The Fiduciary Duty of Expert Witnesses

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The judgement in this recent case was handed down by the Technology and Construction Court of the UK High Court of Justice. Although it does not directly affect Australian law on expert witness duties, lawyers and experts should nonetheless be mindful of the approaches of courts towards the scope of fiduciary duties and influence of corporate ownership of expert witness services on the reach of those duties.

Background

The case relates to the provision of expert witness evidence by individuals at the same Expert Witness Services firm to parties on opposing sides of an arbitration matter in the International Chamber of Commerce (‘ICC’).

The Claimant (a petrochemical plant developer) had contracted the opposing party in the arbitration to produce ‘Issued for Construction’ drawings for development of a petrochemical plant (‘the Project’). This opposing party had engaged a third party (‘Third Party’) to produce these drawings, which the Third Party delivered late and, according to the Claimant, had caused delay and created additional costs in completion of the Project as a whole.

Both the Claimant and the Third Party in the arbitration matter wound up engaging the First and Second Defendants (individuals from the same Expert Witness Services company) in this matter for the purpose of providing expert witness reports on the causes and extent of delays to the Project.

The Claimant had signed a retainer with the First Defendant for expert services pertaining to a variety of issues in the arbitration in May 2019. Approximately 6 months later, the Third Party contacted the Second Defendant for services in anticipation of proceedings the Claimants were planning to take against them for particular delays to the same project.

The Defendants, in a letter to the Claimant, outlined aspects of taking on expert witness work for the Third Party which it thought would not create a conflict with the First Defendant’s loyalty to the Claimant. These factors included that:

  • The work that the Defendants were engaged to produce was different in nature even though in relation to the same Project (reports on EPCM works in contrast to evaluation of delays in constructing ‘non-process buildings’)
  • The Defendants would be able to establish a “physical and electronic separation between the teams” working on the expert witness reports [14]

Key Issues

In correspondence between the three groups, the Defendants and the Third Party maintained that their contract for expert services did not present any conflicts of interest. The Claimants subsequently sought to continue an injunction preventing the Defendants from providing expert witness services to the Third Party in arbitration proceedings against the Claimant in the ICC. [15]-[25]

The Claimants argued that their engagement of the Defendants for expert witness work gave rise to a fiduciary duty of loyalty. To the extent that the Second Defendant’s work for the Third Party might compromise the integrity of the processes and confidentiality of the work of the First Defendant for the Claimants, and to the extent that the Claimants did not consent to the work bearing this risk, the injunction should be upheld. [26]

In contrast, the Defendants argued that they did not owe a fiduciary duty of loyalty to their clients insofar as they held a primary obligation to assist the courts that excluded the possibility of holding a fiduciary duty to their clients in addition or instead. In effect, the Defendants argued that the notion of the fiduciary duty of an expert witness is inconsistent with the possibility of an expert’s foremost role of assisting the court. [43]

No Conflict: Expert Witnesses as Advocates

The Court’s conception of the expert’s duties approached the issue of the apparent tension between expert duties to the court and expert duties to clients by appealing to presumptions of their consistent and streamlined operation in the wording of retainers for both advocates and experts. The Court ultimately sided with the judgement of Lord Phillips in Jones v Kaney [2011] 2 AC 398 in which Lord Phillips found that an expert witness has “far more in common with the advocate than he does with the witness of fact”. That is, to the extent that retainers require expert witnesses to maintain a fiduciary duty to the clients whilst also incorporating the requirements of the relevant Civil Procedure Rules, which provide that experts and advocates alike must uphold a duty to assist the court whilst assisting the client, there should be no sense of a fundamental inconsistency between experts’ duties to clients and to the court. [51]

Like advocates, experts have thus far and should continue to proceed on the understanding that they must assist their clients with a code of loyalty, but with a willingness to deviate from supporting their clients where their paramount duty to the court requires it. For the most part, Civil Procedure Rules and their inclusion in reports and retainers imply that “as with counsel and solicitors, the paramount duty owed to the court is not inconsistent with an additional duty of loyalty to the client”. [53]

The Decision—Injunction Upheld

Mrs Justice O’Farrell determined the case by assessing the scope of the Defendants’ fiduciary duty of loyalty and whether the relevant Defendants had breached this duty.

1. The Defendant Group did owe a fiduciary duty to the Claimants

The nature of the First Defendant’s retainer or agreement for work for the Claimants indicated that the First Defendant did owe a fiduciary duty of loyalty to the Claimants. The Judge highlighted the range of advice and reporting the Claimants had requested from the Defendant as evidence that “a clear relationship of trust and confidence arose, such as to give rise to a fiduciary duty of loyalty”. [54] The First Defendant had been contracted to provide a not only a one-off expert witness report but also technical advice to the Claimant over the course of the arbitration.

In addition, the Court found that such fiduciary duty extends to the whole company or wider group of which the expert witness is a part. [55] The Judge hence found that the fiduciary duty held by the First Defendant should extend to the work of the Second Defendant. Although the two individuals engaged by the Claimant and the Third Party worked in separate divisions within their organisation, both Defendants still worked as a part of a wholly owned subsidiary of one corporation. To the extent that this ownership structure implied a “common financial interest” behind the professional motivations of the Defendants, the duty of loyalty to the Claimants ought to have been extended to the First Defendant’s firm as a whole. [56]

2. The Defendant Group breached its fiduciary duty of loyalty

The fact that the Defendants outlined the measures in place to avoid the inappropriate sharing of information reveals the risk inherent in the Defendant Group taking on work for two sides to the arbitration. Merely catering for the possibility of a breach of fiduciary duty is not sufficient for upholding a satisfactory code of loyalty. [60] Moreover, the Court found that the work requested by both parties to the arbitration related to broadly the same issues of delay in construction. [61] This too became a clear indication of the compromise of confidentiality and interests that would arise in the Third Party’s engagement of the Second Defendant’s Services.

Takeaways

  • Where you are uncertain whether an expert witness or expert witness service does not already do so, request a conflict check of your matter. This should apply to both lawyers and experts.
  • An expert witness’s fiduciary duty of loyalty to their client is consistent with their primary duty to the assist the court. The notion that experts must in some circumstances assist the court in a manner that does not improve the position of their clients is not a sufficient justification for breaching a fiduciary duty of loyalty by accepting expert witness work from both sides of litigation or arbitration.

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