Previous Events

Professional Indemnity Claims

Adrian Bingham

20 April 2004

Adrian is a partner in Hextalls, Solicitors, and specialises in professional negligence matters. The title of his talk attracted a good-sized audience, showing that it is a subject close to the hearts of many branch members. The presentation was most comprehensive, outlining recent developments in case law, with examples of how the courts have dealt with each stage of legal analysis, and with lessons from cases in the field which have been through the adjudication and mediation processes.

Adrian reminded us that since the cases in the 1980’s that had seen the debates over economic loss resolved by the ruling in Murphy v Brentwood District Council (1990), the law in that area has largely been settled. Since then, SAAMCO v York Montague (1998) has been one of the more significant cases involving professional liability, and set the scene for more recent trials. In overturning the Court of Appeal’s decision on the case, Lord Hoffman said in the House of Lords that, rather than concentrating on the way in which damages could be calculated, the starting point should be to establish the duty owed by the professional to the client. It followed that the liability of a professional is defined by the scope of his remit, as set out in his services agreement, and that this was the place to start legal analysis. This was not new, but was nevertheless a useful reminder of a general principle that had, perhaps, become obscured by the debates that had resulted from the Murphy decision.

The House of Lords decision in Investors Compensation Scheme v West Bromwich Building Society (1998) gave authority to the “purposive” approach to the interpretation of professional services contracts, and another decision that followed this line was Nordic Holdings v Mott MacDonald (2001). The approach gives authority to a method of interpretation which tries to establish the meaning which a document would convey to an ordinary person with appropriate background knowledge at the time of making the contract, rather than applying a strict interpretation of the words and syntax which would result in construing an intention which the parties could plainly never have had.

In illustrating how the unwary can be trapped, Adrian told us of disputes which involved interfaces between professional advisers, where lack of scope definition, as distinct from inaccurate definition, had led to individuals finding that they carried liabilities which they had assumed were being carried by others. A further lesson that Adrian drew was that construction professionals could learn from the medical practice of making clients as aware as possible of inherent risks and uncertainties that were to be faced in the endeavour in question. If that were done, it could be argued later that the client understood what he was letting himself in for, and had accepted the commercial risks involved. To that end, representation at appropriate levels during meetings with clients is advisable, together with ensuring that proper minutes are kept to record the salient points that could be used later to defend claims.

The need for run-off insurance was highlighted in Berwick v Wickens Holdings Ltd (2000), following the death of a workman in a structural collapse during a building refurbishment that involved opening up brickwork. It was found that the original building had been negligently designed, and that the engineers who were involved in the refurbishment could not reasonably have known this. The original designer was held liable, years after his services were completed.

Lack of space precludes my recounting here all the topics that Adrian covered, but they ranged from interpretation of the contract and the duties imposed, through standards of care, causation and remoteness to damages. We also heard about cases in which adjudication and mediation had been applied. The Chairman expressed our thanks to Adrian for a very comprehensive and authoritative talk, and the lecture notes which he handed out at the meeting were supplemented by a full transcript that forms a valuable summary of this subject. My copy will be kept alongside my textbooks.

Report by Bob Crease.

The Changing Role of the Expert

Iain Wishart

18 May 2004

Iain is Managing Director of Gardiner & Theobald Fairway, and a very experienced expert witness. He gave us the benefit of knowledge gained by acting in that role, not just in the U.K. but also internationally. The role of the expert was, of course, significantly affected by the Woolff reforms to the Civil Procedure Rules, and whilst they do not strictly apply to arbitration, the philosophy that the reforms brought to the role of the expert is eminently transferable.

Iain started by reminding us that, occasionally, an expert would act like a hired gun, brought in to give in evidence only those aspects of their opinion that would support the case of their client, rather than to advance the cause of justice. This was the easy course, and secured the expert’s retainer on the case in question, but could damage their integrity and reputation, especially in the face of skilled cross-examination.

In the first place, Iain asked us, what is an expert anyway, and who determines that a person can be considered one? Some people obviously stand out as experts - Stephen Hawking, for example. We also learnt that I.K. Brunel sat as an arbitrator, and on one occasion called himself as an expert witness. However, a person only has to hold himself or herself out as an expert to be taken on in the role of an expert witness, provided they can persuade people of their credibility. This can lead to disastrous results, especially in criminal cases, but even in civil actions, poor advice can lead clients and their legal advisers to waste massive sums in costs on cases which in reality have little prospect of success.

C.P.R. Rule 35.2 sets out the general requirements for expert witnesses, namely:

· to help the Court,

· to be independent and uninfluenced by the litigation,

· to give objective, unbiased opinion within their expertise, and

· not to act as an advocate.

Iain’s advice was that an expert should always make it clear when an issue fell outside their area of expertise, and when they could not reach a clear opinion. They should always trust their own counsel, but if they did not know the answer, they should not be afraid to say so.

The introduction of the concept of the single joint expert (SJE), appointed by the Court, has helped to overcome a number of the weaknesses of previous practices by supporting the prime philosophy that the expert is there principally to assist the tribunal. An SJE is often most effective when other procedures or directions encompass their role. Most usefully, the parties can agree on the SJE’s brief or questions to be answered. Any instructions to the SJE must of course be copied to the other side. The Court may give directions and instructions of its own, for example to order examinations or inspections, and may limit fees. Thus, the SJE may find themselves the subject of hard questioning from both advocates, making even lonelier an already difficult role.

In theory, the SJE can approach the judge for legal advice and/or guidance, but the better practice is for them to meet with the legal advisers from both sides to develop the brief correctly, almost like an arbitrator might. The SJE is not empowered to answer the principle, substantive question before the tribunal, but where the evidence is well reasoned and clearly expressed, a judge would have to be careful were he to substitute his opinion for that of the SJE.

Iain told us of French and Danish practices regarding expert witnesses, and there are many similarities with the modern British system. In France, the expert witness is a recognised professional person, whose name is entered on a list maintained by the Courts. There are also national experts. The judge appoints the expert, either on their own motion or on application by one or both of the parties, and gives a specific brief. The expert has the power to investigate whatever they feel is necessary to fulfil their remit, and submits their report to the Court.

Drawing on his own knowledge of an arbitration in Denmark, Iain told us of a case where two experts were appointed, one by each of the parties. The arbitrator, who in this case was a Danish judge, told the experts that he expected them to produce a single, agreed report which was to be confined to answering questions drafted by the parties. Each party was permitted to object to questions posed by the other side, and in total there were about 50 questions. The parties were required to respond to the experts’ needs, and were required to provide to them access to their personnel and records. The parties also gave presentations to the experts and the lawyers of both sides. In this case, the dispute was settled after both experts submitted an agreed report.

We were also given an insight into the use of exerts in adjudication and mediation. Owing to the time pressures in the former process, experts still tend to be hired guns, and Iain suggested that appropriate weight should be given to such evidence if the adjudicator believes that to be the case. In mediation, the role of the expert can be very powerful, by advising the mediator of the strength and weaknesses of the other side’s case (and even that of his own). However, in mediations that have limited time, as is becoming the vogue, experts can be disastrous if they seek to use precious minutes explaining matters in detail.

The important lessons for arbitrators, which Iain drew from his international experience, were that:

· it is very important to select the right expert,

· if there are two opposing experts, to make sure they work together, and

· there is benefit in reinforcing the message about their duty to the tribunal by a briefing at the outset.

Drawing on his own experience, Iain felt that there should be more openness in responding to requests from the experts for more information and that the experts should be able to act inquisitorially. By way of example of co-operation between experts, Iain noted the real need on matters of programming that the two experts should use the same baseline programme, the same progress data and, if possible, use the same, agreed method of analysis.

Professor John Uff has suggested that ethical considerations for experts mean that they should not unquestioningly accept an account from one party only, and not meet with or accept documents from one side only. However, in practice, experts only gain access to their own side’s witnesses, and it thus follows that perhaps the best way forwards is not to have party-appointed experts. Iain saw a need for experts to be more independent, to display greater professionalism and for them to seek more convergence and agreement with other experts involved in the case. The parties to a dispute should be able to rely upon both experts’ integrity, knowledge and common sense.

Report by Bob Crease.

CIMAR 100 Day Arbitration Procedure

Chris Dancaster

15 June 2004

The picture shows Branch Chairman, Robin Orme, presenting Chris Dancaster with a token of the branch's appreciation for an interesting presentation.

Those members who managed to resist the allure of the football on the television and attended the June meeting in Reigate, on what must have been the warmest evening of the year, were treated to an entertaining and informative talk by Chris Dancaster on the proposed CIMAR 100 Day Arbitration Procedure. We were privileged to be given the talk at this time, in that the Procedure was not due to be formally released to the public until the beginning of July. It was thus possible (just) to have some influence on its final form. The Society for Construction Arbitrators, inspired no doubt by the swift and deadly efficiency of adjudication under the Construction Act, decided some years ago to provide a speeded up version of CIMAR (Construction Industry Model Arbitration Rules). Thus the new Procedure.

Copies of the new Procedure were supplied to everyone and we were taken through it and the background to the various rules explained. The underlying philosophy appeared to be: if an adjudication can be done in 28 days then an arbitration can surely be done in 100 days. Sensibly, bearing in mind how parties can drag their feet interminably, time only started to run from when either the statement of defence (or defence to counterclaim) was delivered or if already delivered, from when the arbitrator gave his directions.

After the presentation, Chris Dancaster answered questions from the floor. Concern was exhibited by many questioners (and shared by your reporter) about adopting procedures which, although appropriate to the interim decision arrived at in adjudication, were not necessarily appropriate to the finality of arbitration. Chris Dancaster was not unduly concerned. He said that already parties had signed up to similar procedures and they had been pleased with the results.

Rule 1 of the Procedure says that: “….the arbitrator shall have an overriding duty to make his Award deciding all matters submitted (excluding liability for costs) within 100 days....” However, no corresponding duty has been imposed upon the parties. Some questioners thought that this could put the arbitrator in an impossible position. Furthermore, the Rule could conflict with the arbitrator’s mandatory duties under Section 33 of the Arbitration Act 1996, namely to act fairly and impartially and provide a fair means for the resolution of the matters to be determined.

There was also the question of natural justice. This has already arisen in the case of some adjudications. Although the courts have upheld the requirement for the largely undefined rules of natural justice to be observed, nonetheless the Judges have generally taken a fairly flexible approach. This appears to be because the adjudicator’s decision is intended to be a temporary remedy. This would not necessarily be the case in arbitration and it seems likely that they would adopt a more rigid position.

Chris Dancaster accepted the points that were made and indicated that the Procedure was not yet cast in stone. However, there was now little time for further amendment in that it was due to be launched at a joint meeting of the Society of Construction Arbitrators and Society of Construction Law on 1^{st July.}

There is no doubt that there is an increasing demand in the construction industry for a relatively swift dispute resolution procedure but which is more thorough than the statutory adjudication and would allow the issues to be properly considered. This would act as a back up to the statutory adjudication, and would be both final and binding. It looks as though this need may be met by the 100 day procedure. Remember, you saw it here first!

Report by Martin Moorhead