Non-domestic rating is not something we usually cover on this blog. It is, after all, not about housing. But the decision of the Upper Tribunal (Lands Chamber) in Gardiner & Theobold LLP v Jackson (Valuation Officer) [2018] UKUT 253 (LC) goes much wider.
At the risk of gross oversimplification, commerical occupiers of property have to pay business rates. Those rates are assessed by reference to the rateable value of the unit. The rateable value is not to be confused with the rental value. Establishing the rateable value is a mixture of looking at objective facts (size of the unit) and expert judgement (what allowances are made for location, quality, etc). The Valuation Officer is obliged to maintain a list of rateable values and it is she who first assesses your property. If you disagree with her assessment you can propose an alternative rateable value and, if is not not accepted, appeal to the Valuation Tribunal.
Most of this work on behalf of the tax-payer is done by specialist rating valuers and surveyors. Very often they act as both advocate at the VT and also give expert evidence. It’s obviously not always easy to draw a distinction between the role of an advocate and that of an impartial expert. And that tension is what this case is about. I won’t deal with the facts because they’re not relevant for readers of this blog, save that what was being discussed was a situation where either (i) the whole fee (advocate and expert) was a CFA; or (ii) part of the fee was a CFA. What matters is what the UT has said about law and practice (and not just any old UT – the President, Mr Justice Holgate)
Expert witnesses
An expert owes her primary duty to the court/Tribunal. Whilst this is often stated in the relevant procedural rules, the duty comes from the general law, not from the rules. The key principles are to be found in “Ikarian Reefer” [1993] 2 Lloyd’s Rep 455: –
Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation (Whitehouse v. Jordan [1981] 1 WLR 246at p. 256, per Lord Wilberforce).
An expert witness should provide independent assistance to the Court by way of objective, unbiased opinion in relation to matters within his expertise (seePolivitte Ltd. v. Commercial Union Assurance Co. plc [1987] 1 Lloyd’s Rep. 379at p. 386 per Garland J andRe J [1990] FCR 193per Cazalet J). An expert witness in the High Court should never assume the role of an advocate.
An expert witness should state the facts or assumptions upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion (Re Jsupra).
An expert witness should make it clear when a particular question or issue falls outside his expertise.
If an expert’s opinion is not properly researched because he considers that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one (Re Jsupra). In cases where an expert witness, who has prepared a report, could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report (Derby & Co. Ltd. v Weldon The Times 9 November 1990per Staughton LJ).
If, after exchange of reports, an expert witness changes his view on a material matter having read the other side’s expert’s report or for any other reason, such change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the Court
These duties are obviously very hard to square with a situaton where the expert has a financial interest in the case. Whilst it goes too far to say that a CFA could never be allowed, the decision in R v (Factortame Ltd) v Secretary of State for Transport, Local Government and the Regions (No.8) [2003] QB 381 suggested that, at the very least, it should be flagged up early in the proceedings as it may go to admissibility. It was thought that it would be “… a very rare case indeed that the Court will be prepared to consent to an expert being instructed under a contingency fee agreement”.
Should the same approach apply in the VT/UT? Perhaps not. After all, some of the cases were quite low value and it may be that, without this sort of fee arrangement, then a party would have no expert evidence at all. On the other hand:
The data assembled by an expert in his evidence and the opinion he gives will be crucial to the outcome of the dispute for the parties, even if there are also factual disputes to be resolved in the decision. This issue embraces not simply the opinions which the expert gives, but also the information (eg. on the property, comparables, surveys, structural and engineering matters, planning history and so on) which he supplies and on which his opinion is based, and to which the evidence of the opposing party will react. A party to a dispute before the Tribunal might wish to oppose an opponent’s reliance upon an expert remunerated by success-related fees because of the risk that poses to the objectivity of that expert and the uncertainty to which it may give rise about whether the expert has disclosed all that he should. An expert is obliged to provide information or knowledge (and not simply documents) which may go substantially beyond the scope of the disclosure obligations owed by his client and any solicitor involved, such “disclosure” generally involving only documents which are or have been in the control of the client.
The position of the RICS
The RICS has issued guidance to its members on this issue. In the Practice Statement and Guidance Note: Surveyors acting as expert witnesses, the guidance is as follows
10.1 You should not undertake expert witness appointment on any form of conditional or other success-based arrangement including where those instructing you are engaged on such a basis.
10.2 It is inappropriate to be remunerated by way of a conditional fee arrangement when acting as an expert witness but it may be an appropriate fee basis when acting as an advocate. When acting in a dual role as an expert witness and advocate, where permitted in lower tribunals, a conditional fee arrangement may be acceptable because it will be seen as attached to the role of advocate. Such a dual role improves access to justice by reducing costs and therefore a conditional fee payment can be supported in these limited and strict circumstances.
10.3 When acting in a dual role and where a conditional fee arrangement has been agreed, this must be declared to the tribunal.
10.4 It is unlikely that a dual role will be permitted in higher tribunal formats and consequently previously agreed conditional fees when the surveyor has appeared in a lower tribunal will, at the point of transferring to the superior or higher tribunal, need to be commuted and replaced by an hourly rate or fixed fee arrangement.”
The UT considered that para.10.2 was particularly important. It appeared to provide that, “when a surveyor is acting as an expert witness, he may not be remunerated by way of a conditional fee arrangement (i.e. a fee related to the outcome of the proceedings in which he is so acting), whether that fee is for his services as an expert witness or for other services.”
Just pausing here. That is a big deal. Most, if not all of the big surveying firms who do NDR cases operate on a CFA basis. You get a (say) £50,000 p.a. reduction in your rates as a result of their submissions and they take 10%. If the UT is right then this practice is contrary to the RICS guidance and needs to stop if surveyors don’t want to get brought up before their regulator.
Implications
So, there we have it. If you are a surveyor acting as advocate and expert then it is a breach of your professional code to work on a CFA basis. If you do so, expect costs orders against you personally and to be referred to your regulator. And be aware, this goes beyond NDR cases. This sort of arrangement is also common in relatively low-value enfranchisement (mainly lease extension) cases. It seems that too now needs to come to an end.