if there are, say, two outstanding items of work, A and
B, and A is always going to take 20 weeks to complete but B is only
going to take 10 weeks, it is A which is delaying the work because
B is going to finish earlier; overall completion is therefore dictated
by the length of time needed for A. Put another way, it does not
matter if B takes 19 weeks, it will be the completion of A that has
prevented completion. Thus, if one is seeking to ascertain what is
delaying a contractor at any one time, one should generally have
regard to the item of work with the longest sequence. Therefore it is
necessary to have regard to how long individual items actually took
to perform and not just to how long one party or the other at the
time was saying it would take.
The Judge was also clear that what an expert cannot do is to
prepare a report that simply says that the other side has not
proved its case. He stressed that: it is not for an expert to suggest
this type of thing. Further the adoption of an approach based on
determining the most significant matters preventing practical
completion is not helpful as it tends to reflect a subjective
approach as to what a client thought was significant.
In the delay assessment exercise the court should be very
cautious about giving significant weight to the supposedly
contemporaneous views of persons who did not give evidence.
Without testing the evidence, it is unclear whether the relevant
person who made that particular statement had undertaken any
analysis or had considered all the matters that had been put in
issue in the proceedings or even whether they have given an
informed view.

Issue 147 Sept 2012

There was also discussion of snagging. In the assessment of which

events caused what overall or critical delay, one should remember
that it is not necessarily the last item or the area of work that is
finished last which causes delay. Often on building projects, the
last item of work is the final clean up of the site, something that
may only take a short time. However, it is the task which takes
longer than anticipated and so delays the final operation that must
be assessed. There will always be minor deficiencies or incomplete
items of work which will be required to be completed before
handover.
If there is an excessive amount of snagging and therefore more
time than would otherwise have been reasonably necessary to
perform the de-snagging exercise has to be expended, it can
potentially be a cause of delay in itself.
There was some disagreement between the experts as to what
Practical Completion meant. The Judge noted that it means
completion for all practical purposes and what that completion
entails must depend upon the nature, scope and contractual
definitions of the Works, as they may have developed by way of
variation or architects instructions. There was common ground
between the experts that de minimis snagging should not be a
bar to Practical Completion unless there is so much of it that the
building in question cannot be used for its intended purposes.
Whilst it may not seem unreasonable to pose the question: what
were the most significant matters which, at any given time, were
preventing practical completion from being achieved?, this could
lead to a subjective approach. Further, it was not the case that
just because works are finished before Practical Completion they
cannot have delayed completion.

Confidentiality of arbitration documents

Gray Construction Ltd v Harley Haddow LLP
[2012] CSOH 92
Gray claimed sums from Haddow arising from an arbitration
with the NHBC about defective foundations. Haddow sought the
disclosure of documents relating to the arbitration, including the
pleadings and the terms on which the arbitration settled. It was
not disputed that, in order to make out its claim for damages,
Gray had to show not merely that it had acted reasonably in
compromising the arbitration on the agreed terms but also that
the settlement was, objectively, a reasonable one. Gray explained
that to do this, they intended to produce a statement from the
solicitor who had acted for them in the arbitration. That would
be sufficient as the evidence could then be tested on crossexamination.
Haddow disagreed arguing that to prepare for cross-examination,
it needed to see documents from the arbitration which were
relevant to assessing the reasonableness of the settlement.
Haddow needed to know the legal and factual basis of the
NHBCs claims and also the circumstances in which Gray settled
the claim on the terms that it did. The court proceeded on the
basis that confidentiality extended to all documents produced
or created by or on behalf of the parties in connection with the
arbitration proceedings. As Lord Hodge said, one of the attractions
of arbitration is its privacy and this benefit would be negated if a
party to the arbitration were not bound to respect confidentiality.

Such an obligation should be implied unless the terms of the

parties agreement exclude such implication. However there must
be exceptions to those obligations, for example, where a party
needs to use such documents to enforce its award or otherwise
to protect its legitimate interests or where the disclosure is in the
public interest.
In what circumstances can the court override the obligation of
confidentiality to require disclosure of documents or information
in some other form? The basic answer is that the public interest
in the administration of justice can override a private obligation
of confidentiality. Lord Hodge noted that it was arguable that in
an arbitration, the private obligation of confidentiality may be
supported by the public interest in enabling people to resolve
their disputes privately if they so wish. But the court must be
able to override what remains a private obligation if that is in the
interests of justice.
In the Judges view the court should seek to strike a balance
between respect for the honouring of the obligation of
confidentiality and the public interest in the fair administration
of justice. Where it is necessary to disclose documents in order to
achieve the fair disposal of an action, the court may well order their
production. The test is not one of absolute necessity; the court, in
deciding how to achieve a fair disposal of the action, may take into
account how a party can reasonably prepare to present its case. If
the documents are not essential to the action or if the information
can be recovered elsewhere without breaching a confidence, the
court may refuse to order recovery.
Here, to enable Haddow to prepare it was necessary that it had
access to the relevant documents. It would not be consistent
with the fair disposal of the action to require it simply to accept
the solicitors evidence in chief and then only be able to review
the facts about the arbitration and settlement for the first time
on cross- examination. As the documents were not commercially
sensitive, they could be used, but only, as is standard, for the
purposes of the case at hand. This was, of course, an unusual
case decided entirely on its facts, but it is a useful reminder of
the basic principle that documents created as part of arbitration
proceedings will, in the usual course of things, be treated as
confidential. That is, after all, as the Judge made clear, one of the
key reasons why parties enter into arbitration agreements in the
first place.
Dispatch is produced monthly by Fenwick Elliott LLP, the
leading specialist construction law firm in the UK, working
with clients in the building, engineering and energy sectors
throughout the world.
Dispatch is a newsletter and does not provide legal advice.
Edited by Jeremy Glover, Partner, Fenwick Elliott LLP
[email protected]
Fenwick Elliott LLP
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