As one of the leading offshore jurisdictions globally for the resolution of complex financial services disputes, expert witnesses are frequently appointed to provide evidence to the Financial Services Division of the Grand Court of the Cayman Islands (the 'Court') on a wide array of disciplines. Their role is becoming increasingly important as the financial services industry continues to evolve and gives rise to the emergence of expertise in new categories of disputes, such as shareholder appraisal rights in the context of mergers and fair value petitions where the opinion of an expert can well determine the outcome of the case.
This memorandum focusses on some of the key pretrial procedural aspects relating to the appointment of experts in the Cayman Islands, including the duties they owe to the Court, the required form and content of their reports, and meetings between party appointed experts.
Directions for the appointment of an expert
Except with the leave of the Court or where all parties agree, expert evidence cannot be adduced.1 In practice this means that if the parties are unable to agree upon directions for the appointment of one or more experts in a particular discipline (e.g. forensic accountancy, or foreign law), the requesting party must apply to the Court seeking a direction to that effect. Such applications would ordinarily be determined by the Court at a directions hearing or case management conference shortly after the commencement of the proceedings. The directions available to the parties and the Court vary and will be tailored to the proceedings in hand but common elements are (a) identifying the scope of the expert evidence; (b) the form in which the expert evidence is to be provided (a written report being the default and preferred form); (c) the deadline for filing and exchanging such reports; (d) whether a sole expert may be utilised, or whether the parties may appoint separate experts; (e) the deadline for any meetings between the separate experts in an attempt to narrow the issues in dispute; and (f) the deadline for the filing and exchanging of any reply reports.
The question of determining the appropriate number of experts was considered by the Court in the recent decision of In the Matter of Qunar Cayman Islands Ltd,2 which concerned a fair value petition under Section 238 of the Cayman Islands Companies Law3 where there were multiple dissenters. If each dissenter were to be permitted to instruct their own valuation expert, the Court would have needed to hear evidence from five different experts. The Court, pursuant to its case management powers, decided that one expert should be instructed by the dissenters jointly and severally on the basis that their interests ought to be aligned, and that this would not infringe their right to a fair trial.
General requirements of an expert
Paragraph B5.2 of the Second Edition of the Financial Services Division Guide sets out eight general requirements of an expert. Those eight requirements, which are also commonly referred to as the 'duties' of an expert, are as follows:
- It is the duty of an expert to help the Court on the matters within his expertise. This duty is paramount and overrides any obligation to the party from whom the expert has received instructions or by whom he is paid.
- Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert uninfluenced by the pressures of litigation or any party.
- An expert witness should provide independent assistance to the Court by way of objective unbiased opinion in relation to matters within his expertise. An expert witness should never assume the role of an advocate or seek to promote his client's case.
- An expert witness should not omit to consider material facts which could detract from his concluding opinion.
- An expert witness should make it clear when a particular question or issue falls outside his area of expertise.
- If an expert's opinion is not properly researched because he considers that insufficient data is available, this must be stated in his report with a clear indication that his opinion is no more than a provisional one.
- In a case where an expert witness who has prepared a report is unable to confirm that the report contains the truth, the whole truth and nothing but the truth without some qualification, that qualification must be clearly stated in the report.
- If, after the exchange of reports, an expert witness changes his view on a material matter having read another expert's report or for any other reason, such changes of view should be communicated in writing (through the party's attorneys) to the other side without delay, and, when appropriate, to the Court.
The second of these requirements is vital, and is consistent with the finding of Lord Wilberforce in the House of Lords decision of Whitehouse v Jordan,4 in which he said:
'While some degree of consultation between experts and legal advisers is entirely proper, it is necessary that expert evidence presented to the court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation. To the extent that it is not, the evidence is likely to be not only incorrect but self-defeating.'
The duties were also considered by the Court in the matter of Al Sadik v Investcorp Bank BSC and Five Others5 in which the Court was less than impressed by the evidence given by one of the experts. The Honourable Justice Jones held that the evidence of the plaintiff 's expert was largely inadmissible on the basis that the expert had been asked to provide opinions on matters which were irrelevant, outside the expert's expertise, and on matters of law which were for the Court to decide. It was held that the expert's reports were adversarial both in tone and content; the terms of reference had encouraged the expert to take a judgmental approach; and the cross-examination of the expert took on the character of a debate in which the expert advocated the plaintiff 's case. Given those findings it was no surprise that the Judge held that the expert had not met the required standards of an expert witness, and as such, the Court approached the evidence provided with a high degree of caution.
Form and content of expert report
Expert reports must comply with the following requirements:6
- In stating the substance of all material instructions on the basis of which his report is written an expert witness should state the facts or assumptions upon which his opinion is based.
- The expert must make it clear which, if any, of the facts stated are within his own direct knowledge and which are not.
- If a stated assumption is, in the opinion of the expert witness, unreasonable or unlikely he should state that clearly.
- The expert's report must be limited to matters relevant to the issue or issues in the list of issues to which the relevant expert evidence relates and for which leave to call such expert evidence has been given by the Court.
To assist the experts in fulfilling the above requirements, the parties might seek to agree in advance a common scope of issues to be determined by them, which can be in the form of a series of questions based on assumed facts.
It is important that these questions are settled between the parties at an early stage in order for the trial to proceed expeditiously. In the recent decision of In the Matter of E-House (China) Holdings Limited,7 the petitioner sought an order, after exchange of expert reports (together consisting of over 700 pages) and after the experts having discussed the matters on which they are agreed and the differences which remain between them, to permit the experts to ask five further written questions on issues that had not already been dealt with in their reports. This had the potential effect of widening their scope and delaying the trial of the proceedings. The Court, in exercising its case management powers, refused the order drawing particular reference to the fact that the request to vary the consent order in this instance came from the attorneys and not the experts. The decision also emphasised the substantial authority experts possess in satisfying themselves that they have access to all information they require. The Honourable Justice Mangatal commented:
'If such a need for further questions exists, the Court should expect an expert to say so plainly and unambiguously, and also to indicate, at least in a general way, what additional matters he wishes to speak about.'
Statement of truth
As is customary throughout most common law jurisdictions, the report must contain a statement of truth, which should include a separate statement to the effect that the expert has read and complied with the eight general requirements set out above.8
Documents referred to in expert report
Unless already disclosed by the parties in the proceedings as part of the ordinary discovery process, any documents relied upon by the expert in their report, as well as copies of any unpublished sources, must be provided at the same time as the report.9
Any requests for inspection of a document referred to in a report should not be made if the document is publically available or can be obtained from an alternative source.10
Although there are no formal requirements for an expert's letter of instruction to be disclosed, it is common practice for this to be produced so that the Court and opposing party has full visibility on the scope of the instruction and materials that have been provided to the expert.
Meetings between experts
Where there is a direction for separate experts to meet, such meetings would typically take place shortly after the exchange of their respective reports and prior to the commencement of the trial.
The purpose of such meetings is to give the experts the opportunity (a) to discuss the expert issues; and (b) to decide, with the benefit of that discussion, which expert issues they share or can come to share the same expert opinion, and on which expert issues there remains a difference of expert opinion between them (and what that difference is).11
In order to facilitate this, the meetings should be conducted on a without prejudice basis, and neither the parties or their legal representatives should be in attendance.12
Following the meeting, the experts are expected to prepare a joint report.13 The joint report ought to record:14
- the fact that they have met, when and where and that they discussed the expert issues;
- the issues on which they agree;
- the issues on which they disagree; and
- a brief summary of the reasons for any such disagreement.
If experts reach agreement on an issue, that agreement shall not bind the parties unless they expressly agree to be bound by it.15
The importance of experts ensuring compliance with the above duties and requirements cannot be understated. Failure to comply may lead to the Court imposing adverse costs orders, or perhaps even disregarding the expert's evidence in its entirety.
Parties must also be committed at the outset of the proceedings towards attempting to agree appropriate and proportionate directions particularly in relation to the number of experts to be appointed, and the scope of their instructions, mindful of the Court's ability to exercise its overarching case management powers.
1 GCR O.38, r.36.
2 Unreported, 20 July 2017.
3 Section 238 of the Cayman Islands Companies Law provides minority shareholders who dissent from a statutory merger the right to a court determination as to the fair value of their shareholdings.
4  1 WLR 246, at 256.
5  (1) CILR 451, at 458.
6 Paragraph B5.3(a) of the Second Edition of the Financial Services Division Guide.
7 Unreported, 3 November 2017.
8 Paragraph B5.4 of the Second Edition of the Financial Services Division Guide.
9 Paragraph B5.7(a) of the Second Edition of the Financial Services Division Guide.
10 Paragraph B5.7(c) of the Second Edition of the Financial Services Division Guide.
11 Paragraph B5.6(a) of the Second Edition of the Financial Services Division Guide.
12 Paragraph B5.6(c) and B5.6(d) of the Second Edition of the Financial Services Division Guide.
13 GCR O.38, r.38.
14 Paragraph B5.6(e) of the Second Edition of the Financial Services Division Guide.
15 Paragraph B5.6(f) of the Second Edition of the Financial Services Division Guide.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.