This case emphasises that independent experts are not subject to the same procedural fairness standards that govern court proceedings and arbitration, and that a claim of bias requires actual (and not just apprehended) bias. If parties wish to impose higher standards on an expert, this needs to be explicit in the terms of engagement and the underlying agreement.
A dispute arose between two brothers who were parties to a shareholders agreement concerning the process by which an independent expert would be appointed and instructed to determine the fair market value of the relevant shares. The expert concerned was Mr Collins. The plaintiff sought an order for specific performance requiring the defendant to sign Mr Collins’ letters of engagement.
In response, the defendant alleged bias based around the conduct of Mr Collins during the negotiation process for his terms of engagement and Mr Collins’ refusal of the defendant’s demands for more information regarding Mr Collins’ selection of a property valuer.
The Court observed that unless the parties specify a procedure, an expert has discretion as to how it will proceed (including, in this case, in relation to the appointment of a valuer and the methodology for valuation). While acknowledging an implied obligation for an expert to act impartially, the Court noted that:
- an independent expert is not obliged to afford parties the full range of procedural fairness accompanying judicial or arbitral proceedings, as long as the expert acts honestly and in good faith; and
- actual bias (as opposed to apprehended bias) is the test for independent experts. Too high an insistence on independent experts being required to avoid even an impression of impartiality is not in the interests of justice.
In finding against the defendant, the Court found that the facts did not support a finding of actual bias and the defendant was ordered to sign Mr Collins’ letter of engagement.