UK Court of Appeal rules against establishing a Fiduciary Duty of Loyalty for Expert Witnesses

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Can two sides of a dispute engage the same expert witness? The decision in Secretariat Consulting PTE Ltd & Ors v A Company [2021] (EWCA Civ 6) reflects British courts’ reluctance to establish an expert witness fiduciary duty of loyalty to clients. The Court there looked instead to a no conflict clause in the contract between the expert and client before applying this duty to the whole of the expert witness consultancy rather than its individual experts. The case presents one direction Australian courts may take.

Background

In April 2021, the UK Court of Appeal were forced to consider the obligations of individual expert witnesses when opposing sides of an arbitration employ experts from the same consultancy.

The Respondent had begun proceedings against their expert witness provider (Secretariat, the Applicants) after the opposing side in an arbitration matter (‘Third Party’) engaged the same expert services provider against The Respondent.

Key Issue

The Respondent claimed that Secretariat (‘SCL’) had breached their fiduciary duty of loyalty by agreeing to provide expert witness services to the Third Party, even where Secretariat had provided both parties with experts from different global offices of Secretariat’s practice.

At first instance, the High Court held that SCL did owe a fiduciary duty to the Respondents, which it had breached by accepting work from the Third Party.

Decision and Reasoning

The Court of Appeal found that SCL did owe a duty to avoid conflicts of interest, but only under contract. It affirmed the decision at first instance that this duty applied to the entirety of Secretariat’s international practice.

1. SCL did not owe a fiduciary duty of loyalty to the respondent

The Court of Appeal affirmed that a duty to the court did not conflict with a duty to the client. It then went further to say that the duties in fact support one another: the objective expert witness not only performs their duty to the court but also serves the interests of the client who benefits financially from a fair assessment of their prospects of success. [62]

In contrast to the UK High Court ruling, the Court of Appeal found that there was insufficient reason to establish a fiduciary duty owed by an expert witness to their clients. It refrained from attributing the duty because of the “legal baggage” and “academic distraction” that the category would invite. The Court was especially reluctant to establish the duty given that, in this case, Secretariat had also signed a contract with the Respondents containing clauses expressly outlining the Applicant’s duty to avoid conflicts of interest. [64]

2. Secretariat owed a contractual duty to avoid conflicts of interest

The no conflict provision reflected an intention by the Respondents to create a clear contractual duty on the part of the experts to avoid conflicts of interest, at the time of the agreement, and in the future. [68]-[72]

3. The Duty to Avoid Conflicts of Interest applied to Secretariat International (‘SI’) as a whole

The Court of Appeal adduced several factors which indicated the inseparability of SI’s global arms, including:

The wide scope of the conflict check undertaken by the Respondent. This conflict check reflected an understanding by both parties that expert witness services were being offered on behalf of all Secretariat entities [74]
SI’s marketing, which always represented SI as a single global entity and did not differentiate between individual experts’ or teams’ separate obligations.
The indivisibility of SI’s corporate and commercial structure as one legal entity with directors in common, shared fees or profits, and access to common information and internal data related to the area of conflict. [79]-[80]

4. A Conflict of Interest did arise

The Court found four ways in which SCL’s work for the Third Party would create a conflict of interest:

i) SCL’s advice to the Third Party would oppose advice it gave to the Respondents on its commercial position; [88]

ii) SCL would be required to support conflicting perspectives on the same issues; [89]

iii) SCL would be required to share with the Third Party advice about the design and construction of the plant that it provided the Respondent; [90] and

iv) SCL would also compromise its duty to the Respondents by sharing advice about delay of design and construction of the plant. [91]

The Court’s decision rested also on its conclusion that the scope of the Claimants’ expert witness work had been typical of the “wider arbitration support role commonly undertaken by delay/quantum experts”. [84] SCL had produced, amongst other things, 26 schedules attached to the statement of claim prior to any discussion of engagement in an expert witness capacity. This familiarity with the Respondent’s case invalidated the SCL’s claims that its work with the Respondent had been limited and would not become conflicted when engaged by the Third Party.

Takeaways

When in doubt, request a conflict check of your matter. This should involve ascertaining whether the expert belongs to the same corporate entity as experts engaged by the other side.

While the courts have not explicitly addressed the issue of whether expert witnesses owe a fiduciary duty of loyalty to their clients, it is wise for lawyers to stipulate in their terms of engagement their precise expectations when it comes to conflicts of interest – e.g. whether you expect the expert to work exclusively for you, and whether this obligation applies to all members of the experts’ firm.