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Court of Appeal: Expert was not under “fiduciary duty” to client

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Coulson: No purpose in designating relationship as fiduciary

The Court of Appeal has overturned the first decision in England and Wales to hold that an expert witness owed a fiduciary duty to their client.

Lord Justice Coulson did not rule out the possibility that a fiduciary relationship might exist but said there was no need to find one here because the expert witness owed the client a contractual duty to avoid any conflict of interest.

“It does not follow that, simply because there has never been a case in which such a duty was asserted and found, no such duty can exist,” he said.

“However, the lack of any prior authority is a factor which this court must bear in mind.”

Coulson LJ went on: “I consider that, in a case like this, no purpose is served by designating the relationship as a fiduciary one. There was a contract here with an express clause dealing with conflicts of interest.

“In my view, a fiduciary duty of loyalty would not add to or enhance the obligations arising from that clause.”

The Court of Appeal heard in Secretariat Consulting PTE and others v A Company [2021] EWCA Civ 6 [2] that the claimant/respondent, which was not named at its request, was the developer of a large petrochemical plant costing billions of dollars.

It approached Secretariat Consulting Pte Ltd (SCL) for support and expert services in connection with an arbitration following a dispute with a sub-contractor involved in the project.

The retainer included a detailed confidentiality agreement, and a conflict of interest check was carried out.

Expert witness K was instructed in May 2019 and the respondent “expressly recorded” that K had no conflict of interest preventing him from acting and he would “maintain this position” for the duration of his engagement.

A third party began a separate arbitration against the respondent relating to the project in August 2019, claiming unpaid fees under a management contract. It approached Secretariat International UK Limited (SIUL) to provide arbitration support and expert services.

SIUL’s conflict check across the Secretariat group identified the work that K was doing.

K said in his witness statement that he spoke to the respondent’s solicitors in October 2019, reiterating his view that there was no conflict of interest, but that the solicitors believed there was.

Without any reference back to the respondent, SIUL began work for the third party.

Coulson LJ said: “There is no explanation in the papers of how or why SIUL felt that it could go ahead and accept the appointment without having first resolved the debate about the alleged conflict of interest.”

The respondent issued an urgent ex parte application for an interim injunction against SCL, SIUL and a third member of the group, Secretariat Advisors, in March 2020.

Mrs Justice O’Farrell ruled last April that all three Secretariat companies were in breach of “the fiduciary duty of loyalty”.

Coulson LJ said the judge continued a temporary injunction which has prevented SIUL working for the third party on the separate arbitration.

The lord justice said that, in his view, the conflicts clause in SCL’s retainer had two consequences.

“By this provision, SCL confirmed that there was no conflict of interest at the time of the agreement, and they also undertook that they would not create any such conflict of interest in the future.

“On that basis, SCL owed the respondent a clear contractual duty to avoid conflicts of interest for the duration of their retainer.”

Coulson LJ said this undertaking bound all the Secretariat companies, noting that SCL and SIUL were owned by the same company and the group companies had directors in common.

On the question of whether there was a conflict of interest, he said that in this case the “overlaps” were “all-pervasive” and there was “an overlap of parties, role, project, and subject matter”.

Coulson LJ dismissed the appeal by the Secretariat companies. Lord Justice Males agreed for his own reasons, and Lady Justice Carr concurred.