Clarke v Barclays Bank plc

Civil procedure – Expert evidence – Abuse of process – Claimant bringing action against defendant bank alleging undervaluation of property – Claimant obtaining expert report  – Expert subsequently withdrawing from case – Claimant failing to inform defendant – Deputy Master granting permission for claimant to rely on new expert report – Defendant appealing and applying to strike out claim – Whether Deputy Master erring in law – Appeal allowed – Application dismissed The claimant brought an action against the defendant bank for having sold the mortgaged property at a gross undervalue. The property had been sold in May 2005 for just under £250,000. The nub of the claim was that the claimant had spent £250,000 converting the property into a state-of-the-art recording studio and the property should have been marketed as such, not as a development opportunity. The defendant brought in as third parties the surveyors upon whose advice the defendant said it had relied. The claimant instructed an expert (D) who said that it should have been sold for £500,000. The trial was due to take place in the two weeks commencing 10 March 2014. On 3 May 2013, seven days before the listing appointment took place, D had informed the claimant’s solicitors that he was withdrawing from the case because he had retired, a piece of information the solicitors did not share with the other parties until late November 2013. The claimant subsequently applied to a Deputy Master for permission to rely in the proceedings upon the report of a second expert (Y) dated 14 February 2014. In his report, Y stated that the property should have been sold for £860,000, which he arrived at first by valuing the property at £555,000 and then adding the claimant’s estimate of the cost of the works of conversion to a recording studio. Whilst D had taken into account the fact that the property had been converted to a fully-functional recording studio, he did not appear to have added those costs to the value that he arrived at for the property as a recording studio. The Deputy Master allowed the claimant’s application but the defendant appealed against that decision and applied to have the claim struck out. Held: The appeal was allowed. The application was dismissed.(1) It had been wholly improper for the information about D’s withdrawal to be withheld beyond a reasonable period to allow the claimant to decide whether he could persuade D to change his mind or that some other arrangement could be made which would mean that the claimant could still rely on D. Once the claimant had decided that he had to find a new expert to replace D, it was clear that the claimant should have disclosed the problem he faced to the court and the other side. There was little doubt that the court would have been sympathetic to the claimant if he had applied to the court promptly for directions, because D’s withdrawal had been outside his control. The inference was irresistible on the evidence, particularly the correspondence after service of the expert reports, that the claimant had withheld the information from the court in order to see if he could settle the case in a proposed mediation on favourable terms before he disclosed his difficulty to the other parties and thereby undermined his negotiating position. That strategy failed when the mediation was delayed beyond the end of November 2013. A mediation conducted in, say, October 2013 would have been conducted on a premise which the claimant knew to be false unless he disclosed his problem with D. (2) The defendant and the surveyor would have suffered serious prejudice as a result of the delay in the disclosure of that information if the claimant could rely upon Y’s report. They had responded, as directed, to D’s report. The claimant had now seen their experts’ positions and had the forensic advantage of preparing his new expert’s reports in the light of it. The defendant and the surveyor would have to respond again to a wholly new expert report if Y’s report was allowed in. The trial would have to be adjourned as it would be unfair to allow the trial to take place in the current circumstances. Taking all those factors together, the claimant’s conduct amounted to a serious abuse of the process of the court: Associated Electrical Industries Ltd v Alstom UK Ltd [2014] EWHC 430 (Comm) applied. Worldwide Corporation v GPT Ltd [1998] EWCA Civ 1894 and Swain Mason v Mills & Reeve [2011] 1 WLR 2735 considered. (3) The Deputy Master had failed to appreciate that the claimant’s conduct amounted to a serious abuse of process. He regarded the claimant’s desire to settle first without disclosing the problem with D as an exculpatory factor whereas it was clearly inculpatory. He further failed to find, as he should have done, that the defendant and the surveyor would suffer serious prejudice if the new expert evidence were allowed in. He had made a fundamental error of principle and of law. Accordingly, the balance of justice as between the parties came down firmly in favour of refusing the claimant’s application for permission to rely upon the new expert. He had only himself to blame for his predicament. He had gambled that he could settle the case on a basis which he knew to be false. He had lost the gamble and had to make do with the only conceivable theoretical justification for the non-disclosure, namely that he was always going to fall back on the D report but without D. Therefore, D’s report would be allowed in evidence at trial, even though D might not attend or otherwise engage in the directions for the experts to co-operate in narrowing the issues, leaving it to the trial judge to attach such weight to D’s report as was appropriate: Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 and Thevarajah v Riordan [2014] EWCA Civ 14 applied. Jonathan Steinert (instructed by Duffield Harrison Solicitors) appeared for the claimant; Alexia Knight (instructed by DLA Piper UK LLP) appeared for the defendant; James Leabeater (instructed by Berrymans Lace Mawer) appeared for the third party surveyor. Eileen O’Grady, barrister