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A “sea change” in procedure

A “sea change” in procedure


Vijay Ganapathy considers recent cases on the risks of expert shopping and the problem of identifying the correct defendant where the tort occurred many years ago

The cases of Vilca and others v Xstrata Ltd and another [2017] EWHC 1582 (QB) and Murray v Martin Devenish [2017] EWCA Civ 1016 illustrate the dangers of expert shopping. In Vilca, the defendant (X) replaced their first expert with another more experienced specialist. This second expert later became ill and so X applied for an extension of time to instruct a new expert. The claimant (V) argued the extension should only be granted if X disclosed its earlier expert reports.

The court considered there would be no equality of arms if V was entitled to instruct an expert in whom they had confidence but X could not. As regards disclosing the earlier reports, the court referred to various authorities, including Edwards–Tubb v JD Wetherspoon Plc [2011] EWCA Civ 136, which confirmed the purpose behind disclosure was to discourage expert shopping and to ensure all relevant evidence was made available to the court. Also, it would assure the other party that there had been no abuse of process.

In this case, the court found X had valid reasons for switching between the first and second experts and had this expert not fallen ill, it would have been unnecessary to approach a third specialist. As such, there was no reason to suspect there was any expert shopping or an abuse of process. Also, the judge considered it would not assist him to see the earlier reports.

Accordingly, X was allowed its extension and was not required to disclose its earlier experts’ reports.There was a slightly different outcome in Murray. The claimant (M) alleged he was abused by a teacher (D) in the early 1970s. The expert he first instructed was severely criticised in another reported case, and so M obtained and served a report from a second expert. However, following a conference with counsel, M instructed a new third expert and sought permission to rely on this expert’s report.

The judge was concerned about the nearing trial date (which was just three and half months away) that left little time to consider the new evidence and afforded no opportunity for any joint discussions. He also concluded this expert’s input was unnecessary as the second expert’s report could adequately deal with the relevant issues at trial. He therefore denied permission and so M appealed. M’s claim was then stayed pending the appeal, which meant his trial date was vacated.

In the appeal, the court confirmed there had been a “sea change” in the approach to procedure. It considered “tough decisions” were to be encouraged unless they produced unjust results. The court also referred to Edwards-Tubbs, the principles of which should be applied by having regard to the effect on proceedings and the conduct of the party seeking permission.

The Court of Appeal found no fault in the judge’s approach, but his reasons for refusing permission had mostly disappeared due to the lost trial date. Therefore, M should not be confined to instructing an expert in whom he had lost confidence, but in contrast to Murray, M was ordered to disclose his earlier experts’ reports. It appears the Court of Appeal considered the late introduction of the new evidence, and the fact that the first-instance judge considered it not to be crucial, justified ordering disclosure. In addition, M would need to pay the costs associated with switching between the second and third expert.

While both these cases demonstrate the pitfalls of switching experts, it is clear the courts are keen to ensure parties instruct an expert in whom they have confidence. However, if permission for this is sought too late it may be refused or, as stated in Vilca, if there is any “hint of undesirable expert shopping”, disclosure of earlier material would be the “usual order”.

Correct defendant

Staying with the subject of procedure, English Electric Co Limited v Alstom UK [2017] EWHC 1748 (QB) emphasises the problems many face in identifying the appropriate defendant, especially if the tort occurred many decades in the past.

The issue in this case arose following a previous claim advanced by a mesothelioma sufferer (C) against Associated Electrical Industries Ltd (A). He claimed he was negligently exposed to asbestos during his employment with A in the mid-1960s. In those proceedings, A admitted to being C’s employer and C later succeeded in obtaining judgment and damages.

In around 1970, A transferred its business to the claimant (E) and E agreed to indemnify A in respect of any claims. Later, the defendant (D) acquired this business from E and similarly agreed to indemnify E. However, following settlement in C’s claim, D refused to indemnify E, alleging that a subsidiary of A (S) was C’s employer instead of A.

The court received numerous documents regarding the employer’s identity, but they painted a conflicting picture. For instance, the HMRC history named A as C’s employers, but the tax deduction cards referred to S. C understood his employers to be A, but no contract of employment was available.

While these conflicts were noted, the court considered it unnecessary to explain or resolve them. Instead, it simply had to consider the evidence “in the round” to determine the issue on a balance of probabilities.

Among other things, the court attached substantial weight to C’s own understanding of his employer’s identity and A’s admission, which would have not been given lightly. Then, taking the evidence as a whole, the court found A was the employer, which meant D was liable to indemnify E.

This case is an example of the challenges which can arise when seeking to identify the correct defendant. The consequences of getting this wrong could be disastrous, particularly if proceedings are commenced just before limitation expires. Companies can go through numerous changes over time, including name changes and business transfers.

This case in not unusual as historic documents can often give a conflicting view. Many key documents may have been destroyed or become unavailable. However, it was interesting to note the court’s comments regarding the maxim omnia praesumuntur contra spoliatorem, which requires a court to presume against a party who has disposed of relevant information. This is an argument that should be borne in mind for other cases.

Dissolved companies

Even if the correct defendant is identified, there may be further challenges if that company is dissolved. This was evident in Redman (Administratrix of the Estate of Mr Redman, deceased) v Zurich Insurance Plc and ESJS1 Ltd [2017] EWHC 1919 (QB), where the claimant (R) sought to take advantage of the Third Parties (Rights against Insurers) Act 2010.

This Act came into force on 1 August 2016 following its predecessor, the Third Parties (Rights against Insurers) Act 1930. The 1930 Act was passed to alleviate the harsh consequences of not being able to recover damages against insolvent companies. It effectively transferred the rights of the insured to the tortfeasor victim, but this only occurred when the tortfeasor was established and the amount ascertained. In personal injury cases this only occurs when judgment is entered or settlement agreed.

Therefore, if no prior settlement was agreed, claimants had no option but to restore the dissolved company and bring proceedings against them before seeking damages from an insurer. While the 2010 Act removed the need for restoration, it only applies if the date on which the insured becomes liable and the date when this insured became a “relevant person” occurred after this Act’s commencement date.

In this case, R brought proceedings on behalf of her late husband, who sadly died following a diagnosis of lung cancer. She alleged her husband suffered asbestos exposure during his employment with the second defendant (ES) between 1952 and 1982. ES dissolved in June 2016 and it appears it was only the company’s insurers, Zurich, which were sued by R under the 2010 Act. Zurich later agreed for ES to be joined in proceedings following its restoration, which meant R’s position was unaffected, but as the issue of whether R could utilise the 2010 Act was of general importance, the court decided to make a finding on it.

On the first question of when the insured incurs a liability, the court held this occurred when “the cause of action is complete”. As regards when the insured becomes a “relevant person”, the court confirmed this occurs at the point of insolvency.

It was clear both these events occurred before 1 August 2016 and so R was not entitled to sue Zurich under the 2010 Act. In the alternative, R argued this Act was retrospective and operated in parallel with the 1930 Act. However, that argument was also rejected as it was inconsistent with the wording of 2010 Act. Therefore R’s claim against Zurich was struck out.

It is hoped in the future that more parties will be able to sue under the 2010 Act, which would save considerable costs and time. However, many disease claims involving tortfeasor companies that dissolved several years in the past will not be able to take advantage of this Act. Therefore, some will say the 2010 Act’s requirement for both the above events to have occurred after 1 August 2016 is unnecessarily prohibitive.

Vijay Ganapathy is a partner at Leigh Day