The case of WH Smith Retail Holdings Ltd v Fort Properties Ltd clarifies the rules on expert valuation evidence in lease renewal proceedings. The Defendant, who was the landlord of commercial premises in North London, made an application to strike out various passages in the Claimant's expert valuation report on the basis that it contained inadmissible information.
Background
The tenant had a 5 year lease and remained in occupation after contractual expiry, holding over under the Landlord and Tenant Act 1954 ("the Act"). The landlord served a section 25 notice on the tenant opposing renewal of the tenancy on the ground that it intended to carry out development works to the property. Proceedings for a new tenancy were issued by the tenant in June 2017 but were later discontinued. The tenancy came to an end on 21 May 2020.
Further proceedings were then issued by the tenant in relation to the level of interim rent that ought to be paid between 25 December 2017 (being the earliest determination date which might have been specified in the section 25 notice) and 21 May 2020.
The Interim Application
As is common where the level of rent cannot be agreed, each party was given permission to rely on its own expert valuation evidence.
The interim application was made by the Defendant on the basis of 3 alleged issues:
The Claimant's expert had referred in her report to PACT (Professional Arbitration on Court Terms) decisions and those decisions are confidential and inadmissible;
The Claimant's expert's use of disclosed material did not comply with the rules for using those documents as set out in CPR 31.22; and
The Claimant's expert's report contained legal submissions.
It was for the Court to decide whether to strike out various passages of the report and / or joint statement between the two experts.
The Court's Decision
His Honour Judge Monty QC ultimately dismissed the Defendant's application and declined to strike out any part of the Claimant's expert report.
Dealing with the admissibility of the PACT decisions, it was held that the Claimant's expert was not relying on them for valuation purposes, instead using them to support her assumptions and methodology. In relation to confidentiality, the Claimant's expert made clear in her witness statement responding to the application that PACT determinations are "widely circulated among valuers engaged in lease renewals and rent reviews to the point that they have ceased to be private".
The Court indicated that it would not be appropriate to strike out "parts of an expert report…where the applicant had not taken me to any authority on the preservation of confidentiality which, as a matter of fact, are in the public domain and are openly referred to".
On whether legal submissions had been included, while the Court reiterated that an expert's duty is to the Court rather than to a party, it indicated that it is not controversial for an expert to set out their opinion in a report. Having considered each alleged legal submission the Court held that the Claimant's expert's motive for each reference was to explain why a relevant assumption had been made.
Finally, the Defendant's objection on the basis of CPR 31.22 also failed. CPR 31.22 provides that a party to whom a document has been disclosed may use that document only for the purposes of the proceedings for which it has been disclosed, subject to some exceptions. As the relevant documents were not disclosed by the parties as part of the disclosure exercise, it was held that CPR 31.12 had no application here.
Although the application was unsuccessful, this decision underlines the care that experts (and those assisting them) must take to ensure that their approach does not lay them open to criticism and potentially costly satellite disputes.
