Caribbean Steel Company v Price Waterhouse

[2013] UKPC 18

An allegation of professional negligence must be supported by expert evidence.

The Facts

The Appellants (“Carib Steel”) appealed against the decision of the Jamaican Court of Appeal, which had decided the Respondents (“PWC”) were not negligent in their valuation of a company that Carib Steel had purchased on PWC’s advice / valuation. Central to the case was expert evidence called by the parties. What was interesting about the case was that the experts, to a degree, were talking past each other. In particular, Carib Steel’s expert did not deal directly with the points made by PWC’s expert in his evidence, Lord Toulson noting that he, “did not grapple directly with the points made” by PWC’s expert evidence.

That, however, did not deter the trial judge. In his written judgment the trial judge dismissed the whole of PWC’s expert evidence in a single paragraph, making the sweeping statement that, “this is an obvious case, requiring the application of common sense and which does not require any expertise in share valuation itself.”

The Jamaican Court of Appeal reversed that judgment, and the Privy Council found that they were right to do so. Lord Toulson noted that the Jamaican Court of Appeal had been quite right to call the trial judge’s approach “somewhat mystifying”, and pointed out that Sanson v Hambleton [1998] PNLR 542 was clear authority that a Court should be slow to find a professional guilty of negligence without evidence from a suitably qualified expert as to the relevant professional standard, and how the professional fell below it. Because Carib Steel’s expert did not grapple with PWC’s expert’s points, there was no such evidence, and the trial judge’s decision to plug that gap with what he thought was the “application of common sense” could not be supported. As a result, the appeal failed and the Privy Council supported the Jamaican Court of Appeal

Comment

There are a number of interesting points here for practitioners:

  1. First and foremost: issues, issues, issues! Any effective expert report depends in the first instance on identifying what the issues are. Sometimes the lawyers will have already attempted to identify the issues before you are instructed. If they have not, expect them to involve you in the process. If they do not put their mind to it, your instructions will not be clear. You may well need to identify the key issues for yourself. That may involve review the pleadings and the factual evidence. This is of central importance; if you don’t start with the right questions, then you are unlikely to get to the right answers. Just as important, you may well end up missing the entire thrust of the other side’s case, as the expert did in this case. That can be fatal; indeed, it was fatal here for Carib Steel.

 

This case reinforces the need for allegations against professionals to be supported by expert evidence. This was recently re-emphasised by Coulson J in Pantelli Associates v Corporate City Developments [2010] EWHC 3189 (TCC) and by Akenhead J in ACD v Overall [2012] EWHC 100 (TCC). Opinion differs as to how and when an expert has to be brought into the case (the best answer seems to be that lawyer’s favourite; it depends on the circumstances). But what is clear – and what was reaffirmed by the Privy Council in this case – was that expert evidence which is directed to the key issues is absolute fundamental to the success of any allegation of professional negligence.

TEDR Volume & Issue

TEDR Volume: 
18
TEDR Issue: 
2