Hopkinson v Hickton & Ors

The Court of Appeal dismissed an appeal against a High Court decision refusing to set aside an expert valuation obtained under the terms of a Tomlin Order. The central legal principle was that where a compromise requires a valuation by a "suitably qualified independent valuer" the valuer must be independent at the time of appointment; independence is to be judged by an objective "tribunal" or apparent bias test derived from Porter v Magill and Helow v Home Secretary. The court held that independence is not limited to freedom from connections with the parties but extends to connections with the subject matter that create a real risk of partiality.

The appellant had relied on the valuer's prior involvement in a 2013 valuation of the same land to argue lack of independence at appointment. The court concluded that, on the facts, a fair-minded and informed observer would not conclude there was a real possibility of bias: the valuer had not linked his earlier work to the present instructions at the time of appointment, the sale of the land shortly before 2013 was a significant intervening event, and there was no challenge to the valuer's competence or to the way the valuation was carried out. Accordingly the contractual valuation remained binding under the Tomlin Order.

Background and procedural posture:

• This is an appeal from HH Judge Purle QC (Chancery Division, Birmingham) dated 3 November 2014 concerning enforcement of a Tomlin Order made 6 February 2014 which settled an unfair prejudice petition relating to Maximus Securities Limited (MSL).

Nature of the application: The appellant sought a declaration that the valuer appointed under the Tomlin schedule (Mr Peter Clarke FRICS) was not a "suitably qualified independent valuer" at the date of his appointment and that his valuation of the Clay Cross land (as at 30 September 2010) was therefore not binding.

Key facts:

• MSL's sole asset was the value of land at Clay Cross held by a subsidiary. The Tomlin schedule required an independent valuation of the land to determine the value of the petitioner’s shares.
• The respondents proposed three valuers; the appellant selected Mr Clarke. Mr Clarke disclosed in his report a prior supervisory role in a November 2013 portfolio valuation for St Modwen which included the Clay Cross land and the subsequent July 2013 sale of the land to St Modwen for £4m.
• The appellant argued that this prior involvement meant Mr Clarke was not independent at appointment and that the valuation should not be binding; the challenge was to appointment only, not to the methodology or conduct of the valuation.

Issues framed by the court:

• Whether the requirement in the Tomlin schedule that the land be valued by a "suitably qualified independent valuer" required independence at the date of appointment or only at the date of the valuation.
• What "independent" means in that context and which test (apparent bias/tribunal test or actual bias) applies when challenging the appointment of an expert valuer.
• Whether Mr Clarke’s prior role in the 2013 valuation of the same property produced a real possibility of bias as at his appointment.

Court’s reasoning and conclusions:

• The schedule requires independence at the date of appointment as a condition of appointment; independence is distinct from acting independently when performing the task.
• The appropriate test for independence at appointment is the objective apparent bias or tribunal test (Porter v Magill / Helow), not a requirement to prove actual bias. The court explained why the actual-bias test would be impractical in most pre-determination situations.
• Independence extends beyond lack of ties to the parties; it includes connections with the subject matter which, objectively viewed, create a real risk of partiality.
• Applying the tribunal test to the facts, the court concluded the fair-minded and informed observer would not find a real possibility of bias because (a) Mr Clarke had not linked his 2013 work to the present instructions when appointed, (b) the intervening events, including the open-market sale and timing, reduced the chance that the 2013 valuation would affect a 2010 valuation, and (c) there was no challenge to the valuer’s conduct or methodology.
• The judge should treat assurances by the valuer with caution (following Locabail) but could take them into account. On the facts the assurances and explanations were not rejected and did not alter the conclusion that there was no real possibility of bias.

Wider context: The court emphasised the practical difficulty of proving actual bias and therefore the utility of the apparent bias test for pre-determination challenges to expert appointments. The appeal was dismissed and the Tomlin schedule valuation remained binding.

Appeal dismissed. The Court of Appeal upheld the High Court’s conclusion that the requirement in the Tomlin schedule that the land be valued by a "suitably qualified independent valuer" required independence at the date of appointment and that the tribunal/apparent-bias test (Porter v Magill / Helow) governed that inquiry. Applying that objective test, the court found no real possibility of bias arising from the valuer’s prior limited involvement in a 2013 valuation and therefore the valuation remained binding under the Tomlin Order.

Appeal to the Court of Appeal from the High Court of Justice, Chancery Division (Birmingham District Registry), HH Judge Purle QC, Case No. 8503 of 2012; the High Court refused the application to set aside the valuation and that decision was affirmed by the Court of Appeal ([2016] EWCA Civ 1057).