Crema v Cenkos Securities Plc

[2010] EWCA Civ 1444

Is expert evidence required to assist 

The Facts

This was a commercial case and involved the interpretation of a contract. The question which concerns us is whether or not a Court can take account of expert evidence on the issue of “market price” for the purposes of implying a term into a contract whether that contract is wholly in writing or partly oral and partly in writing.

The Issues

Would the Court admit expert evidence?

The Decision

Lord Justice Atkins re-affirmed the earlier law that a Court must consider all the background knowledge which would be reasonably available to the parties when deciding whether or not a wholly written contract was to be interpreted so as to contain an implied term. He concluded that the same was true of a contract which was partly oral and partly in writing. Even if the contract is wholly oral his Lordship’s view was that the position is the same. Accordingly, it was held that a Court was entitled to receive the evidence of an expert as to what the “market price” was if that was something which was relevant to the background knowledge that would have been available to the parties. Further, if there was a dispute between the parties as to what market price was, His Lordship was of the view that expert evidence would be even more necessary. His Lordship referred to the landmark case of Prenn v Simmonds [1971] 1 WLR 1381 at 1383H to 1385H per Lord Wilberforce: written contracts are not to be interpreted divorced from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations. Therefore, expert evidence of the factual background known to the parties at the time would be admissible.

Conclusion

Accordingly, there is nothing inherently wrong in an expert being instructed to give an opinion of practices within a particular industry at the time a contract was entered into for the benefit of allowing the Court to understand the backdrop to the commercial arrangement. The position is the same whether the contract is written oral or a mixture.  

TEDR Volume & Issue

TEDR Volume: 
16
TEDR Issue: 
1