The Secretary of State for Business, Energy and Industrial Strategy v Richard John Adam & Ors

Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL Date: 26 November 2021 Before : Mrs Justice Joanna Smith DBE - - - - - - - - - - - - - - - - - - - - - Between : The Secretary of State for Business, Energy and Industrial Strategy Claimant - and - (1) Richard John Adam (2) Richard John Howson (3) Zafar Iqbal Khan (4) Keith Robertson Cochrane CBE (5) Andrew James Harrower Dougal (6) Philip Nevill Green CBE (7) Alison Jane Horner (8) Ceri Michelle Powell Defendants - - - - - - - - - - - - - - - - - - - - - Mark Cunningham QC, Tom Shepherd and Ben Archer (instructed by Womble Bond Dickinson (UK) LLP ) for the Claimant Andrew George QC, Harry Adamson and Warren Fitt (instructed by Covington & Burling LLP ) for the First Defendant Clare Sibson QC and Tiran Nersessian (instructed by Addleshaw Goddard LLP) for the Second Defendant James Potts QC and Andrew Blake (instructed by Taylor Wessing LLP ) for the Third Defendant Andrew Thompson QC, Ben Shaw and Philip Morrison ( instructed by Herbert Smith Freehills ) for the Fourth to Eighth Defendants Hearing dates: 26 th November 2021 - - - - - - - - - - - - - - - - - - - - - RULING Mrs Justice Joanna Smith Friday, 26 November 2021 ( 10.08 am) Ruling by MRS JUSTICE JOANNA SMITH

1. In the context of this directions hearing an issue now arises as to expert evidence. It arises in the following way. These are Directors Disqualification proceedings brought by the Secretary of State in relation to eight former directors of Carillion plc. The proceedings were issued on 12 January 2021 and were supported by an affidavit from Ms Lambert. That affidavit runs to over 1,000 pages and relies on the conclusions and findings of a 341 page draft expert report prepared by Mr Nick Whitaker, a forensic accounting expert.

2. Very broadly, the issues in the case concern allegations of false accounting in respect of five major construction contracts and wrongful reporting and accounting of two transactions which took place respectively in 2013 and 2016.

3. From the outset, the defendants have all been highly critical of the way in which the Secretary of State's evidence has been put together and although I make no final findings today on the point, my preliminary view is that the Secretary of State has apparently failed to comply with the guidance given by Falk J in Official Receiver v Batmanghelidjh [2021] EWHC 175 (Ch) at [898]-[908].

4. Be that as it may, by an application notice dated 18 November 2021 the Secretary of State applied for an order that he be permitted to rely on the expert report of Mr Whitaker at trial, saying it would be “essential to the court's determination of the allegations against the defendants”.

5. However, during the course of the hearing today the Secretary of State's position has changed. In circumstances where I have acceded to the submission made by all the defendants that it would be premature at this stage to make an order for expert evidence (not least because the scope and necessity for such expert evidence cannot be determined until after disclosure and factual evidence from the defendants), the Secretary of State now seeks to withdraw his application. He now submits that all questions of expert evidence should be addressed at the next case management conference, which I have indicated must take place in the autumn of 2022 so as to ensure robust ongoing case management of these proceedings.

6. The defendants disagree. They submit that it would be helpful for the court to provide an indication today as to its views on the Whitaker report. They point to their skeleton arguments in response to the application, identifying the numerous ways in which they say the report is defective and inadmissible and they submit that it is important in the context of the preparation of their factual evidence to know which aspects of the Whitaker report they need to address.

7. Indeed, Mr Thompson QC, acting on behalf of the fourth to eighth defendants, makes a strong case that his clients must understand which elements of the Whitaker report they must respond to.

8. Mr Cunningham QC, on behalf of the Secretary of State, complains that this is an ambush by the defendants, that it would be inappropriate for the court to give an indication at this stage, and that the court should simply let the matter lie until the next case management conference, at which point he says there may then be, in his words, "an informed use of secateurs" in relation to Mr Whitaker's report, if appropriate.

9. I reject the suggestion that this is an ambush. The Secretary of State himself put Mr Whitaker's report in issue by making the application and the defendants responded to that application in their skeleton arguments for this hearing, pointing out the various grounds on which they each contend that the report is inadmissible and/or irrelevant and/or inappropriate by reference to the requirements of CPR Part 35.

10. I am concerned at the approach the Secretary of State appears to have been taking in these proceedings to date in relation to evidence and the identification of his case and I am also concerned that the Secretary of State has sought to resist the provision of an indication which would be designed (i) to assist him in understanding the use that might be made of the Whitaker report going forward and, (ii) (just as importantly) would be designed to ensure that the defendants are place in a position where they may understand the case that they must meet.

11. At present, as I have said, the defendants do not know whether they must respond to all of the factual points made by Mr Whitaker or whether ultimately he will not have permission to advance those points.

12. During the course of submissions today, Mr Cunningham said that the defendants should assume that they must respond in full to Mr Whitaker's report, but in my judgment that is a highly unsatisfactory state of affairs likely to lead in due course to wasted time and money being spent by the defendants.

13. Far better, it seems to me, for this court to give some guidance which it is to be hoped will assist the Secretary of State in advancing a clearer case and thus assist the defendants in understanding that case.

14. I should say, however, that there is not time today to go through Mr Whitaker's report in detail, or to identify which paragraphs should be excised (even assuming that such an exercise would be a proper one for the court to undertake). Furthermore, I am not asked to give a final decision on the admissibility of his report or whether it is reasonably required to resolve the proceedings (see CPR 35.1). That will be a matter for the judge at the next case management conference, if it still remains in issue.

15. If the Secretary of State chooses to take no action in light of my indications, then that is of course a matter for him. It may result in further applications to the court which may have a delaying effect on the timetable, but that will be a matter for the defendants to determine in due course.

16. Turning then to my indications. The Whitaker report appears to me to be a fact-finding exercise. It was plainly prepared, as is apparent from the witness statement of Ms Dowell in support of the application, as part of the preparations for commencing this case. Mr Whitaker apparently reviewed 70,000 documents in undertaking the task at a cost of over £2 million. No doubt that task will have informed the Secretary of State as to the merits of the case, but the report is not in a form which is appropriate for a CPR 35 compliant report.

17. Amongst other things, in my judgment, as it stands Mr Whitaker's report expresses views on the evidence as to facts which will be a matter for the court. It arrives at conclusions on factual questions, including what documents mean and how differences in the evidence should be resolved which will be matters for the court, and it bases expert opinion evidence on a necessarily one-sided understanding of the facts. In this regard, I agree with the skeleton of Mr Potts QC, acting on behalf of the third defendant at paragraphs 75-84, where specific examples of this are set out. From time to time the report even purports to say what the "true" position is on the evidence, an entirely inappropriate exercise for an expert to engage in.

18. That the Secretary of State originally considered that the expert evidence should be exchanged at the same time as the defendants' factual evidence in this case in my judgment speaks volumes as to his apparent lack of understanding as to the objective and neutral role of the expert.

19. There was even a suggestion in correspondence that if the defendants' experts did not agree with Mr Whitaker, they could simply deal with any disagreements on the evidence in their own reports. However that effectively invites the experts to engage in a disputed fact-finding exercise, which is emphatically not their role.

20. The expert’s role does not involve acting as an advocate in the case. It does not involve engaging in a fact-finding mission. Independent experts of like disciplines should all have access to the same material and should not identify which versions of the facts they each prefer. Their opinions should be advanced by reference to assumed facts.

21. With some diffidence and very respectfully I would invite the Secretary of State to have regard to CPR Part 35 in its totality, the practice direction to CPR Part 35, and the Guidance for the Instruction of Experts in Civil Claims 2014, including looking at the guidance given in the well-known case of National Justice Compania Naviera SA v Prudential Assurance Co Ltd (“The Ikarian Reefer”) [1993] 2 Lloyds Rep. 68 (Comm) and the more recent TCC decision in Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd (No.2 Quantum) [2018] EWHC 1577 (TCC) .

22. In my judgment, Mr Whitaker's report strays far outside the role of an independent expert as it currently stands and although it is common ground that some aspects of it will of course be admissible and are likely to be required to resolve the proceedings (assuming a need for expert evidence in this area), there are equally substantial parts of it which will not.

23. I consider that the Secretary of State needs to address this issue now rather than leaving the matter to be dealt with at the next case management conference when considerable time will have passed and the date for trial will be that much closer. That is particularly so where the Secretary of State appears to rely on Mr Whitaker's report to such an extent in the affidavit of Ms Lambert and will need to consider, amongst other things, whether factual material that is currently addressed in the Whitaker report will need to be dealt with elsewhere in his evidence.

24. In all the circumstances I am going to require the Secretary of State to inform the defendants (by a date to be determined) which parts of the Whitaker report (if any) he still considers must be answered by them in producing their evidence.