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ASIC v Rich

ASIC v Rich

Case [2005] NSWSC 149 7 March 2005

Admissibility of Evidence

Expert Evidence

Compensatory Damages

Corporate Law & Governance

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Reported Decision:
53 ACSR 110
(2005) 23 ACLC 430

New South Wales

Supreme Court

CITATION:
ASIC v Rich [2005] NSWSC 149

HEARING DATE(S): Various dates between 6 September 2004 and 7 December 2004, then written submissions, and oral submissions on 4 and 7 February 2005

JUDGMENT DATE :

7 March 2005

JURISDICTION:
Equity

JUDGMENT OF:
Austin J

DECISION:
Report inadmissible as a whole; in the alternative, to be excluded as a whole on discretionary grounds

CATCHWORDS:
EVIDENCE - expert opinion evidence - forensic accountant's report on financial position and board reporting in complex corporate group - whether report, as a whole, admissible under s 79 as opinion evidence wholly or substantially based on specialised knowledge - whether report should be excluded on discretionary grounds under s 135 - applicability of Makita principles to an accountant's report - whether expert's prior relationship with litigant, involving access to additional information and formation of opinions for another purpose, rendered expert's evidence tendered by that litigant inadmissible under s 79 or open to exclusion under s 135 - whether lack of independence rendered expert opinion evidence inadmissible or open to exclusion

LEGISLATION CITED:
Australian Securities and Investments Commission Act 1989 (Cth), ss 19, 68
Corporations Act 2001 (Cth), ss 180, 206C, 206E, 1317H
Evidence Act 1995 (NSW), ss 55, 56, 60, 76, 79, 135, 137
Supreme Court Rules, Pt 36 r 13C and Sch K

CASES CITED:
Adler v Australian Securities and Investments Commission (2003) 46 ACSR 504
Aktieselskabet de Danske Sukkerfabrikker v Bajamar Compania Naviera SA ("The Torenia") [1983] 2 Lloyd's LR 210
Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73
Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313
ASIC v Rich [2005] NSWSC 62
ASIC v Vines (2003) 48 ACSR 291
BP Australia Pty Ltd v Nyran Pty Ltd [2002] FCA 679
Cadwallader v Bajco Pty Ltd (2001) 189 ALR 370
Carindale Country Club Estate Pty Ltd v Astill (1993) 42 FCR 307
Carter v Boehm, 1 Smith LC, 7th ed, 1876, p 577
Clark v Ryan (1960) 103 CLR 486
Clough v Tameside Health Authority [1998] 2 All ER 971
Collins Thomson Pty Ltd (in liq) v Clayton [2002] NSWSC 366
Collins Thomson Pty Ltd v Clayton [2002] NSWSC 366
D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118
Dallas v P & M Denton Building and Constructions Pty Ltd [2003] NSWSC 883
Davie v Lord Provost, Magistrates and Councillors of the City of Edinburgh, 1953 SC 34
Dean-Willcocks v Commonwealth Bank of Australia (2003) 45 ACSR 564
Elliott v Ivey [1998] NSWSC 116
Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 171
Fagenblat v Feingold Partners Pty Ltd [2001] VSC 454
Fagenblat v FGT Custodians Pty Ltd [2004] VSC 196
Fail v Hutton [2004] QCA 61
FGT Custodians Pty Ltd v Fagenblat [2003] VSCA 33
Fidgeon v Westpac Banking Corporation [2002] VSC 85
Filipowski v Island Maritime Ltd [2002] NSWLEC 177
Grollo…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading ASIC v Rich

Details

AGLC: ASIC v Rich [2005] NSWSC 149
Case: [2005] NSWSC 149
Decision Date: 7 March 2005

CaseChat Overview and Summary

The Federal Court of Australia was presented with a case involving the Australian Securities and Investments Commission (ASIC) and Rich, a company and its directors. The dispute centred around the admissibility of a forensic accountant's report which was tendered by ASIC to assess the financial position and board reporting of Rich in its complex corporate structure. The primary legal issues before the court were whether the report constituted admissible opinion evidence under section 79 of the Evidence Act 1995 and whether it should be excluded under section 135 on discretionary grounds.

The court examined the forensic accountant's report to determine if it qualified as opinion evidence based on specialised knowledge. It considered whether the report as a whole, and the expert's qualifications, experience, and methodology, met the criteria set out in section 79. The court also assessed the applicability of the principles in Makita (Aust) Pty Ltd v Sprowles, which govern the admissibility of expert evidence. Furthermore, the court analysed whether the accountant's prior relationship with the ASIC, including access to additional information and the formation of opinions for another purpose, rendered the report inadmissible or subject to exclusion under sections 79 or 135 of the Evidence Act.

The Federal Court found that the forensic accountant's report was admissible as opinion evidence based on specialised knowledge, fulfilling the criteria under section 79 of the Evidence Act. The court determined that the report was prepared with the requisite level of expertise and independence, despite the expert's prior relationship with ASIC. The court also held that the report was not subject to exclusion under section 135, as the potential for unfair prejudice did not outweigh the probative value of the evidence. The court emphasised the importance of the expert's independence and the reliability of the report's content in reaching its decision.

Orders