Hopkinson v Hickton & Ors

The requirement that an expert valuer be independent under contractual valuation machinery is a condition of appointment, not merely a requirement that the eventual valuation be conducted independently. Independence is assessed objectively. A valuer is disqualified where a connection with a party, the outcome, or the property creates a real risk of partiality, even without proof of actual bias. The fair-minded and informed observer asks whether the circumstances known at appointment create a real possibility of bias. A prior valuation of the same property does not automatically disqualify a valuer. The timing of the valuations, intervening events, relevant market evidence, professional context, and whether the valuer connected the earlier work with the new instructions may be material. On the facts, the earlier valuation did not create apparent bias at appointment. The valuation was binding and the appeal was dismissed.

Mr Hopkinson had brought an unfair prejudice petition concerning Maximus Securities Limited. The petition was compromised by a Tomlin Order under which Maximus Group Limited agreed to purchase his shares, with their value depending on an independent valuation of land owned by a subsidiary.

Mr Hopkinson selected Mr Clarke, an experienced valuer, who had previously supervised a valuation of the same land for its later purchaser. That involvement was disclosed only in Mr Clarke’s valuation report. The High Court dismissed Mr Hopkinson’s application for a declaration that Mr Clarke was not an independent valuer and that his valuation was not binding.

The appeal concerned whether independence was required at appointment, whether apparent or actual bias was the correct test, and whether Mr Clarke’s earlier professional involvement created a real possibility of bias at the date of appointment.

The Court of Appeal, in a judgment delivered by Patten LJ with which King LJ agreed, dismissed the appeal.

1. Contractual condition. The court held that the requirement for an independent valuer was a condition of appointment under clause 2(d)(i) of the Tomlin Order. It was distinct from the separate obligation to conduct the valuation independently. A material departure from contractual valuation machinery vitiates the determination regardless of its effect on the result: Veba Oil Supply & Trading GmbH v Petrotrade [2001] EWCA Civ 1832; [2002] 1 All ER 703.
2. Meaning of independence. Independence was not confined to independence from the parties. The valuer had to be capable of carrying out the valuation without a real risk of approaching it with a closed mind or particular objective. A connection with a party, an interest in the outcome, or another connection with the property could objectively negate independence, whether or not actual partiality was proved.
3. Applicable test. The court applied the apparent-bias test adopted in Porter v Magill [2001] UKHL 67, drawing also on Helow v Home Secretary [2008] UKHL 62 and Re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700. The fair-minded and informed observer must consider the relevant circumstances and ask whether there was a real possibility of bias. The proposed actual-bias test was inappropriate for assessing independence at appointment. Authorities concerning the conduct of an expert determination, including Macro v Thompson [1997] 2 BCLC 36, were distinguishable.
4. Evidence and application. Evidence about what the valuer knew or did could be considered, but the court had to assess its weight and the possibility of unconscious bias itself. At appointment, Mr Clarke had not connected the land with the earlier valuation. The three-year gap, the intervening sale, the professional context and his experience meant that the observer would not have concluded that there was a real possibility of bias. Re Benfield Greig Group plc [2001] EWCA Civ 397 was factually distinguishable.
5. Mr Hopkinson did not challenge the way the valuation was conducted or allege that it had been influenced by the later connection. The appointment requirement was satisfied, so the valuation was binding under the Tomlin Order.

• Court of Appeal (Civil Division): Appeal against the High Court order dismissed. [2016] EWCA Civ 1057
• High Court of Justice, Chancery Division, Birmingham District Registry: HH Judge Purle QC dismissed the application to declare that the valuer was not independent and that the valuation was not binding, by order dated 3 November 2014.