James Bickford Smith discusses the Court of Appeal’s decision in Simpson v Simpson [2016] EWCA Civ 1306.
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Case Management and Proof
There has recently been a run of cases in which courts have at case and costs management conferences (CCMC) refused permission to a party seeking to call an expert. Such refusals may be made on grounds of relevance, proportionality or because the evidence that is sought to be adduced is, on analysis, not expert evidence at all, as held by the judge in Darby Properties Ltd and another v Lloyds Bank plc [2016] EWHC 2494 (Ch).
These cases fall to be considered as part of the common criticism that parties are too often incurring unnecessary costs on expert evidence of marginal, if any, assistance. The frequency with which one sees it stated in judgments that the judge had found the expert evidence was of no assistance to the issues before the court plainly adds substance to such criticisms.
A practical question that has interested me when seeing these debates is: what would happen if a case where the court had refused permission to call expert evidence duly proceeded to trial, whereupon it became clear that expert evidence was, after all, needed?
One practical answer to that question lies in existing witnesses of fact volunteering (or being asked on the hop to give) their opinion on matters that should properly be the subject of an expert report. The attraction of that course to retail banks underpins some of the cases referred to above. Bank witnesses may be much better placed to answer ad hoc questions about financial instruments and financing packages than their customers, and will certainly be more familiar with the relevant terminology. This lends their evidence an air of technical expertise.
Another answer would lie in the court concluding that, if and insofar as a claimant’s case necessitates the proof of certain matters by expert evidence, then the claimant who has failed to prove those matters must fail in their case. That is the dynamic that one suspects underpins the heavily fought intellectual property cases in which defendants have sought to keep out survey evidence, as attempted by the defendants in Interflora Inc v Marks & Spencer plc [2012] EWCA Civ 1501 (the leading authority on this issue). The defendants successfully kept the survey evidence out before running at trial and on appeal the argument that the claimants had not had the admissible evidence they needed to prove their case. This latter position is unattractive to the extent that it may allow a defendant who has kept evidence out at the interlocutory stage to maintain subsequently that, in the absence of that evidence, the case must fail. It is, however, relatively rare for such a submission to succeed
Simpson v Simpson [2016 EWCA] Civ 1306
In Simpson v Simpson [2016] EWCA Civ 1306 the Court of Appeal had to address a case in which:
The point of analysis apparently not grasped at the case management stage was that the value of the defendant’s counterclaim lay in it representing the loss of value of the stock during the period of unlawful retention. As the trial judge stated:
“In the present case, the [appellant] does not make her claim for damages on the basis that, if the stock had been returned, she would have sold it or even that she would have been able to use it productively, because in order so to use it she would have needed the equipment and no claim is now pursued in relation to the retention of the equipment. She presents her claim on the basis that whatever value the stock had at the date of conversion, its value had fallen so that after about 17 months when all the goods had been recovered, the stock had no more than scrap value of perhaps 10% of its original value.”
The question that followed was how this contention could be proved and quantified. The Court of Appeal had this analysis of the evidence before the judge at trial:
“i) The appellant’s view that the returned stock was worth only 10% of its original market value.
This, the judge observed, even if admissible as an opinion based on the appellant’s own experience of the business, was no use without a figure for the original market value.
ii) An email sent by the claimant to the appellant, dated 25 May 2012, in which, in the context of a possible sale of the business, the claimant said that he had attempted to list and value their assets, saying of the stock: ‘Requires valuation but likely to be between £50,000 and £100,000.’
There was no question but that this was a genuine attempt by the claimant to estimate the value of the stock. However, as the judge pointed out, the email expressly said that a valuation would be required. Understandably, the judge classed the figure given in the email as no more than an informal estimate.
iii) The business accounts.
It was the oral evidence of the claimant, who it seems was responsible for accounting matters in the business, that when he estimated stock value for the annual business accounts, he proceeded by way of a rough and ready visual check. The figures given in the business accounts for stock were not, in the circumstances, of any material assistance to the judge on the subject of valuation. Miss Davies, who did not represent the appellant before Judge Butler but was good enough to represent her on appeal through the Bar Pro Bono Unit, realistically did not attempt to argue otherwise”.
(Simpson v Simpson [2016] EWCA Civ 1306, at paragraph 12.)
Faced with this evidence, the judge’s conclusion was that “damages could only be awarded to the appellant if she established that the returned goods had lost value and that this meant that the appellant could not succeed ‘without admissible evidence of value’” (Simpson v Simpson [2016] EWCA Civ 1306, at paragraph 10). No such evidence having been led, the trial judge granted only nominal damages on the counterclaim:
“I regret that the foregoing description of the way in which [the appellant’s] attempted valuation of her claim has changed and the lack of any admissible independent or expert evidence to support it demonstrates that she cannot discharge and has not discharged the burden of proving the market value of the stock at the date of conversion, assuming that to be November 2012, or at final return, assuming that to be March 2014, or at any time in between. I use the word ‘regret’ advisedly, because I have little doubt that if [the appellant] had been legally represented there would have been a professional stock inventory and/or independent valuation report which might have provided the evidential basis for a substantial award. As it is, as Ms Sandbach properly stressed, the court is not even assisted by an informal inventory and so does not know precisely what quantities and types of component are to be valued.”
“In the circumstances, I regret that I cannot make an award based on some notional or theoretical scrap value without any evidence. To do so would be not to ‘estimate’ but to ‘speculate’, that is to say would involve the
court speculating as to a matter on which the defendant could and should have adduced some admissible independent evidence, without which the court has no basis for estimation or assessment, being unable to apply any inherent knowledge or experience. This is a paradigm example of a case in which expert evidence was required to discharge the burden of proof”.
(Simpson v Simpson [2016] EWCA Civ 1306, at paragraphs 14 and 15.)
The defendant appealed against this finding. The main ground of appeal was that the judge had erred by not awarding the defendant £90,000 given the evidence before him, and by improperly considering expert evidence a necessary prerequisite of proof of loss. That ground was rejected:
“On a proper reading of the judgment as a whole, I do not consider that the judge fettered himself by proceeding on the basis that, as a matter of principle, expert evidence was indispensable. All that he was saying, in my view, was that the evidence produced in this case was insufficient to establish what the appellant’s loss was, leaving him no alternative but to award her only nominal damages. It was the sort of case in which, in the judge’s view, as a matter of practicality, expert evidence was needed to establish the appellant’s real loss”.
(Simpson v Simpson [2016] EWCA Civ 1306, Black LJ, at paragraph 18.)
Likewise, having analysed the evidence, the Court of Appeal concluded that the trial judge “had no choice, in the circumstances, but to find that the appellant had not established a figure for damages going beyond the purely nominal” (at paragraph 19).
Adjournment
The alternative argument advanced by the defendant on appeal was that in the circumstances, the trial judge
“should have directed a separate hearing of the issue of damages, pursuant to the court’s general powers of case management, giving such directions as he considered were appropriate, for instance as to the instruction of a single joint expert and the production of a schedule of the stock” (at paragraph 18). This was, in fact, a suggestion that had emerged only during a permission to appeal hearing before Vos LJ.
This suggestion faced the obstacles that the defendant had not sought an adjournment and that an appeal of a refusal to adjourn faces all the hurdles of an appeal against a case management decision. Nevertheless, the Court of Appeal allowed the appeal on this basis. Fundamental to its decision to do so was the case management decision about expert evidence:
“In the context of his review of the sufficiency of the evidence about the value of the stock, the judge’s attention was not invited to the decision of District Judge Rouine at the case management hearing in February 2014 to the effect that no party had permission to call or rely upon expert evidence ‘none being necessary’ (see §5 supra) … In my view, the district judge’s order was very material to a decision whether or not to direct a separate hearing as to damages. If he had considered the implications of this direction for a litigant who had been in person throughout the proceedings, it seems to me that Judge Butler may well have decided that it would be wrong to conclude the hearing on the evidence as it was, particularly in the light of the regret he expressed in his judgment. In my view, based on the fuller appreciation that we now have of the situation, the right course in all the circumstances would have been to adjourn the issue of damages for a further hearing. Furthermore, in the light of the written submissions made by counsel for the parents following the circulation of the draft judgment, I would add that I consider that the district judge’s order was of such significance that it was incumbent on the judge to deal expressly with its implications in determining the damages question; this he did not do and that is a fatal flaw in his decision. I would therefore allow the appeal against the judge’s decision to conclude the trial there and then with an award of nominal damages only”.
(Simpson v Simpson [2016] EWCA Civ 1306, at paragraph 26.)
Conclusion: Be careful what you wish for
The reason why the defendant in Simpson v Simpson succeeded is not hard to detect; the trial judge had stated in terms that she had a potentially valuable claim that she had not led the correct evidence to quantify. Once it was apparent that the type of evidence that she would have needed to lead was evidence expressly excluded at the case management stage, the decision to press ahead was vulnerable to challenge.
Although the Court of Appeal seems to have been particularly sympathetic to the challenges faced by the defendant as a litigant in person, the challenge mounted against the decision to press ahead would likely have subsisted whether or not the defendant had been in person. Trial counsel in such circumstances would most likely have applied for a split quantum hearing on circulation of the draft judgment, if not before. That application would have led either to such a hearing or to an appeal. The real battleground might well have been on costs (an issue passed over lightly by the Court of Appeal in the form of an invitation to the trial judge to revisit the issue at the end of the rehearing).
The main conclusion to draw from Simpson v Simpson is that the current trend for seeking to exclude expert evidence, or particular types of evidence, at the case management stage is one that may well have its limitations. A finding that a case has failed for want of proof is rarely an appealing one for a trial judge. It is true that there are situations in which such a finding is the fairest way of resolving a difficult issue. Nevertheless, it is also true that in circumstances where the court can see at the end of the litigation process that there was evidence that was needed, which was kept out at the interlocutory stage, there are many judges who will either seek to “do the best they can” on the evidence before them, or decide simply to adjourn for further evidence. While that is in part a question of fairness, there remains underpinning it the fundamental technical point that a party’s case is delimited not by the evidence led but rather by the case pleaded.
