LLoyds Bank. Giving great weight to an expert's considered opinion
19 September 1995
16 January 2014
18 July 2014
9 July 2014
8 April 2014
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19 August 2014
AS HEAD of forensic accounting at chartered accountants Baker Tilly, I gave expert evidence for the successful plaintiffs. However while initial legal opinion suggests this case does not set a precedent and it remains to be seen whether the floodgates will open with similar actions against banks, the case provides a good example of some potential pitfalls that can arise in giving expert evidence:
An expert must be impartial, their evidence should be given only from within their own area of expertise and they must not act as an advocate even though as in this case, I knew I could probably help save the plaintiffs from bankruptcy and losing their home.
That said, it would be unnatural if they did not wish their side to win and no party will call an expert witness if they do not believe they will be helpful.
This is not a serious problem, as no expert worth their salt will ever give evidence they cannot fully support against scrutiny from another expert and on cross-examination. Credibility is vital.
In Verity & Spindler v Lloyds Bank there was an unsuccessful attempt to strike out my evidence on the grounds that an accountant's evidence is not relevant to the advice of a bank manager.
However, the judge accepted that as an accountant I did possess the relevant experience in advising companies and individuals seeking bank finance and was well aware of the criteria a bank would apply to such proposals.
More importantly he ruled that: "If a bank manager undertakes to give financial advice to customers, then it seems to me he must expect to be judged by the same standards as those applicable to other professionals who give such financial advice, such as Mr Chilton Taylor himself. In any event there was nothing arcane or esoteric about what he had to say. I found his views extremely sensible and reasonable and I have no hesitation about taking them into account."
An important factor here is that expert evidence should be given by those who not only have wide litigation experience but who also continue to practice in their chosen field. They should not be full-time experts.
Experts must also keep their evidence clear and simple. In this case, which was comparatively simple, it had been difficult to identify and focus on the key issues amid a mass of often irrelevant and disorganised information prepared over several years prior to my involvement by financially naive plaintiffs.
It was also necessary to suppress personal judgements. In a marketplace where clients have no qualms about suing accountants for negligent advice, why should banks providing similar advice be treated any differently?
Area of expertise
There were a number of matters on which no accountant should give evidence and these represented potential traps for the expert: was the bank actually advising (ie owing a duty of care) and not simply lending? If the advice was given had the plaintiffs actually relied upon it?
These were both matters only for the court to decide and my evidence on the alleged advice was given with this proviso. Attempts were made on cross-examination to draw me into these areas and also into the entirely different area of negligent lending and property valuation, not an area for an accountant or, for property valuation, a bank manager either.
Litigants in person
But would the plaintiffs, having lost their legal aid and not being represented by a barrister, ask the appropriate questions of an expert and inadvertently destroy their credibility?
In such circumstances it is essential an expert resists the temptation of advocacy and is not drawn into matters outside his area of expertise.
And in some cases a litigant in person can command sympathy from the judge who might find in favour of the plaintiff on a technicality.
In Verity & Spindler v Lloyds Bank the judge also allowed examination by a Mackenzie friend - Sam Crabb, a retired bank manager. This is a very rare occurrence.
The problem did not arise as my principal evidence had already been served by way of an expert's report and it was decided that I first be cross examined - and was fortunately asked the questions I would have been asked on examination in chief.
The Dibb Lupton view - Dibb Lipton Broomhead acted as representatives for Lloyds Bank
There has been a remarkable level of interest in this particular case. It has largely concentrated on the fact that the plaintiffs have won damages of £77,529 from Lloyds Bank.
There has been scant mention of the fact that the plaintiffs were claiming in excess of £500,000 or that there is an outstanding counter-claim of around £160,000 in the light of which the plaintiffs must consider their "victory" a hollow one.
In no way does the decision change the law. The judge simply applied the existing law of negligence to the facts of the case as he found them. It has been clear, at least since the decision in Woods v Martins Bank (1959) that a banker, like any other professional who gives advice, can be held liable in damage if his advice is negligent and leads to loss.
Advice must have been specifically sought by the customer and it must be clear to the bank that its advice is being sought in order for the duty of care to arise.
The decision by a bank to lend money to a customer does not constitute advice on the viability of the project for which the customer has sought the funds.
Neither Lloyds Bank nor Dibbs' approach to the case was influenced by the fact that the plaintiffs represented themselves at trial,
although this no doubt contributed to the media interest in the case.
In fact, the plaintiffs were represented by solicitors and counsel until shortly before the trial commenced, when their legal aid was withdrawn.
We extended every courtesy, and where appropriate, assistance at all times and the Lloyds Bank counsel was commended by the judge for his conduct in this regard throughout the trial.