With the increase in the number of agricultural disputes being resolved by expert determination, the recent case of Hopkinson v Hickton [2016] provides useful guidance on the question of how independent the independent expert must be.

The case

In 2014, an experienced valuer in a large, national firm of surveyors, was asked to act as an independent expert to determine a dispute concerning the open market value of some development land. His instructions were to value the land as at 30 September 2010, some four years prior to his instruction. The valuer was a partner in a national firm, heading up the regional valuation team and managing over 50 valuers spread over more than ten offices.

On receiving instructions, he carried out conflict checks and confirmed to the parties that no conflict existed and he was free to act. He proceeded to value the land as at 30 September 2010 at £5.9m.

As it turned out, the land had been sold in July 2013 to property developers for £4m. When the valuer produced his report, he confirmed that in November 2013 his firm had valued the land for the developers. While the valuer had not personally undertaken that valuation, he was responsible for overseeing it and had formally signed it off. Since the valuation that he was being asked to undertake was at a different point in time and in a different market, he did not consider that any conflict arose. He wrote the report disclosing the involvement in November 2013, but stated that the valuation in 2013 did not have any bearing on his report.

Was that the correct decision to have been made?

It may be excusable that in 2014, at the date of accepting instructions, neither the valuer nor his sophisticated conflict check system made a link between the land in question and the valuation that they had carried out for the developer client in 2013. However, when the valuer subsequently came to write his report and gave active consideration to the question of whether a conflict existed, he decided that it did not.

When the report was delivered to the parties, one of them considered that the valuer was not a truly independent expert and so the report was not binding on the parties. The argument was that the valuer, in determining the value in 2010 had a vested interest in ensuring that the figure in 2010 value was consistent with the 2013 valuation in order to save his firm from embarrassment. This was in the context that other firms had at much earlier times valued the land at £22m.

Principles of impartiality and expert determination

The case came before the Court of Appeal and is reported. The Court of Appeal rehearsed the principles of impartiality and expert determination. The requirement is that the valuer is independent. This means that he should be capable of carrying out the expert valuation, without there being any risk of him approaching the task with a closed mind or with a particular objective. The Court of Appeal cited the dicta in Kemp v Rose [1858]:

“where it turns out that, unknown to me or both of the parties who submit to be bound by the decision of another, there was some circumstance in the situation of him to whom the decision was entrusted which tended to produce a bias in his mind, the existence of that circumstance will justify the interference of the Court.”

There is clear authority that an expert witness (emphasis added) is not automatically disqualified from giving expert evidence simply by reason of a relationship with one of the parties or an interest in the outcome of the proceedings. It is a matter for the Judge to consider when giving weight to that evidence.

However, in relation to expert determination, different factors apply, because the expert is performing a quasi judicial function, which requires the exercise of impartiality.

However, the Court of Appeal pointed out that even in these cases, a link such as a professional relationship with one of the parties, will not be sufficient to overturn the expert determination, unless it can be shown that the expert was actually partial in making the decision. Therefore the party bringing the challenge needed to show that the valuer was not impartial and was actually influenced by the 2013 valuation into producing a valuation that was consistent with it.

Meaning of ‘independent’

In giving the leading judgment, Lord Justice Patten stated:

“It seems to me that the question of what has to be shown in order to be able to challenge the appointment of an ‘independent value’ is really determined by the construction of the word ‘independent’… An expert valuer does not satisfy the requirement that he be independent if he has a connection with one of the parties, an interest in the outcome of the valuation or some other connection with the property which, objectively viewed, creates a real risk that he may act partially in carrying out the valuation. His independence is negated by the relevant factor regardless of whether in fact it would cause him to act partially. The stipulation that the expert be independent is intended to remove from the parties the risk of a lack of impartiality and professional objectivity.”

Apparent bias

He applied the test of apparent bias which is as follows:

“The Court must first ascertain all the circumstances which have a bearing on the suggestion that the Judge was bias. It must then ask whether those circumstances would lead a fair minded and informed observer to conclude that there was a real possibility, or a danger, the two being the same, that the Tribunal was bias.” [Re Medicaments and Related Classes of Goods (no 2) [2001]

So what were the facts that a fair minded observer has in front of him? He would know about the valuer’s role in the 2013 valuation and the fact that the land had been sold to the developer shortly before in July 2013 for £4m.

He would attach some caution to the valuer’s statement in his report that he had no regard to the 2013 valuation.

Lord Justice Patten formed the view that a fair minded observer was likely to reject any blanket assertion that a prior valuation of the same property would necessarily impact on the subsequent valuation to the extent of encouraging a valuer to produce conformity between the two valuations regardless of the evidence produced in relation to the second.

The observer would also take into account the distance between the two valuation dates and any intervening events which would impact in some way on the valuation exercise. The observer would have regard to the fact that an experienced valuer with a significant professional reputation was not likely to act other than professionally in carrying out the expert valuation. So, had some information and submissions of the parties caused him to doubt the accuracy of the 2013 valuation, he would have notified the developer accordingly rather than compromised his duties to the parties.

Lord Justice Patten formed the view that the observer would not have concluded that there was a real possibility of bias. The valuation dates were three years apart. The 2013 sale price to the developer was far more relevant to the valuation exercise than the subsequent 2013 valuation. For those reasons he formed the view that there was no basis for an observer to conclude that at the date of his appointment there was a real possibility of bias on the part of the valuer.

It is noteworthy that in this case the applicant had not argued that the valuation report itself had in some way been affected by the valuer’s knowledge of the property. The case centred on an argument that at the date that he was appointed, he was not independent.

With more agricultural disputes now being resolved by independent experts or by third party determination, the same issues of conflict arise for professionals accepting such appointments as arise in arbitrations.

Where large organisations are involved, with different parties giving different instructions at different times it is easy to see how a previous involvement in relation to a particular parcel of land may not be picked up. It then becomes an altogether more complicated test of establishing bias on behalf of the expert.