Independence and candour in an expert witness
In ruling on the admissibility of expert evidence in a proceeding involving allegations of directors’ breach of fiduciary duties, the Supreme Court has addressed some key issues relating to expert witnesses. The Court’s decision in Finance & Guarantee Company Pty Ltd v Auswild (Expert Evidence Ruling)[1] serves as a reminder of the importance of independence and candour in an expert. The ruling also reiterates the need for transparency in an expert report so far as assumptions and material relied upon are concerned.
The facts
The first defendant was the younger of two brothers who, after the Second World War, established a business principally in the motor industry under the trading name of ‘Preston Motors’. Later, when the elder brother passed away, the business expanded into joint venture activities and investments involving a collection of corporate entities.
The plaintiffs alleged that a number of transactions entered into by the defendants, who were directors of the corporate entities, were not in the plaintiffs’ interests or were in breach of the defendants’ fiduciary and equitable duties.
The second to fifth defendants engaged an accountant, Mr Silvia, to provide his expert opinion in the proceeding about the various impugned transactions. Mr Silvia prepared his own report in addition to a report he prepared jointly with accountants which the plaintiffs and the first defendant respectively had engaged as expert witnesses.
At trial, the plaintiffs objected to the admissibility of Mr Silvia’s report. The plaintiffs also objected to the admissibility of the experts’ joint report to the extent Mr Silvia’s opinions were contained in that joint report and to the extent his opinions influenced the opinions of the other experts. In circumstances where the plaintiffs alleged Mr Silvia had communicated extensively with the second to fifth defendants’ lawyers and potential witnesses, the plaintiffs objected on grounds that Mr Silvia had breached his obligations as an expert witness due to a lack of independence, misleading conduct, and a failure to disclose the basis for his opinion.
In making their objection, the plaintiffs sought orders that the relevant material be excluded from evidence pursuant to either section 29 of the Civil Procedure Act 2010 (Vic) or section 135 of the Evidence Act 2008 (Vic).
The Court’s decision
Riordan J dismissed the plaintiffs’ objection and held that it was not appropriate to exclude the expert evidence. In so ruling, his Honour made the following findings.
No lack of independence
His Honour found that Mr Silvia had not contravened his obligation of independence. This was for a number of reasons.
His Honour held, first, that Mr Silvia’s report was transparent as to how he had formed his opinions. His Honour noted that all of Mr Silvia’s assumptions had been set out in his report and that the material upon which he had relied was annexed to the report. His Honour also noted that any deficiencies in that respect had not been put to Mr Silvia in cross-examination.
Noting the limits of disclosure in an expert report — particularly so far as the role of privilege is concerned — the Court observed:
There is no obligation to disclose matters on which the opinion expressed in a report is not based. In fact, confidential oral or written communications between the lawyer acting for a client and an expert made for the dominant purpose of the client being provided with professional legal services relating to an anticipated or pending proceeding involving the client are privileged.[2]
Second, his Honour found that there was no evidence of partiality on Mr Silvia’s part in preparing his report; ‘[t]he lack of such partiality [was] demonstrated by the fact that all the experts agreed in substance on all material questions’.[3]
The plaintiffs, in arguing that Mr Silvia was not independent and impartial, had sought to paint him as a ‘dirty expert’ — not a pejorative term, but a colloquialism which refers to an expert who tends to advocate for a client’s interests (rather than assisting the court) and who generally informs lawyers on technical matters. His Honour dismissed such a characterisation and, while warning that ‘care must be taken’, noted:
[A]n independent expert can be utilised for the purpose of providing technical information to the lawyers to assist them in better understanding technical aspects of the case including, for example, in the preparation of cross-examination.[4]
Riordan J also noted the reality that:
An expert will frequently be in court during the evidence of another party’s expert, specifically for the purpose of assisting the cross-examiner. Such assistance in the preparation of a party’s case does not render the expert no longer independent.[5]
Also, so far as communications between an expert witness and briefing lawyers was concerned, Riordan J noted that ‘[w]hat is critical is that the expert approaches consideration of the questions impartially; and there is no attempt by the lawyer to influence the expert’s opinion’.[6]
No misleading conduct by expert
His Honour found that Mr Silvia had not engaged in misleading conduct in the course of providing his expert evidence. The plaintiffs had alleged that, amongst other things, Mr Silvia had failed to disclose the details of previous retainers he had with the solicitors acting for the second to fifth defendants and who had briefed him in the present proceeding.
Riordan J held that there was no requirement either in the expert witness code of conduct contained in the Court’s rules or elsewhere which compelled Mr Silvia to disclose matters unless they formed the basis for an opinion in his report. He therefore had not engaged in misleading conduct in failing to disclose, amongst other things, details of his previous retainers.
Does a lack of independence render expert evidence inadmissible?
Having dismissed the plaintiffs’ argument that Mr Silvia was not an independent expert, it was not strictly necessary for his Honour to determine whether any lack of independence rendered Mr Silvai’s evidence inadmissible. Nevertheless, his Honour noted that expert evidence need not be independent in order for it to be admissible but that a lack of independence might affect the weight a court should assign to the evidence. Riordan J cited an earlier judgment of Dodds-Streeton J in Ananda Marga Pracaraka Samagha Ltd v Tomar (No 4) where her Honour held:
In my opinion, relevant authority establishes that while (as reflected by the Federal Court Practice Note and like curial protocols) objectivity and independence are sought of expert witnesses, such qualities are not preconditions of competence, even in the case of expert witnesses. The sanction for failure to fulfil the obligations imposed by relevant authority and curial protocols is not the exclusion of the expert’s evidence, but rather, the significant risk that it will fail to persuade.[7]
Comment
In Finance & Guarantee Company Pty Ltd v Auswild (Expert Evidence Ruling), the plaintiffs sought to have an expert’s report excluded from evidence on the basis of circumstantial matters and also on the basis of an apparent failure to disclose certain matters in the report. The Court’s decision makes clear that an expert’s report needs only disclose the matters which informed the expert’s opinion, that is, to state clearly the assumptions made and the material relied upon in forming any opinions.
The Court’s decision is also a reminder of the importance, even if not the requirement, of independence in an expert witness. It is a useful decision to bear in mind whether one seeks to admit or to exclude expert evidence in a proceeding.
[1]: [2019] VSC 665.
[2]: Ibid [39].
[3]: Ibid [48].
[4]: Ibid [51].
[5]: Ibid.
[6]: Ibid [42].
[7]: (2012) 202 FCR 564, 570 [35].