25 May 2005
Admissibility of expert evidence
The New South Wales Court
of Appeal on 20 May 2005 overturned a decision of Austin
J made on 7 March 2005 in respect
of expert evidence. The court held that for expert evidence
to be admissible it need only disclose the facts and
reasoning process used by the expert, rather than the
true factual basis upon which the expert's opinion
was formed. Additionally, the court held that the probative
value of expert evidence needs to be assessed when the
Court is exercising discretionary powers to exclude evidence.
This Express law supplements the issue of 10 March
2005 which discussed Austin J's original decision.
Securities & Investments Commission v Rich & Ors
South Wales Court of Appeal, 20 May 2005,  NSWCA
On 7 March 2005 Austin J in ASIC v Rich & Ors  NSWSC 149 handed down a decision that expert evidence
on behalf of ASIC ('the Carter Report') was
inadmissible because it failed to disclose the real factual
basis and true reasoning process of the opinions expressed.
This arose because of the expert's involvement with
ASIC prior to his engagement to provide expert evidence.
Alternatively, Austin J held that as a matter of discretion
the Carter Report should be excluded because of the risk
that the expert had taken account of information he had
not disclosed. Austin J held that this created a risk that
his evidence would be unfairly prejudicial to the defendants
and mitigated against its probative value.
this decision and on 20 May 2005 the Court of Appeal ruled
in its favour.
The court held that the trial judge, once
he had found that the Carter Report set out the facts asserted
expert to support his opinions and his reasoning process,
should have found the Carter Report admissible under s
79 of the Evidence Act 1995 (NSW) ('Evidence Act').
It was not necessary that the Carter Report disclose the
true factual basis on which it was formed, although the
existence of undisclosed facts would be a matter going
to the weight to be given to the expert's evidence.
The court said:
The mere fact that the expert's opinion
is based on facts that are assumed (and not proved) at
the time the expert
gives evidence is no reason to exclude the evidence at
that stage. The assumed facts may be proved later by other
evidence. The fact that the opinion was initially formed
or later reinforced by reference to other facts, not said
by the expert in his evidence to be proved or assumed,
is irrelevant to the question of admissibility. 
court also found that the discretionary power to exclude
evidence provided by s 135 of the Evidence Act required
the trial judge to weigh up the probative value of the
Carter Report against the risk it would be unfairly prejudicial,
misleading or confusing, or cause or result in undue waste
of time. The court found that the trial judge did not conduct
a systematic analysis of the Carter Report's probative
value and that this was a fundamental error. Determining
the impact of an expert's access to material not
before the court requires a 'process of assessment' by
the trial judge. It is not a matter which can be determined
in the abstract.  The court said:
The mere fact that
there must have been use of some extraneous material ...
does not of itself necessarily lead to a conclusion
that the evidence is of low probative value. 
set aside the trial judge's ruling that
the Carter Report was inadmissible or should be excluded.
This Court of Appeal decision assists in clarifying
the circumstances under which expert evidence will be admissible
(the corresponding provisions of the Evidence Act 1995 (Cth) are in relevant terms the same as those considered
in this decision).
However, it also highlights the risks
of engaging a person to provide expert evidence where that
person has a prior
relationship with the party engaging the expert. Agencies
should exercise caution when engaging expert witnesses
in these circumstances.
Text of the decision is available
Securities & Investments Commission v John
David Rich & Ors
For further information please contact:
T 03 9242 1311 F 03 9242 1237
Important: The material in this Express
law is provided to clients 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