Section 238 of the Companies Law (2016 Revision) and Nord Anglia Education, Inc.
| Jurisdiction | Cayman Islands |
| Judge | Kawaley |
| Judgment Date | 15 August 2018 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FSD 235 OF 2017 (IKJ) |
| Date | 15 August 2018 |
The Hon. Justice Kawaley
CAUSE NO. FSD 235 OF 2017 (IKJ)
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Summons for Directions-section 238 of the Companies Law Petition — whether Dissenters should be granted leave to replace their initial expert witness-governing principles-whether conditions should be imposed if leave granted.
Mr Mac Imrie, Mr Malachi Sweetman and James Eldridge, Maples and Calder, on behalf of Nord Anglia Education, Inc. (“ the Company”)
Mr Jonathan Adkin QC and Mr Andrew Jackson, Appleby, on behalf of the Appleby Dissenters
Mr Barry Isaacs QC and Mr Hamid Khanbhai, Campbells, on behalf of the Campbells Dissenting Shareholders
Mr Christopher Harlowe, Mr Rocco Cecere, Mr Zachary Hoskin and Ms Jessica Bush, Mourant Ozannes, on behalf of the Mourant Dissenters
On March 6, 2018, directions were ordered on the Company's November 9, 2017 Summons for Directions. The Order provided, so far as is material for present purposes, as follows:
“ 3. The Company and the Dissenters shall have leave to instruct one expert witness each (the Dissenters to jointly and severally instruct one expert between them) in the field of valuation in order to opine upon the fair value of the Dissenters' shares in the Company, valued as a going concern as at 21 August 2017 (“ Valuation Date”) (together, the “ Experts).
4. The Experts shall be appointed no later than 14 days from the date of this Order, and on that date the Company and the Dissenters shall each advise the other in writing of the identities and email addresses of the respective Experts so appointed.”
The Dissenters did not jointly and severally instruct their expert. Appleby raised concerns with Maples by letter dated April 12, 2018 about the fact that Mr Osborne and the Company's expert (Professor Fischel) both had links to FTI Consulting. On June 5, 2018, Appleby advised Maples that it had terminated Mr Osborne's retainer to resolve the conflict issue. Mr Osborne himself notified Mourant that he was withdrawing, and this development was reported by Mourant to Maples by letter dated June 14, 2018. The Campbells Dissenters were seemingly left out in the cold.
By paragraph 1 of the Company's Summons for Directions issued on June 19, 2018, the following relief was sought:
“1. Directions as to the identity of the Dissenters' joint expert.”
This was, by the time the Company's Summons was actually heard, in substance an application by all of the Dissenters to replace the expert they had previously notified as their joint expert (Mr Osborne) with another expert (Professor Gompers). The Company did not oppose the application altogether. Rather, it submitted the Court should grant leave subject to conditions designed to ensure that the Dissenters were not engaged in “expert shopping”.
This was in large part because the Dissenters' position on the replacement of Mr Osborne was inconsistent and incoherent when it ought to have been a united one. This of course assumes, as the Company was entitled to assume, that the joint instruction contemplated by the March 6, 2018 Order had occurred. It was not until July 25, 2018 that the Campbells Dissenters eventually agreed to the replacement of Mr Osborne by Professor Gompers.
On July 27, 2018 I granted leave for the Dissenters to jointly instruct Professor Gompers as their expert and only imposed one of several conditions proposed by the Company. I was satisfied there was no objective basis for concerns about “expert shopping”. I made the following Order in respect of costs:
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(1) the costs of the Company's Summons relating to the replacement of expert issue up to and including July 25, 2018 were awarded to the Company in any event (as against the Appleby and Mourant Dissenters), to be taxed if not agreed;
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(2) the Company's and the Mourant and Appleby Dissenters' costs after July 25, 2018, were ordered to be in the cause;
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(3) The Campbells Dissenters' costs generally in relation to the Summons were ordered to be in the cause.
I now give reasons for that decision.
The content of the governing principles was not in controversy and derived from English case law which the Company commended to this Court. Expert witnesses though retained by parties owe their primary duties to the Court and the opinions they advance are supposed to be independent non-partisan ones. To ensure that a litigant wishing to replace an expert initially retained is not simply seeking another expert who will provide a more favourable opinion, the Court when exercising its discretion to grant leave may require the applicant to disclose any previous opinion rendered by the expert it is proposed not to call. Any privilege which existed in a prior report falls away once the Court decides to grant leave to adduce fresh expert evidence. It may also impose other necessary conditions designed to allay concerns about “expert shopping”.
The controversy in the present case was whether or not there was any objective basis for concerns that the Dissenters' changing of the expert may have been attributable to what is colloquially referred to in the legal trade as “expert shopping”.
The first case upon which reliance was placed was Beck v Ministry of Defence [2005] 1 WLR 2206. Simon Brown LJ, delivering the leading judgment in the English court of Appeal, described the central point raised as follows:
“2…. It …raises a question of some little importance, namely whether it can ever be appropriate to allow a party to substitute one expert for another without, at some stage at least, being required to disclose the first expert's report.”
The substantive principles approved by the English Court of Appeal in Beck are set out at the end of Simon Brown LJ's judgment:
“23. The burden of the defendants' argument in this regard is that, whilst it is one thing to assert, as clearly in general terms they were asserting, that their expert's report, essentially supportive of their case though it was in many respects unsatisfactorily set out and reasoned; it is quite another to be forced to make that argument by specific reference to the details of the report, every point thereafter becoming directly available against them if ultimately they are forced to rely upon his evidence. Put on that basis, and that must necessarily have been the basis upon which the point was understood by both judges below, I, for my part, am likewise disposed to accept it.
24. Very different considerations, however, seem to me to arise once in principle it has been decided to make the order allowing a new expert to be instructed. At this point I can see no reason for continuing to withhold disclosure of the original report which is now to be discarded, and every possible reason why such disclosure should be made. In Lane v Willis [1972] I WLR 326, one notes, the Court of Appeal was told, on indicating that they proposed to allow the defendants to instruct a further expert, that the defendants would thereupon disclose their existing evidence. Roskill LJ, at page 335, described that as a very proper undertaking by counsel for the defendants:
‘….that if this court makes the order which he seeks, at any rate in some form, the defendants' solicitors will, as soon as they get [the new report], send to the plaintiff's solicitors a copy not only of that report but of the various reports which Dr Carroll has already made as a result of his several examinations of the plaintiff. If the defendant does not wish to call Dr Carroll at the trial, it would then be open to the plaintiff to call him if he so desired.’
25. The disclosure of the original report, as a condition of being allowed to instruct a fresh expert, would also meet the concern expressed by Sachs LI in the third passage of his judgment cited above:
‘No room should be left for a plaintiff to wonder whether the application is really due to the reports of a defendants' medical expert being favourable to the plaintiff.’
26. I do not say that there could never be a case where it would be appropriate to allow a defendant to instruct a fresh expert without being required at any stage to disclose an earlier expert's report. For my part, however, I find it difficult to imagine any circumstances in which that would be properly permissible and certainly, to my mind, no such circumstances exist here.
27. It seems to me that there clearly ought to be a condition attached to the order here permitting the defendants to instruct a fresh psychiatrist; namely that they should, on taking up such permission, forthwith disclose Dr Goodhead's report upon which they no longer seek to rely.”
The English Court of Appeal, in a decision which was (on this point) strictly obiter, unconditionally approved its earlier decision in Beck in Vasiliou v Hajigeorgiou [2005] 1 WLR 2195. Dyson LJ opined as follows:
“27. In our judgment, these factual differences are immaterial to the point of principle that was decided in Beck which is encapsulated in para 26 of Simon Brown LJ's judgment and are not a sufficient basis for distinguishing that case from the present. The court approached the issue that was before it on the footing that the defendants required permission in order to rely on a second expert. That is the basis on which we are approaching the second issue in the present case. The question of principle that was decided in Beck was that the court has the power to give permission to a party to rely on a second (replacement) expert which it should usually exercise only on condition that the report of the first...
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