The umpire calls not out: admissibility of expert evidence

The Court must be satisfied that an expert report demonstrates a relevant opinion based on specialised knowledge. If an expert does not properly explain reliance on another person’s opinion, or areas outside the expert’s expertise, does not necessarily render the report inadmissible.

We look at the key lessons from Bannon v Nauru Phosphate Royalties Trust (No 4) [2018] VSC 237.

The Supreme Court of Victoria identifies several matters that may affect the weight given to an expert’s report, but not its admissibility.

Key Takeaways

Issues that affect the weight given to an expert’s report, but not its admissibility include:

  • the expert not being instructed to provide an opinion but to review documents and provide comments,
  • reliance on another person’s opinion,

  • instructions given to the expert as to how to prepare his report, which were pejorative and not impartial,

  • not complying with the requirements of Order 44 and the Expert Witness Code of Conduct,

  • maintaining a claim of legal professional privilege over documents relied on in preparing a report.

Background 

The plaintiff in the proceeding claimed damages for breach of contract, mostly related to unpaid director/secretarial fees. The defendant’s counterclaim alleged that the plaintiff received amounts via unauthorised loans and unauthorised payments. 
In re-examination, counsel for the plaintiff tendered Exhibit A: Reconciliation of Reimbursable Expenditure which showed that the amount owing to the defendant was approximately $20,000.

The defendant instructed Mr Fitzgerald (the expert) to consider Exhibit A and the expert prepared an initial report and a supplementary report to trace and explain the flows of money.

Is a forensic accountant an expert in flows of money? 

The plaintiff challenged Mr Fitzgerald’s standing as an expert witness.

The Court accepted the defendant’s submissions that as an accountant of 44 years’ experience, Mr Fitzgerald has lengthy experience in forensic accounting matters, and is well placed to provide his report. The Court also accepted that the evidence of Mr Fitzgerald involves the tracing through of many transactions across voluminous records to arrive at the analysis presented to the Court. Citing Hart v Commissioner of Taxation (No 2) the Court found that:

“… tracing and explaining flows of money is, in my opinion, plainly part and parcel of both the expertise and application of expertise of a forensic accountant”.

Is Mr Fitzgerald’s report admissible?

The Court found that none of the following matters either individually or collectively, rendered Mr Fitzgerald’s report inadmissible. Rather, the matters go to the weight to be attributed to the report. The plaintiff would have the opportunity, when cross-examining Mr Fitzgerald, to put all of the matters set out below to him.

(i) “He was not provided with instructions as to matters of fact by any employee or officer on behalf of the defendant having relevant knowledge that would provide a basis for any opinion he might express, including not having any instructions as to processes and procedures for transactions engaged in by the Defendant or their authorisation;

(ii) He was not asked to provide an opinion requiring relevant expertise on any particular matter, but was rather asked to review documents and provide comments, being inadmissible lay evidence as to matters the subject of documents and not within his personal knowledge;

(iii) He was asked in the Letter of instruction to review and comment on an “unauthorised payment of backpay”;

(iv) He does not have, or claim to have, any expertise on what is “unauthorised” or “without a lawful basis”

(v) He has been given instructions as to how to prepare his report which were pejorative and not impartial and has worked on it in consultation with a range of other persons including the Defendant’s solicitors, counsel…;

(vi) He has had regard to other accountants’ reports and derive assistance from other work carried out by other accountants or bookkeepers.

(vii) Has relied on Ms Potter (who is not being called as a witness) for his understanding of the defendant’s MYOB accounts. He was not informed that the MYOB records provided for his review were only incomplete and deficient and had to seek assistance from Ms Potter in relation to “details of deficiencies in the MYOB records”.

(viii) He does not comply with the requirements of Order 44 and the Expert Witness Code of Conduct, in that he has:

a. Become an advocate for party who retained him and has not remained impartial;
b. Not properly explained or acknowledged areas in which he is dealing with matters falling outside his expertise;
c. Not properly explained or acknowledged parts of his report that involve the acceptance of another person’s opinion or his reliance on that person’s expertise or specified their qualifications;
d. Not adequately specified where he has been able to provide a concluded opinion because of insufficient data or to modify his opinion based in the insufficiency of data;
e. Not exercised his independent judgement to assist the Court impartially on matters relevant to his area of expertise.

(ix) Mr Fitzgerald did not provide all documents relied on or to which he regard in preparing his report. These were only provided pursuant to subpoena and following requests for complete material by the Plaintiff’s solicitors. He has still maintained a claim of legal professional privilege thereby being waived. The Defendant’s new solicitors were asked by letter from the Plaintiff’s solicitors to identify the items over which legal privilege is claimed and are yet to provide a response…”

Having rejected all the arguments advanced on admissibility of Mr Fitzgerald’s evidence, the Court ordered that the plaintiff bear the costs incurred by the defendant of one hearing day and the written submissions it filed on a standard basis.1

Conclusion

The admissibility of expert evidence is often challenged at trial. There are many matters which parties can rely on in support of a challenge to expert evidence, but it is important to distinguish:

  • matters that go to admissibility,
  • matters go to weight.

The statutory framework for admissibility of evidence is that it must be relevant. The opinion rule excludes evidence of an opinion “to prove the existence of a fact about the existence of which the opinion was expressed”. Section 79 provides the exception to the opinion rule for expert evidence.
In applying s 79, Courts must be satisfied of two criteria:

  • specialised knowledge,
  • a relevant opinion based wholly or substantially on specialised knowledge. 

Importantly, Courts do not apply evidentiary reliability to determine admissibility.

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1Bannon v Nauru Phosphate Royalties Trust (Costs Ruling) [2018] VSC 643 at 68.

 

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