Wednesday, October 9, 2013

"The need for expert evidence"

The need for expert evidence

Part 35 of the CPR, like many other parts of the CPR, was amended on 1 April 2013 and those changes made it clear that the court has the power to limit the issues that the expert evidence should cover. Although it was heard before April 2013, the case of BY Development Ltd & Others v Covent Garden Market Authority, [2012] EWHC 2546 (TCC), which came before Mr Justice Coulson, raised important issues about the extent to which, if at all, expert evidence can be admissible or relevant in a procurement dispute under the Public Contracts Regulations 2006 (as amended). Following the new rules, it is likely that the courts will adopt a similarly tough approach in other cases.

The starting point under CPR 35.1 is always that expert evidence shall be restricted to that which is reasonably required to resolve the proceedings. CPR 35.4 now states that:

(1) No party may call an expert or put in evidence an expert’s report without the court’s permission.

(2) When a party applies for permission under this rule they must provide an estimate of the costs of the proposed expert evidence and identify –

(a) the field in which he wishes to rely on expert evidence and the issues which the expert evidence will address; and
(b) where practicable the name of the proposed expert.

(3) If permission is granted under this rule it shall be in relation only to the expert named or the field identified under paragraph (2). The order granting permission may specify the issues which the expert evidence should address.

(4) The court may limit the amount of the expert’s fees and expenses that the party who wishes to rely on the expert may recover from any other party.

In the BY case, the defendant (“CGMA”) wished to develop the site next to Vauxhall Cross where, for almost 40 years, the New Covent Garden Market has operated. It began a tender process in March 2010 using the competitive dialogue procedure which, following pre-qualification, involved three stages: stage 1, being initial dialogue and submission of outline solutions; stage 2, being the detailed dialogue; and stage 3, being the submission of final tenders. The claimants reached stage 3 of the process.

However, on 27 March 2012, CGMA issued a notice under Regulation 32, notifying the claimants that their tender had not been successful and that it intended to award the development contract to a rival bidder. The claimants sought to challenge that decision arguing that CGMA’s evaluation of the respective bids contained a number of manifest errors, particularly in relation to planning matters. Alternatively, they said that the decision was unfair and/or arose as a result of the unequal treatment of their bid. The claimants sought leave to rely on expert evidence in relation to both planning and finance matters.

The question for Mr Justice Coulson was whether the expert evidence was either admissible or relevant. The Judge noted that the test of “manifest error” applied in the European procurement cases was very similar to, if indeed not the same as, the Wednesbury1 test of unreasonableness or irrationality in domestic judicial review proceedings where it is very rare for expert evidence to be either relevant or admissible. He referred by way of example to the case of R (on the application of Lynch) v General Dental Council [2003] EWHC 2987 (Admin) where Collins J concluded that:

“it will be virtually impossible to justify the submission of expert evidence which goes beyond explanation of technical terms since it will almost inevitably involve an attempt to challenge the factual conclusions and judgment of an expert”.

The one exception might be a report from an expert which, again in the words of Collins J, “seeks to explain what is involved in a particular process and how complicated that process is”. In rare circumstances such a report might be admissible to explain the technical terms and concepts.

Mr Justice Coulson considered that the correct approach to the test of “manifest error” in public procurement cases is that the court must carry out its review with an appropriate degree of scrutiny to ensure that the basic principles for public procurement have been complied with, that the facts relied upon by the contracting authority are correct and that there is no manifest error of assessment or misuse of power. The relevant point to Mr Justice Coulson was that the exercise undertaken by the judge was a straightforward factual investigation. There was no expert evidence. Indeed, one thing to emerge from the BY case was the fact that procurement disputes of this type do not generally involve expert evidence. Only three were referred to in the judgment:

(i) Harmon CFEM Facades (UK) Limited v Corporate Officer of the House of Commons [1999] 67 Con LR 1, where HHJ LLoyd QC found that the tender procedure for the fenestration package at Portcullis House was operated in breach of the relevant Regulations. Here the Judge had to consider expert evidence from an engineer and a quantity surveyor. The evidence here was not about the tender process but went to particular issues of causation (namely whether or not, but for the errors, the claimant’s tender would have been successful) and quantum.

(ii) Henry Brothers (Magherafelt) Limited and Others v Department of Education for Northern Ireland [2011] NICA 59, where at first instance there was expert evidence about applicability of one of the relevant criteria, against which the bids were considered, rather than any wider issues concerning the tender process as a whole.

(iii) Newcastle Upon Tyne Hospital NHS Foundation v Newcastle Primary Care Trust and Others [2012] EWHC 2093 (QB), where the expert evidence put forward was criticised by the Judge.

This led Mr Justice Coulson to conclude that:

“where the issues are concerned with manifest error or unfairness, expert evidence will not generally be admissible or relevant in judicial review or procurement cases. That is in part because the court is carrying out a limited review of the decision reached by the relevant public body and is not substituting its own view for that previously reached; in part because the public body is likely either to be made up of experts or will have taken expert advice itself in reaching the decision; and in part because such evidence may usurp the court’s function.”

This does not mean that expert evidence can never be admissible in public procurement cases concerned with manifest error. Sometimes technical explanatory evidence is required. Is the claim one where the technical background is so complex that explanatory expert evidence is required, and/or the claim an unusual case where expert evidence on some or all aspects of the tender evaluation process is required in order to allow the court to reach a proper view on the issues of manifest error or unfairness? In the Henry Bros case, the issue in question related to the amount of Defined Costs as required under the NEC3 form of contract. The underlying assumption made by the Contracting Authority was that Defined Costs would be the same for each contractor. It was demonstrated at the hearing at first instance, through expert evidence called by the claimant and cross-examination of the witnesses, that that assumption was incorrect and amounted to a manifest error.

In the BY case here, all the matters at issue went to elements of the tender evaluation itself. In these circumstances, unlike in the Henry case, the need for such evidence to explain background technical matters was not made out. Indeed, the Judge went further to suggest that there did not seem to be any substantive disputes between the parties as to the technical background to the evaluation. The Judge gave an example. One of the questions for the proposed planning expert was whether or not the London Borough of Wandsworth would have accepted an outline application for planning permission for a 175m tower. The Judge was of the view that the opinion evidence of a planning expert, reached some time after the event, as to what a third party local authority might have done had it received a hypothetical planning application, was not going to be of any meaningful assistance to a judge who had to decide whether or not there was a manifest error in the assessment of planning risk.

Saying this, the Judge recognised that in these cases, claimants, who are almost invariably the party whose bid has been unsuccessful, can often be at something of a disadvantage in mounting a challenge to the decision. That claimant has had no involvement in the detailed evaluation, so does not know precisely why its bid was unsuccessful. In the first instance, it is entirely dependent on the information which it is given by the defendant. Even once the proceedings have commenced, and further information has been provided (usually with a greater or lesser degree of reluctance), the claimant often remains unclear as to precisely what happened during the evaluation exercise. However, whilst, against that background, the Judge could see that the possibility of being able to rely on a detailed expert’s report dealing with all aspects of the evaluation, and out of which a case as to manifest error or unfairness might emerge would be at least superficially attractive to a claimant, he reconfirmed that:

“I consider that such an approach is wrong. Given the limited nature of the court’s review function, such expert evidence will not generally be admissible unless there are particular reasons why, on the facts of the case in question, the costs, time and effort required to present such opinion evidence could be justified.”

Here the Judge was concerned that the instruction of the expert would lead to a complete rerun of the evaluation process, with the experts commenting on each element of the tenders and their evaluation, and seeking to substitute their views for those held, and the decisions taken, at the time. That is not the role of the Judge. To do this would be to ignore the limited review task for the court at trial. You should not assume that a complete replay of the whole evaluation process will be allowed. Further, there was a danger that the experts were being asked to usurp the function of the court. The experts were being asked not only whether it was their view that the claimant’s bid did not represent an unreasonable planning risk but also whether, in reaching the contrary conclusion, they were of the opinion that the authority’s evaluation was manifestly wrong.

Conclusion

The BY judgment makes it clear that the need for explanatory expert evidence will be very carefully assessed by the courts in cases where a challenge is being made to the tender process. It is only where there is a complex technical field where explanation is required in order for the court to reach a conclusion that such evidence will be permitted. Given the very clear comments made by Mr Justice Coulson in the BY case, it must be anticipated that it will only be on very rare occasions that such expert evidence will be allowed. The task of the court when considering challenges to the procurement process is a limited one and the court will not allow a complete replay of the whole evaluation process. Here the Judge felt that the desire to appoint an expert was designed to permit such a complete rerun of the evaluation process.

When deciding whether or not to allow expert evidence, the question the court will ask itself is this:

“Is this a claim where the technical background is so complex that explanatory expert evidence is required, and/or is this an unusual case where expert evidence on some or all aspects of the tender evaluation process is required in order to allow the court to reach a proper view on the issues of manifest error or unfairness?”

The likely answer in most public procurement cases at least will be: no.

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  • 1. Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223. Adopting the Wednesbury approach a court will consider whether the decision was so perverse that no reasonable tribunal, properly directing itself as to the law to be applied could have come to the same conclusion.