Experts: the burden of proof
In Caribbean Steel Company Limited v Price Waterhouse, the Privy Council has recently reiterated the principle that for a court to find that a professional had breached his duty of skill and care, expert evidence ought to be adduced from persons in the same profession as the defendant as to the standard of care required in the particular case and the defendant's failure to reach that standard.
This case concerned the purchase in the early 1990s by the claimant of a 50.1% share in Caribbean Cable Company Limited which produced construction materials in Jamaica. The claimant’s accountants, Price Waterhouse, prepared a valuation in advance of the purchase. This valuation treated a J$13,849,000 surplus in Caribbean Cable’s pension fund as an asset and did not mention that Caribbean Cable had already borrowed J$1,400,000 from that pension fund. The claimant alleged that Price Waterhouse were negligent in failing to bring this fact to its attention and that it would have materially affected the purchase.
The claimant was successful at first instance but Price Waterhouse successfully appealed to the Jamaica Court of Appeal. The claimant appealed to the Privy Council.
The Privy Council dismissed the appeal agreeing with the Jamaica Court of Appeal’s finding that the first instance judge had not given due regard to Price Waterhouse’ expert evidence.
At first instance, Price Waterhouse’ expert had opined that the J$1,400,000 loan from the pension fund was immaterial to the valuation. The Jamaica Court of Appeal and the Privy Council found that the claimant’s expert had given no reasoned rebuttal. It was essential that the reasons given by the expert for reaching his opinion were carefully scrutinized; for unless there was a sound reason for rejecting it, the judge could not properly find that professional negligence had been established. Sansom v Metcalfe Hambleton & Co was cited by both the Jamaica Court of Appeal and the Privy Council.
This decision affirms the principle that compelling and coherent expert evidence is necessary for a finding of professional negligence.
This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, click here.