A forensic accounting case study
Shorter trial case study: Earlier in the year Kate Hart gave evidence in her capacity as expert for the claimant in the matter of DBE Energy Ltd v Biogas Products Ltd  EWHC 1232 (TCC) (“DBE v Biogas”). Following the recent publishing of the judgment we take a look at the impact that disclosure had on the outcome.
The matter concerned the alleged breach of contract and/or negligence of Biogas in relation to the design and supply of components to DBE for use in DBE’s anaerobic digestion facility. In summary, the parts provided by Biogas failed allegedly resulting in a delay to the start-up of the facility and additional costs to mitigate the loss. The trial considered the extent to which Biogas was liable for the loss suffered by DBE and the quantum of that loss.
A shorter trial
The case was heard on the shorter trial scheme. This is the first matter that we have been involved in on the scheme and, for those who have read the judgment it will be clear, the scheme isn’t suitable for all cases. This is probably one of those cases.
The parties will have had their reasons for persevering on the shorter trial scheme (which at least meant that the trial was done and dusted before lockdown) but, from the deputy judge’s perspective, the use of the shorter trial scheme was only feasible as a result of “considerable co-operation from the parties”.
Pertinent information was absent from witness statements
The limitations of the shorter trial scheme impacted not only the length of the trial and ability to “explore all of the issues in cross-examination” but also the volume of disclosure which resulted in pertinent information being excluded from witness statements.
The deputy judge ultimately found that Biogas was liable leading to the question of quantum. Each side presented a quantum expert and the deputy judge did not prefer one or the other’s evidence. The experts were in agreement on many elements of the loss calculation, and the deputy judge therefore approached each point of disagreement on its own merits.
To disclose or not to disclose? That is the question
The omission of information which was relevant to the quantum of the claim ultimately had a significant impact on the value of the award. The deputy judge, as would be expected, based her conclusion on facts and figures which were supported by disclosure and the witness evidence.
In this case the anaerobic digestion facility was in the very early stages of ramping up
and contracts were being negotiated even in the days leading up to the trial. Partly as a result of this DBE did not disclose various documents in support of its claim. DBE had concerns about disclosing information late in the day and it suffered as a result.
We are occasionally engaged in matters where obtaining the information required to quantify the loss feels like drawing blood from a stone.
We appreciate that information can be commercially sensitive and it is difficult to protect that sensitivity once Court proceedings have commenced. Ultimately clients will need to understand the risk of non-disclosure, as well as the risk of disclosure, and make an informed decision.
Where a client is not prepared to disclose information it may be possible to quantify
loss by reference to other sources of support, such as a witness statement or evidence from the marketplace.
Ultimately, however, where evidence is needed but not disclosed in order to quantify a loss there is likely to be an adverse impact of non-disclosure on quantum.
This article was originally published in Forensis Summer 2020