English CA Holds No Fiduciary Relationship Between Expert and Client

In A Company v X, Y and Z [2020] EWHC 809 (TCC), a case concerning the use of the experts from the same global firm but from different offices, the High Court found that the claimant was entitled to a continuation of an interim injunction to restrain the defendants from acting as experts for a third party in an ICC arbitration proceeding against the claimant by reason of the defendants having acted for the claimant in a separate arbitration relating to the same project. At first instance, the Court concluded that:

i) The defendant group (Secretariat, an international group encompassing many offices, including SCL – based in Singapore, and SIUL and SAL) owed a fiduciary duty of loyalty to the claimant arising out of its engagement to provide expert services in connection with the 1st Arbitration.

ii) The defendant group was in breach of that fiduciary duty of loyalty by accepting instructions to provide expert services in connection with the 2nd Arbitration. At 54-55, the Court stated:

“In this case, the first defendant [SCL] was engaged to provide expert services for the claimant in connection with the Works Package Arbitration. The first defendant was instructed to provide an independent expert report and to comply with the duties set out in the CIArb Expert Witness Protocol as part of the engagement. However, it was also engaged to provide extensive advice and support for the claimant throughout the arbitration proceedings, as explained by S in his witness evidence. In those circumstances a clear relationship of trust and confidence arose, such as to give rise to a fiduciary duty of loyalty…

Where a fiduciary duty of loyalty arises, it is not limited to the individual concerned: Bolkiah (above) per Lord Millett at p.234H. It extends to the firm or company and may extend to the wider group: Marks & Spencer Group plc v Freshfields Bruckhaus Deringer [2004] EWCA Civ 741; Georgian American Alloys v White & Case [2014] EWHC 94 (Comm).”

iii) Pending trial of this matter, the claimant was entitled to a continuation of the interim injunction to restrain the defendants from providing expert services to the third party in connection with the 2nd Arbitration.

See the Post on this case here.

On appeal, in Secretariat Consulting Pte Ltd & Ors v A Company [2021] EWCA Civ 6, the Court of Appeal summarised the nature of the issues before it as follows (@2-3):

“The issues that arise on this appeal are, in one sense, novel and potentially significant… In the judgment below, O’Farrell J (“the judge”) found that Secretariat Consulting Pte Ltd (“SCL”), an entity within the Secretariat group, all of which provide litigation support services and act as delay and quantum experts in construction arbitrations, owed its client (the respondent) a fiduciary duty of loyalty. She held that this in turn meant that Secretariat International UK Ltd (“SIUL”) could not provide similar expert services to a third party, who was making a claim in another arbitration against the same respondent arising out of the same project and concerned with the same or similar subject matter. The remaining defendant, Secretariat Advisors LLC (“SAL”), was involved in some of the correspondence. This was the first time in the English jurisdiction that an expert had been found to owe a fiduciary duty to its client. “

“One of the features of this case was that, although plenty of authorities were cited to the court, very few of them were – as Leading Counsel frankly conceded – of any real assistance. No English case has addressed head-on a dispute in which there are two existing litigation support/expert retainers, which each client wished to maintain, relating to two live arbitrations, where what the respondent says is the same expert organisation will be supporting, advising and giving evidence for and against the same client about the same project and the same or similar subject matter. However, counsel can hardly be blamed for the absence of authority, and we are grateful to them for the excellence of their written and oral submissions. “

The Court acknowledged that there was no English authority on the issue of whether an expert owes a fiduciary duty of loyalty to his client, reviewing and summarizing authorities in relation to fiduciary duties (@40-42); confidential information (@43-46); conflicts of interest (@47-53); and experts generally (@54-58).

The Court of Appeal considered the following issues:

Issue 1: Did SCL owe a fiduciary duty of loyalty to the respondent?

The principal objection to the finding of a fiduciary duty in this case was that, because of the overriding duty that an expert undoubtedly had towards the court or arbitral tribunal, that duty would conflict with or negate any fiduciary duty of loyalty. The Court disagreed, stating that while it accepted the expert’s overriding duty to the court or tribunal, it did not accept that such a duty means that the expert cannot in law owe a fiduciary duty of loyalty to his client (@61). The Court stated (@62):

“…On a proper analysis, the expert’s overriding duty to the court could be said to be one of the prime reasons why the expert may indeed owe a duty of loyalty to his client. In many cases, the client instructs an expert to provide extensive pre-trial services and then to give expert evidence at the trial. The client wants a frank and honest appraisal of his case by the expert at the earliest possible opportunity. There is no point in the client spending a good deal of money pursing or defending a claim if his underlying position is hopeless, but none of his other advisors is prepared to tell him so. The client knows that, because an expert has to stand up before the judge or the arbitrators and say that his report is true to the best of his knowledge and belief, and represents his honest opinion, the expert will only be prepared to do that if he or she has first ensured that the pre-trial work has led to the formation of a position which the expert can support. None of that is contrary to any duty of loyalty: on the contrary, complying with the overriding duty to the court is the best possible way in which an expert can satisfy his professional duty to his client. “

That said, the Court considered that it would be reluctant to conclude that there was such a duty, which may have many unseen ramifications, unless it were necessary for the disposition of the appeal; that was because the expression “fiduciary” is freighted with a good deal of legal baggage and that it might be inapt to import all of that baggage into a relationship between a client and an expert (@64). The Court held (@65) that, in a case like this:

“…no purpose is served by designating the relationship as a fiduciary one. There was a contract here with an express clause dealing with conflicts of interest. In my view, a fiduciary duty of loyalty would not add to or enhance the obligations arising from that clause. So considering the issue further is unnecessary for the disposition of the appeal.

Concluding (@66):

“I would leave Issue 1 in this way. Depending on the terms of the retainer, the relationship between a provider of litigation support services/expert, on the one hand, and his or her client on the other, may have one of the characteristics of a fiduciary relationship, namely a duty of loyalty or, to put it another way, a duty to avoid conflicts of interest. That is not contradicted by the expert’s obligations to the court. But, unlike the judge, I do not consider that it is necessary or appropriate to find the existence of a freestanding duty of loyalty in the present case. “

The remaining issues were considered on the assumption that the expert did not owe a fiduciary duty to their client.

Issue 2: If not, did SCL owe a contractual duty to the respondent to avoid conflicts of interest?

The contract between the expert and the client contained a relatively common conflicts of interest clause, to the effect that the expert confirmed that it had no conflict of interest in acting for the client in respect of the engagement and that it would maintain this position for the duration of the engagement. The Court of Appeal had no hesitation concluding that the expert owed the client a contractual duty to avoid a conflict of interest (see @68-72).

Issue 3: If so, was that duty also owed to the respondent by other Secretariat entities?

The Court of Appeal noted that a conflict check was undertaken by one office and that encompassed all other offices and that, in the circumstances, it would be very surprising if SCL could say that its undertaking to avoid conflicts of interest in the future only bound one particular “office” within the Secretariat “global firm”, and that there was therefore nothing to stop SIUL from accepting instructions which would put it in conflict with SCL (@76).

The Court of Appeal concluded(@81):

“…the conflict check having been carried out across the Secretariat group, the undertaking given by SCL in its retainer bound all the companies in the group. They were all providing the same form of litigation support/expert services.”

Issue 4: If so, was there a conflict of interest as a result of SCL’s engagement in Arbitration 1 and SIUL’s subsequent engagement in Arbitration 2?

In response to an argument that experts could be separated into a “testifying expert” on the one hand, and a “roving expert” on the other, the Court of Appeal noted the general duties of delay/quantum experts (@86):

“…delay/quantum experts are usually … retained at an early stage to sift through the reams of factual material, looking for particular events on which to focus. The delay expert collates that material and can often save a huge amount of time and resources by focusing the client’s litigation support team on the factual issues as to delay which are really going to matter. In construction arbitrations, it would be rare for a delay expert to merely be a testifying expert. The whole purpose of having such an expert, along with his team, is to provide wide-ranging support and advice, in the hope that, ultimately, the case settles and there is no hearing at all. “

In relation to whether there was a conflict of interest between SCL acting for the respondent and SIUL acting for the third party, the Court of Appeal held that there was a clear conflict of interest stating that (@92):

“the overlaps in this case are all-pervasive. There is an overlap of parties, role, project, and subject matter. “

In what appears to be a “tip for players”, the Court of Appeal noted that the situation encountered in this case could be avoided, stating (@101) that:

“It is perfectly possible for a group like Secretariat, if it thought it commercially sensible to do so, to make plain that its representations as to conflict of interest and its undertakings for the future were based solely on the entity involved, and that, despite the scope of the conflict check that they had undertaken, no such representations or undertakings were given in relation to any other entity in the Secretariat group.“

Lord Justice Males, while agreeing with Coulson LJ’s judgment added (@105):

“A professional expert witness offers his services in return for payment and the relationship between the expert and his client is essentially contractual. It is therefore necessary to focus on the incidents of that relationship, concentrating on the terms of the expert’s retainer and the role which he is required and expected to perform. In this case the contract by which the expert was engaged contained an express term dealing with conflicts of interest. It is therefore unnecessary to consider what the position may be if an expert is engaged without anything at all being said about conflicts. That would be unusual nowadays in any substantial commercial litigation or arbitration.”

In relation to the duties owed by an expert to the court and the client, Males LJ stated (@110):

“…there is no conflict between an expert’s duty to the tribunal to give independent and objective evidence and the duty which he owes to his instructing client. On the contrary, it is clearly in the client’s interest that the expert’s evidence is and is seen to be independent and unbiased and it is typically (as in this case) a term of the retainer that it should be. Such evidence will carry far greater weight than if the expert is perceived to be lacking objectivity. An expert whose evidence is measured and objective, acknowledging the points which can be made on both sides, and who is prepared to give ground when matters appear in a new light as a result of questioning, will enhance his credibility rather than undermine it. Indeed, a biased expert who is determined to stick to the party line come what may will generally be disastrous for the client’s case. The duty to give independent evidence is therefore a duty which the expert owes to his client as well as to the court or tribunal.”

Males LJ also addressed the distinction that was sought to be drawn between a “testifying” and “roving” expert. At 112-113, Males LJ stated:

“In general, however, and particularly when the relevant discipline is of a technical nature, including delay and quantum experts such as we are concerned with here, the expert will be an important resource for the lawyers and others responsible for the conduct of the case. Thus the expert will often be involved in instructing the lawyers as to the technical issues in the case, discussing and liaising with the client’s personnel, advising as to the way in which the case should be formulated, attending meetings at which strategy is discussed and advice is given, attending hearings at which the expert will sit as part of the client’s team, assisting counsel in the cross examination of the opposing expert, and so on. All this requires, perfectly properly, the development of a close working relationship between the expert, the lawyers and the client.

“It is, therefore, wrong to draw a sharp dividing line between an “independent” expert witness and a “consulting” expert as the appellants’ written submissions seek to do (or between a “testifying” and a “roving” expert as it was put in oral argument: it is not entirely clear whether this is the same distinction, but it does not matter). That does not reflect what usually happens. The role of a professional expert witness will generally fall into both of these categories.”

Answering the question “Was there a conflict”, Males LJ referred to the argument danced by Secretariat that the two Secretariat experts were instructed in different disciplines (expert M in relation to quantum and expert K in relation to delay), stating (@120-121):

“It is true that there are two separate arbitrations, one between the contractor and A Co and the second between A Co and the third party. Both are ICC arbitrations and we were told that there are no arbitrators common to both tribunals. But they arise out of the same Project and the issues, even if not identical, have a very substantial overlap. Indeed, if this were litigation in court, there would be a single set of proceedings. It is clear in those circumstances that the interests of A Co and the third party are directly opposed. Moreover, it was always within the parties’ reasonable contemplation that there would or might be a dispute between A Co and the third party and that A Co would wish to expand its instruction of Secretariat to cover any arbitration with the third party. When it accepted instructions to act in the arbitration with the contractor on the basis that it had no conflict of interest and would maintain this position for the duration of its engagement, Secretariat must be understood as having given this confirmation by reference to the Project as a whole and to have had regard to all those who might reasonably be contemplated as having interests opposed to or inconsistent with the interests of A Co. In other words, it agreed in effect not to accept instructions in any dispute between the client and the third party arising out of the Project.

I cannot see that it makes any difference that K is a delay expert while M is a quantum expert. The two issues are closely connected. But even if they were not, Secretariat could not possibly have given the confirmation that it had no conflict of interest in acting for A Co if it had already accepted instructions to act for the third party. That would be an obvious conflict of interest.”

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Hong Kong Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.


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