Forensic Accountancy

As can be seen from his CV, Chris has been a forensic accountant and expert witness for well over 20 years. 

He acts frequently for claimants/applicants, defendants/respondents and as SJE.  He has given expert evidence over 70 times. 

He is one of only some 35 chartered accountants to have received the accolade of Accredited Forensic Accountant and Expert Witness at ICAEW; APIL recognise him as an expert 1st tier, and he was for many years a contributor to Kemp & Kemp “The Quantum of Damages”.  His chapter on Loss of Profits for the Self-Employed & Family Company Director, now out of print and available free on request, is an admirable summary of how businesses work, and is of benefit to lawyers in many fields, not just personal injury.

Chris offers an initial review of any case, without obligation to instruct him.  If the matter does not proceed, he makes no charge, he destroys the papers, and he doesn’t even sulk!  And if the matter does proceed, the time spend on initial review is included in the fee quoted.   Only when terms are agreed is a contractual relationship established.  So use Chris as a sounding board; it costs nothing to find out whether he can add value to your cases.

Here are just a few examples of Chris’s work, to illustrate his vast experience:

Civil

Shareholder & partnership disputes

Chris has often acted as expert for one party or another in such matters, including the tracing and evaluation of diverted trade.  With one such case, the hearing went part-heard three times and costs escalated.  Towards the end, the judge spoke very sternly, “over the heads of your lawyers directly to you two sensible businessmen who used to be friends”, urging them to ask for help from a mediator.  They would not listen.  Afterwards, Chris spoke to the other expert, a friend who was also a mediator, saying that he had been encouraging his side to mediate, but been told that the other side would not consider it.  “Funny, that” said Chris’s friend; “that’s exactly what my side have been saying about your lawyers…”

In a partnership case, an accountant had left his firm suddenly and taken clients and staff.  Chris was appointed SJE to quantify the diverted profits and the value of goodwill, work in progress etc.  He interviewed both sides, and established a good rapport with all concerned.  In a teleconference he explained to lawyers on both sides that this dispute could probably be settled if he were allowed to mediate it.  The lawyers were interested, but feared that they would have to appoint another expert if mediation were to fail.  So, again at Chris’s suggestion, he was appointed expert determiner, and so the case was brought to an end at modest cost.

Insurance claims

An insurer will be interested to learn whether there were signs of strain in a business, which might have induced the owner to set fire to the premises.  Chris dealt with the case of a transport contractor who attempted to “torch” his fleet of 22 lorries and his Porsche on New Year’s Eve, but his claim failed on two counts: the wind was blowing the wrong way (!) and he lost only two trucks; and late disclosure of his bank manager’s file showed that he had told that manager, shortly before the fire, that an expected insurance claim would solve his cash flow difficulties!  It is seldom so easy to avoid a claim, but careful review of the finances of a business before a fire is often “illuminating”!

Business interruption & consequential loss

This is a major part of Chris’s work, acting for the claimant, the defendant/insurer, or as SJE.  Whether caused by a factory fire, blocked access to business premises, theft of a customer list, death or injury of the “rainmaker”, or any other cause, he is required to quantify the “would have been” but for the interruption.  He does this by careful examination of the performance of the business before the event, and review of comparable businesses and other factors to express his opinion.  He has been complimented on his clarity of thought and opinions, by judges and those instructing him, on many occasions.

Product liability

A claimant company contended that Chris’s client’s tool, a set of blades in a cutting platen, was faulty and had caused loss of profit of £330,000.  By careful review of the production records, Chris was able to demonstrate that losses had been caused by many other factors – no materials, no labour, no power, routine shutdown for maintenance, etc – and that the loss from downtime caused by the faulty tool had been only £105, which was 0.132% of the amount claimed!  As soon as Chris’s report was disclosed, the claimant abandoned the claim and paid all the defendant’s costs.

Intellectual property

Chris’s client had invented and patented a system which prevented customers from stealing trolleys from supermarkets.  It was licensed to another company, who planned to sell the business thereby created.  That company alleged that the inventor, in meetings with the potential purchasers, had given away secrets which caused the sale to fail, and they sued for the £6million which they said they would have received in the sale.  Chris found the flaws in the claimant’s arguments, and gave expert evidence which mainly comprised an explanation of how a company is valued.  After the hearing but before judgment, the case settled with the claimants abandoning the claim and paying virtually all the defendant/inventor’s costs, he agreeing to pass the business to them.  But the product by now was obsolete, and the inventor has since invented a different system for securing supermarket trolleys.

Director disqualification

These require careful handling.  There is pressure from the authorities to accept a shorter ban, under Carecraft Construction, but that is dangerous for directors who are professionals, particularly Chartered Accountants, since that professional’s disciplinary body will inevitably also take action against that director.  Chris can help in these difficult cases as expert, and he is also an honorary confidential counsellor who helps Chartered Accountants with such ethical and disciplinary problems.

Chris has acted as expert for several such directors, but it has to be said that the risk of losing and paying the authorities’ costs, or of risking so much for a shortened ban, is usually not worthwhile.  Chris’s article on this topic is available free on request.

Taxation advocacy

Chris’s client had the unenviable task of cleaning out the huts from mass chicken production, as each mature batch went for slaughter.  He engaged operatives on a freelance basis who contended, when the tax bills came in, that they were employees, which would thus have passed the tax liability back to Chris’s client.  The client could not afford legal representation, so Chris took witness statements, agreed skeleton openings with inspectors from HMRC Technical Division, and represented the client at a full day’s hearing before the General Commissioners.  They found that the operatives were self-employed, which saved the client tax and NI of £165,000.

Professional standards

Chris is familiar with the Bolam test, and has often given expert evidence on the standard one can expect from the reasonably competent accountant.  He is a Support Member (confidential counsellor) for Chartered Accountants with ethical problems, and advises on ICAEW disciplinary procedures (and how to avoid them!).

Personal injury, clinical negligence and loss of dependency

Over the last twenty years, Chris has acted in hundreds of PI cases, large and small.  On average over the last five years, he has acted 50% for claimants, 30% for defendants and 20% as SJE.  Acting for claimants, his figures are mostly accepted even after detailed review by the other side, but when acting for defendants he has often made significant savings. 

When Gary Hart feel asleep at the wheel of his Land Rover, going off the M62 onto the East Coast main line and colliding with the InterCity from Newcastle and a goods train, it caused the most expensive claim ever to be met by Fortis.  Chris acted for the dependants of five high-earning men who were killed in first class that fateful day.

Chris acted for a claimant with a “portfolio” career.  He farmed 180 acres, employing no hired help.  He ran a plant hire business, being the sole JCB and crane operator.  He had converted farm cottages for rent.  He was converting a second group of disused farm outbuildings to create a science park for rent, the first group being fully occupied. And he was converting the family’s Grade II listed mansion, having stripped it to the bare walls.  He had spent so much time on such property improvements that his annual accounts showed only a modest profit.  The defence expert accountant contended that such accounts formed the basis of the multiplicand.  Chris disagreed.  In his opinion, the claimant should be provided with a lump sum to employ a labourer to do all the heavy work which he could no longer do.  “Buy him a man” and the status quo ante would be restored, per Bradburn –v- Great Western Railway [1874] LR 10 Ex 1.  At trial, the judge agreed Chris’s approach, and agreed his multiplicand to the penny.

Matrimonial

Business & share valuations

Often the family company is the largest single asset to be taken out of the marriage by a spouse, and its value can be a large component of the matrimonial balance sheet.  And it is seldom for sale, because the spouse who built it will wish, or need, to continue to operate it. Chris has vast experience of valuing family companies as party expert and, increasingly, as SJE, and can advise on tax-efficient ways of withdrawing them from the marriage.

Chris acted as shadow expert for the wife in a case where the spouses owned a specialist IT company half each.  The company was making huge trading losses, but its intellectual property was of great interest to an American company.  So the husband was in complex negotiations with the US buyers, whilst Chris was advising the wife’s family lawyers on company sale & purchase and tax planning issues etc, in a way which would not spoil the negotiations.  An order by consent was achieved, and the sale went through.   A couple of years later the husband reneged on the deal, and the wife had to sue for the final instalments of the amount due to her.  At the hearing, she won.  The case is reported as Wood & Rost [2007] EWHC 1511 Fam, and the first paragraph of the judgment reads:

“If Charles Dickens were alive today, the twists and turns of this litigation, conducted at vast expense, would provide him with ample copy for a 21st century sequel to Bleak House”.

Chris is also experienced at locating hidden assets and diverted businesses.  In one case, a husband had an IT company which, as well as selling hardware, provided a range of maintenance, support and training services.  Chris captured a print from his website when all such services were listed.  He then inspected the husband’s sales records, and found that regular income from many customers petered out.  The husband contended that these services were no longer worth pursuing.  Then a few months later, Chris captured a print from the website of the new girlfriend, who also had an IT company, and found that all the missing services were now listed on her web site.  Quel surprise!  The husband very quickly reached a generous settlement with his ex-wife.

Husband and wife were equal shareholders in two companies.  One company ran a big waste transfer company, and the other owned a huge quarry from which road gravel was extracted.  The wife’s lawyer proposed that a fair division of assets should start with the husband taking the waste business and the wife taking the quarry.  Chris saw this as a daft proposal, for where would the husband put his landfill, and how would the wife refill the quarry?  Chris saw that there was a “marriage” between the two companies, and that they should not be “divorced”.  He valued the combined businesses, the husband took them out of the marriage, and a settlement was reached with the wife whereby she took the matrimonial home and other assets to balance.  A clean break which suited both parties was achieved.

The wife had a rich daddy who paid for a forensic accountant to value the husband’s businesses.  That expert’s opinion was a total value of £1million.  Application was made to the court for this expert’s report to be admitted, and permission was given provided that the husband could also instruct an expert.  So Chris, acting for the husband, then valued the businesses, which had huge losses and pressing creditors, at £nil.  Shortly afterwards, and whilst the matrimonial proceedings were part heard, the husband was forced to declare himself bankrupt, and all his businesses collapsed.  This was the best possible demonstration that the £1million valuation was hopelessly optimistic.

Criminal

Money laundering

Chris led a team of 6 accountants in the defence of the chairman of an international investment company, Barlow Clowes, which had collapsed because £150million had been stolen by the directors and spent on yachts, Porsches, Bentleys, vineyards, and corporate raiding including a brewery – for $3.5million they had even bought a yacht from Christina Onassis!  By tracing the funds and identifying the person who had signed each and every transfer, he was able to demonstrate that the chairman was not responsible for any of the thefts.  His report ran to 43 ringbinders, and was agreed by the SFO.  After an 18-month trial his client was found not guilty on all charges, whereas the managing director (not his client) was gaoled for 10 years.

Environmental health

Chris and his team assisted environmental health officers and the local police in the “Mouldy Chicken” case.  Condemned poultry, send for rendering and conversion into dogfood, was being diverted back into the human food chain by being dipped in baths of acid and brine, shrink-wrapped and sold to local butchers.  Dogmeat was worth 1p per pound, choice cuts of chicken worth £1 per pound, so the profits were enormous and so was the risk to public health.  Chris’s team seized evidence at the dogmeat factory with the help of armed police, and helped to secure convictions for 7 perpetrators, with prison terms of up to 7½ years.

Drug trafficking

Chris’s biggest failure was whilst assisting in the defence of a man caught red-handed importing cocaine by light aircraft.  By review of the flight plans and the number of times the accused had flown to Holland, Customs alleged he had imported drugs worth £100million.  Chris held an interview the accused in Strangeways, but the case was hopeless, and the accused was gaoled for 25 years.  Interestingly, the instructing solicitor was Jonathan Duff, the first solicitor jailed for not reporting suspicious transactions through his client account.  And guess whose money he had been looking after! 

Theft & false accounting

At a more modest level, Chris has assisted in the defence of several sub-postmasters accused of theft, where he was able to demonstrate that the accounting systems they are obliged to use are incapable of showing who might be responsible for any shortfall in funds.  Several “not guilty” verdicts were achieved as a result of his work.

Taxation offences

Chris’s client was an ice-cream vendor in London who was not registered for VAT.  Customs said his business should be aggregated with other family members’ businesses, taking the combined business over the registration threshold; and they contended that VAT of £500,000 then became due.  Customs took criminal action against the family.  At trial Chris appeared as expert for the defence and, although the aggregation point was lost, his work on quantification showed that trade was much lower than Customs alleged, resulting in a much reduced sentence for his client.