Express law No. 16

10 March 2005

Admissibility of expert evidence

Expert evidence may be
found inadmissible in circumstances where the expert has
not fully articulated the factual
basis for his or her opinions, particularly where the
expert has participated in an earlier advisory capacity
prior to engagement as an expert. If an expert has been
engaged to provide advice during investigations, then
subsequently is engaged to provide expert evidence in
litigation, there is a risk that the expert evidence
will be found inadmissible.

ASIC v Rich & Ors

New South Wales Supreme Court, 7
March 2005, [2005] NSWSC 149

Background

ASIC brought civil proceedings against the defendants
in respect of the failure of One.Tel Ltd at the end of
May
2001.

ASIC intended that evidence about the financial position
of the company and the significance of documentary records
would be given by an expert witness. The expert had prepared
a report about which Austin J at [8] observed: '[it]
is a central plank of ASIC's case against the defendants,
and its removal is likely to cause substantial damage to
the structure of the case.'

The objections to the
admissibility of the expert's
report turned on two issues. The first was alleged formal
defects in the report, which the defendants argued meant
that the report did not satisfy the statutory requirements
of the Evidence Act 1995 (NSW). The second related to the
expert's relationship with ASIC.

The Court found that
the expert and his staff had been extensively involved
in assisting ASIC with its investigation
of One.Tel from the commencement of the investigation.
The expert had access to transcripts of examinations conducted
by ASIC and he and staff from his firm attended examinations.
The expert was involved in planning sessions about identifying
individuals for examinations by ASIC, and he had access
to a large volume of documents from the investigation.
He and his team assisted in the preparation of the statement
of claim and the expert attended conferences with counsel
for ASIC. All of this occurred prior to the time the expert
was engaged to provide his independent expert opinions.

In
a detailed judgment, the Court held that it was more likely
than not that the expert did not exclude, when forming
the opinions set out in his expert's report, information
acquired by him during the investigation phase and by his
staff who continued to assist ASIC. Even if it could not
be established that the expert took into account excluded
information, there would be a substantial risk that it
may have happened.

The Court therefore found the expert
had, albeit most likely unconsciously, relied on excluded
materials and consequently
not fully articulated the factual basis on which he formed
his opinions and his reasoning process. Accordingly his
report did not satisfy the statutory requirements of the
Evidence Act 1995 (NSW) (which in relevant terms is the
same as the Evidence Act 1995 (Cth)).

The Court found that
the expert's report was inadmissible
in its entirety.

Implications

The decision in ASIC v Rich & Ors demonstrates
that there can be practical difficulties in persuading
a Court
that an expert witness has been able to discount, or not
take account of, information he or she had access to prior
to being engaged as an expert witness. In this case this
has resulted in a finding that a key element of the plaintiff's
case is inadmissible.

When engaging an expert to provide
advice prior to the commencement of litigation, agencies
should consider at
an early stage if it is likely that expert evidence will
be required in any subsequent court proceedings. If it
is, thought needs to be given to the nature of the assistance
that will be sought prior to litigation and to the nature
of the proposed retainer to provide expert evidence,
and whether in the circumstances of the case it is appropriate
to engage a different person as an expert witness.

Agencies
should also be mindful of the Federal Court Practice
Direction: Guidelines for Expert Witnesses issued
on 19
March 2004. It notes in its Explanatory Memorandum
that while a pre-existing relationship between an expert
and
a party to the proceedings will not disqualify an expert
from giving evidence, an expert may find it difficult
to maintain the requisite level of objectivity where
he or
she is significantly involved in preparing the case.

Agencies
should ensure when engaging expert witnesses that detailed
records are kept of what documents and
information
are provided to the expert, to minimise any uncertainty
about the factual basis on which the expert has formed
his or her opinions.

Text of the decision is available
at:
http://www.lawlink.nsw.gov.au/scjudgments/2005nswsc.nsf/66950614059df523ca25673900081e8e/fffaf601b14cfb86ca256fba00074a92?OpenDocument

For
further information please contact:

Steven Small

Senior Lawyer

T 03 9242 1311 F 03 9242 1237

steven.small@ags.gov.au

Simon Anderson

Lawyer

T 03 9242 1230 F 03 9242 1237

simon.anderson@ags.gov.au

Important: The material in Express law is
provided as an early, interim view for general information
only and further analysis on the matter may be prepared
by AGS. The material should not be relied upon for
the purpose of a particular matter. Please contact
AGS before any action or decision is taken on the basis
of any of the material in this message.