McCloskey v Nexis Accountants Pty Ltd (No 2)
[2023] ACTSC 145
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | McCloskey v Nexis Accountants Pty Ltd (No 2) |
Citation: | [2023] ACTSC 145 |
Hearing Date: | 10 February 2023 |
DecisionDate: | 10 February 2023 |
Reasons Date: | 9 June 2023 |
Before: | Loukas-Karlsson J |
Decision: | See [32] |
Catchwords: . | CIVIL LAW – CIVIL PROCEDURE – expert evidence – application for leave to file expert report out of time – non-compliance with timelines for service of expert reports – where matter listed for hearing and no expert evidence has been filed by defendant – leave granted |
Legislation Cited: | Court Procedures Act 2004 (ACT) s 5A |
Cases Cited: | Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 |
Parties: | Steven McCloskey (First Plaintiff) SM Precision Building Services Pty Ltd (ACN 144 883 652) (Second Plaintiff) Nexis Accountants Pty Ltd (ACN 108 623 338) t/as Nexis Accountants and Business Advisors (Defendant) |
Representation: | Counsel C Erskine SC (Plaintiffs) M Wells (Defendant) |
| Solicitors Aulich (Plaintiffs) Kanther Law (Defendant) | |
File Number: | SC 175 of 2021 |
LOUKAS-KARLSSON J
Introduction
On 10 February 2023 I made the following orders:
(a)Leave is granted to the Defendant to file the Expert Report of Adrian Bailey dated 22 November 2022
(b)Direct the Defendant to file and serve the Expert Report of Adrian Bailey dated 22 November 2022 within 1 business day of these orders
(c)The costs of the application is to be paid by the Defendant
Reasons now follow.
The interlocutory application for determination
The broader proceedings involve a claim of damages for breach of contract or negligence arising out of taxation advice given to the plaintiffs. The expert evidence concerns matters of tax law.
By way of an application filed on 19 December 2022, the defendant sought that this Court make the following orders:
(a)Grant the Defendant leave to file the Expert Report of Adrian Bailey dated 22 November 2022;
(b)Direct the Defendant to file and serve the Expert Report of Adrian Bailey dated 22 November 2022 within 1 business day of the date of these orders;
(c)Reserve the costs of the application;
(d)Any other orders that the Court considers appropriate.
In support of its application, the defendant relied upon two affidavits of Mr Kanther, solicitor for the defendant, dated 11 September 2022 and 13 December 2022 respectively. Both affidavits were filed on 19 December 2022.
The plaintiffs opposed the application. The plaintiffs relied on the affidavit of Mr Arahman, solicitor for the plaintiffs, affirmed on 18 January 2023. Mr Arahman was cross-examined at the hearing regarding the contents of his affidavit.
Legal Principles
The Court has power to make directions in relation to expert evidence under r 1205(1)(a) of the Civil Procedure Rules 2005 (ACT). The overriding purpose of the Rules is to promote the objects of the Court Procedures Act 2004 (ACT) in s 5A of the act include the purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
In the recent decision of Glover v Fuller [2022] ACTSC 24 (Glover), McWilliam AsJ (as her Honour then was) dealt with an application concerning this provision. This matter similarly concerned the question of the granting of leave to a defendant to adduce expert evidence out of time.
The defendant referred to a number of features of Glover. In particular, as to prejudice to the defendant, McWilliam AsJ found (at [22]-[23]) that the prejudice:
… arises from not being permitted to lead any expert evidence in a case that is likely to depend heavily on experts.
That prejudice is significant to the Court’s discretion to be exercised on this application. While the non-compliance with orders by the parties is unfortunate and not a procedural approach to be encouraged, the position as it stands is that the interests of justice favour the defendant being permitted to serve his expert evidence. I accept that the defendant is entitled to defend the case and in doing so, to be provided with a reasonable opportunity to lead evidence.
10. Further, McWilliam AsJ observed:
Matters relevant to the exercise of the Court’s discretion vary depending upon the circumstances leading to the application being brought. In Russell v Glen [2020] ACTSC 81, Walker AJ drew attention (at [18]) to matters to which a court may have regard in making general directions, which are set out in r 1401(5). The list of considerations is non-exhaustive, and includes factors such as that each party is entitled to a fair hearing, with steps in the proceeding being taken within a reasonable time and each party being given a reasonable opportunity to lead evidence
…
Where there has been a delay, a proper explanation for such delay should be forthcoming.
Submissions
11. The defendant made submissions concerning the explanation for the delay, the context of the mutual delay of the parties, and prejudice.
Explanation for the delay
12. The defendant submitted that the solicitor has given proper explanation of the delay in the service of the defendant’s expert evidence.
13. The affidavit of Mr Kanther, affirmed on 13 December 2022, provides a number of reasons for delay. There is no utility in repeating these matters here.
Mutual Delay
14. The defendant further submitted that there has been delay in the service of expert evidence by both sides. The defendant submitted that this does not excuse their delay but, rather, puts it in context. A detailed chronology outlining the timeline of various directions and deadlines in relation to the service of expert reports was included in the defendant’s outline of submissions.
15. The defendant noted, in particular, the following:
(a)The plaintiffs’ expert evidence was served 10 weeks late (due 28 April 2022 and served on 12 July 2022)
(b)The orders contemplated sequential service of expert evidence. The defendant could not serve their expert evidence on 27 May 2022 as initially ordered by consent because the plaintiffs had not served their evidence until over a month later, on 12 July 2022.
(c)The defendant’s expert evidence was provided to the plaintiffs 16 weeks late (due 4 August 2022; served 24 November 2022). At this juncture I note the plaintiffs’ submission concerning the expense of referring the report to their expert where leave was not guaranteed for the defendant to rely upon the report.
16. Further, at the hearing of this application, Mr Arahman, instructing solicitor for the plaintiffs, was cross examined regarding his affidavit of 18 January 2023.
17. The plaintiffs accepted in submissions that there were delays on its side but distinguished those delays from those of the defendant. The plaintiffs submitted that the fact that one party may or may not have complied with directions is largely irrelevant to the question of whether a party, subject to a specific order not to file out of time without leave, should be granted leave. Further, counsel for the plaintiffs submitted that there are a number of factors which distinguish their delays from those of the defendant.
18. The plaintiffs pointed to the deadline imposed by the Deputy Registrar of 4 October 2022 noting that the defendant’s expert report was only commissioned on 7 November; over a month following the deadline (I note the defendants had commissioned an earlier report in September, however this report was deemed to be too expensive). Further, the plaintiffs were only served a copy of the report on 24 November 2022.
19. The plaintiffs ultimately submitted that while the defendant has offered some explanation for its delays, they do not provide an excuse, in circumstances where the report was commissioned a month following the deadline and well after the point at which the defendant’s solicitor was aware the plaintiffs’ report had been served. Further, the plaintiffs noted that the application for leave to allow for the service of the defendant’s report was only provided to the court on 13 December 2022, in the last week of law term. The plaintiffs submitted there is no explanation for this delay.
20. The plaintiffs distinguished this matter from Glover wherein the application was heard on 3 June, with a hearing date set down for September. I note this application came before me on 10 February 2023 and the matter was listed for trial commencing less than a month later, on 6 March 2023.
Prejudice
21. It was submitted by the defendant that the plaintiffs had access to this report from 24 November 2022 and were therefore able to respond to it at the time. The defendants submitted that the plaintiffs cannot, “and should not be permitted to”, manufacture prejudice on the basis of an assumption. I note that the plaintiffs pointed to the significant expense that could be occasioned on the part of an expert referring to a report and relying on it in the context such as this where the court may not grant leave. The defendants submitted that the plaintiffs have not given evidence that there would be any prejudice to their interests in preserving the hearing date if substantial reply evidence was required. Further, in any event, the defendant submitted that there is sufficient time before the hearing date to enable the plaintiffs to put on reply evidence, such that no prejudice arises.
22. The defendant submitted that that the prejudice to the defendant however is known (quoting Glover at [22]): “it arises from not being permitted to lead any expert evidence in a case that is likely to depend heavily on experts.”
Consideration
23. The defendants relied upon rule 1205 of the Court Procedures Rules 2006 (ACT) which provides as follows.
1205 Court may give directions in relation to expert evidence
(1) The court may, on its own initiative or on a party’s application, give 1 or more of the following directions in relation to expert evidence:
(a) a direction about the time for service of an expert report;
(b) a direction that expert evidence—
(i) may not be adduced on an issue; or
(ii) may not be adduced on an issue without the leave of the court; or
(iii) may be adduced only in relation to a stated issue;
(c) a direction limiting the number of expert witnesses who may be called to give evidence on an issue;
(d) a direction providing for the appointment and instruction of 1 expert witness for the parties in relation to a stated issue;
(e) a direction providing for the appointment and instruction of a court-appointed expert witness in relation to a stated issue;
(f) a direction requiring an expert witness who has prepared 2 or more expert reports in relation to a proceeding to prepare a single report that reflects the witness’s evidence in chief;
(g) any other direction in relation to expert evidence that the court considers appropriate.
(2) If the court gives a direction under subrule (1) (e), it may also give a direction about the payment of costs, including—
(a) the remuneration of the court-appointed expert witness; and
(b) by which party or parties, and in what proportion, the remuneration is to be paid.
(3) The court may—
(a) order a party to give security for the remuneration of the court‑appointed expert witness; and
(b) order a stay of the proceeding until the security is given.
(emphasis added)
24. At the hearing the plaintiff submitted that rule 1404 was relevant, further indicating that the content of the two rules is for practical purposes “much the same”, and involves a balancing process.
25. Rule 1404 provides:
Failure to comply with direction etc1404
(1) This rule applies if a party—
(a) after receiving notice of a directions or listing hearing, in a proceeding, does not attend the hearing; or
(b) fails to comply with a direction about the conduct of a proceeding.
(2) The court may do any of the following:
(a) give the further directions it considers appropriate;
(b) dismiss the application or proceeding;
(c) make an order for costs for or against a party;
(d) adjourn the application or hearing;
(e) make another order dealing with the proceeding it considers appropriate.
(3) Without limiting subrule (2), the court may consider, and give directions in relation to, the following matters at a directions hearing:
(a) requests for particulars;
(b) filing further pleadings;
(c) amending pleadings;
(d) challenges to any pleading;
(e) discovery, either in full or limited to particular issues;
(f) interrogatories;
(g) alternative dispute resolution, including mediation;
(h) statements of agreed facts;
(i) evidence by affidavit;
(j) service or exchange of expert reports.
Note The court has a general power to make directions about the conduct of a proceeding (see r 1401 (Directions generally)).
(4) The court may act under this rule on application by a party or on its own initiative.
Note Pt 6.2 (Applications in proceedings) applies to an application under this rule.
(5) In deciding whether to dismiss the application or proceeding, the court must have regard to the principle that the interests of justice are paramount.
(emphasis added)
26. The rules must be considered in the broader context of s 5A of the Court Procedures Act 2004 (ACT).
27. The plaintiffs referred the Court to s 5A and the decision of McCallum CJ in Su v Kamal (No 2) [2022] ACTSC 239, in particular paragraph [31].
28. S 5A provides the following:
5A Main purpose of civil procedure provisions
(1) The main purpose of the civil procedure provisions is to facilitate the just resolution of disputes—
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
(2) Without limiting subsection (1), the main purpose includes the following objectives:
(a) the just resolution of the real issues in civil proceedings;
(b) the efficient use of the judicial and administrative resources available for the purposes of the court;
(c) the efficient disposal of a court’s overall caseload;
(d) the timely disposal of civil proceedings;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3) The civil procedure provisions must be interpreted and applied, and any power or duty imposed by them (including the power to make rules) must be exercised or carried out, in the way that best promotes the main purpose.
(4) The parties to a civil proceeding must help the court to achieve the objectives.
(emphasis added)
29. I note the comments of McCallum CJ in Su v Kamal (No 2) at [32]-[33]:
It is now well understood that case management provisions of those kinds were intended to effect a wholesale change in the way in which litigation is to be conducted in Australia and the expectations of the court as to the cooperation of the parties in that undertaking. As long ago as 2010, the New South Wales Court of Appeal in Bi v Mourad [2010] NSWCA 17 explained why parties should expect that if they do not prosecute their claims with due expedition, or if they permit themselves repeatedly not to comply with orders of the court, proceedings may be dismissed. The proposition is perhaps best captured in the judgment of Young JA at [31] where his Honour said:
“It must also be remembered these days that ss 56 to 60 of the Civil Procedure Act 2005 set up a regime that requires the courts to turn away reluctant gladiators and to ensure that they either prosecute their claims in due time or get sent away from the court.”
Allsop P agreed with his Honour's remarks. Sackville AJA also made additional remarks with which Allsop P also agreed, emphasising the importance of a party prosecuting a claim with due expedition.
(emphasis added)
30. The plaintiffs correctly emphasised that the interests of justice are informed by s 5A. The plaintiffs submitted that following the High Court’s decision in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175, the interests of justice must be informed by a consideration of matters such as the pressure on court time, the allocation of hearing dates, the expense and inconvenience to parties of having adjournments and other relevant considerations.
Conclusion
31. In my view the interests of justice favour the defendant being permitted to serve the expert evidence in this case. This is not a case where the default of the defendant is so egregious as to warrant the Court’s procedures being applied to prevent the reasonable defence of the proceedings. Importantly, in this case there is a proper explanation for the delay by the defendants. Further, the defendant’s expert report was served some 11 weeks ago. Additionally, there is clear prejudice to the defendant. In this case the prejudice arises from not being permitted to lead any expert evidence in a case that likely depends heavily on experts.
Orders
32. The orders I made were as follows:
(a)Leave is granted to the Defendant to file the Expert Report of Adrian Bailey dated 22 November 2022
(b)Direct the Defendant to file and serve the Expert Report of Adrian Bailey dated 22 November 2022 within 1 business day of these orders
(c)The costs of the application is to be paid by the Defendant
| I certify that the preceding thirty-two [32] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Rebecca Emder Date: 9 June 2023 |
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