Disclosure of correspondence with an expert

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We have become used to the idea that an expert’s draft report may end up being disclosed to the other side in certain circumstances, but the idea that communications with that expert in anticipation of litigation may also be disclosable could come as a surprise.

We have become used to the idea that an expert’s draft report may end up being disclosed to the other side in certain circumstances, but the idea that communications with that expert in anticipation of litigation may also be disclosable could come as a surprise. This is what happened in Sotheby’s v Mark Weiss Ltd where the court rejected Sotheby’s claim to litigation privilege over communications with two experts. In this briefing, we review the circumstances in which communications with an expert may have to be disclosed. 

Litigation privilege

Litigation privilege applies to communications that are made for the dominant purpose of conducting or aiding the conduct of ongoing litigation or litigation which is reasonably in prospect. Litigation privilege can protect communications between a lawyer (or the party themselves) and a third party such as an expert, in contrast to legal advice privilege, where the communications must be between a lawyer and their client. Where there are two purposes of equal weight, the dominant purpose test is not satisfied and litigation privilege does not apply. 

Sotheby’s v Mark Weiss Ltd

Sotheby’s v Mark Weiss Ltd is an excellent illustration of the high bar presented by the dominant purpose test. Sotheby’s was appointed by the defendant seller to sell a portrait said to be by Frans Hals for a minimum price of US$10,750,000. The sale contract with the buyer provided that the sale would be rescinded if the buyer provided written evidence about the authenticity of the painting, which was accepted by Sotheby’s. 

The buyer raised concerns about the painting and Sotheby’s obtained an initial opinion from an art expert, Mr Martin, that the portrait was counterfeit. It then appointed lawyers Freshfields who commissioned a second expert, Mr Twilley, to conduct a peer review of Mr Martin’s final report. Sotheby’s and the seller exchanged experts’ reports. 

Sotheby’s, now with the benefit of reports by Mr Martin, Mr Twilley and the seller’s expert, determined that the painting was a fake, rescinded the sale and repaid the purchase price to the buyer. Sotheby’s began proceedings against the seller to obtain repayment of the purchase price and the seller sought disclosure of correspondence between Sotheby’s and both Mr Martin and Mr Twilley. 

Instructions and the importance of the language used

The judge rejected Sotheby’s argument that the dominant purpose of the expert reports and communications with the experts was the litigation which ensued. In this case the contract of sale required written evidence of doubts about the authenticity of the painting. Sotheby’s had a commercial decision to make about rescinding the contract with the buyer and it also had in mind potential litigation with the seller. The experts’ reports would be used for both purposes. 

The contract with Mr Martin stated that he was not to provide “expert consultation as a consulting expert or testifying expert”. The judge concluded that this paragraph in Sotheby’s correspondence with Mr Martin also identified the two purposes – the commercial contractual decision and the potential litigation – neither of which was dominant: 

"All correspondence between you and Sotheby's relating to this matter is in the context of that anticipated litigation, to enable Sotheby's to understand the strengths and weaknesses of its position and to make the right legal and commercial decisions in anticipation of that potential litigation. Such correspondence is privileged against disclosure in that litigation if it occurs." 

The same letter advised Mr Martin to mark all correspondence "Prepared in anticipation of litigation: Legally Privileged" but also asked him to ensure that his comments were consistent with his role as an independent expert focussing on technical issues associated with the painting "and not with any strategy associated with the litigation or the various claims". 

As for Mr Twilley, this paragraph in Freshfield’s letter to him was also held to encapsulate the dual purpose of his role: 

"1.4 To ensure that it has a proper basis for exercising its discretion to rescind the Seller's contract, if necessary, and that this position is robust in any litigation, Sotheby's would like to have Mr. Martin's analysis subjected to a peer review." 

Distinction between Sotheby’s and Re Highgrade Traders

Sotheby’s relied on the recent Court of Appeal decision in ENRC v SFO, which in turn relied on Re Highgrade Traders. In those cases, the court accepted that litigation privilege applied because litigation would inevitably follow from the taking of a particular commercial decision and it was therefore impossible to discern two alternative purposes. The judge rejected the analogy given the facts in Sotheby’s: there were two purposes that could not in a realistic and commercial sense be regarded as one and the same. 

Expert advisers and experts with a dual role

A party can instruct an expert privately, at their own expense, to advise on a dispute. Such an expert is known as an expert adviser, as distinct from an expert appointed for the purpose of proceedings in accordance with CPR 35. As long as the dominant purpose test is satisfied, litigation privilege should apply to correspondence with them. The distinct role of the expert adviser is acknowledged by Hughes LJ in Edwards-Tubb v JD Wetherspoon Plc, but he also flags up that it is always on the cards that the report may end up being required for use in court. 

This is most likely to happen where the party subsequently decides to use the expert adviser as their Part 35 expert. It will usually be impossible to maintain privilege over the initial report of the expert because they will be under a duty to inform the court of any details relevant to their opinion (Axa Seguros SA v Allianz Insurance Plc). 

It is possible for an expert to be a Part 35 expert but also to perform an independent role giving advice as to what should or should not be done, such as a decision in a construction case to demolish or carry out remedial works. Coulson J commented on this situation in the context of fire cases in Lalana Hans Place Ltd v Michael Barclay Partnership LLP. He noted that although the expert’s opinion will generally be privileged, any notes they make concerning their investigations at the scene will usually be disclosed to all parties. 

Collateral waiver

Where a party or potential party to litigation discloses an expert’s report to the other side, waiving litigation privilege in the process, a question may arise about collateral waiver over related documents such as letters of instruction and other correspondence with the expert. Had the judge in Sotheby’sconcluded that the expert reports were privileged and that privilege over them had been waived when they were given to the seller, an argument along these lines could have been made in relation to the correspondence with Mr Martin and Mr Twilley. 

In Lalana Hans Place Ltd v Michael Barclay Partnership LLP Coulson J said that the courts will look at the nature and extent of the “transaction” whereby the advice was given and further disclosure will be ordered to avoid unfairness and misunderstanding. Nugee J reviewed the authorities in Holyoake v Candy in the context of the waiver of privilege over legal advice. 

The status of instructions under CPR 35

Under CPR 35, letters of instruction and material such as witness statements or reports from other experts provided to an expert and referred to in their report form part of their instructions. As such, the documents referred to are no longer privileged but should not be disclosed to the other side unless CPR 35.10(4) is satisfied - that is, where the court is satisfied that there are reasonable grounds to consider the statement of instructions to be inaccurate or incomplete (Lucas v BarkingHavering & Redbridge Hospitals NHS Trust). In general, therefore, letters of instruction to experts should not have to be disclosed to the other side. 

Changing Part 35 experts

It has become a standard requirement that a party wishing to change experts, who is also in need of the court’s permission in one form or another, will have to disclose the draft and final reports of its first expert as a condition of relying upon the evidence of the second (see Edwards-Tubb v JD Wetherspoon Plc and the latest decision on this point, Bowman v Thomson). The party wishing (or having) to change experts is compelled to waive privilege as a condition of making the change, whether this is necessary because the first expert cannot carry out their role properly or is ill or wishes to retire. They could choose to proceed without any expert evidence but this could fatally undermine their case.

In a clear case of expert shopping, the court could require the party wanting to change experts to disclose not only draft reports of its previous expert(s) but also correspondence with them and attendance notes of phone conversations. The full menu was requested in BMG (Mansfield) Ltd v Galliford Try Construction Ltd but the order for disclosure was limited to any reports and documents containing the expert’s opinion. A similar order for further disclosure (letters of instruction and the final report had been voluntarily disclosed) was made in Allen Tod Architecture Ltd v Capita Property And Infrastructure Ltd.

Comment

As the correspondence in Sotheby’s demonstrates, the words you use to instruct an expert are critical – subsequent scrutiny of the language used may result in unwanted and unforeseen disclosure. The dominant purpose test is still hard to satisfy, despite the Court of Appeal’s decision in ENRC. It is important to be as clear as possible about the expert’s role and to anticipate what might end up having to be disclosed – that way there will be no uncomfortable surprises and the risk of satellite litigation, as happened in Sotheby’s, will be diminished.

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