Oztech Pty Ltd v Public Trustee of Queensland (No 11)
[2016] FCA 1091
•6 September 2016
FEDERAL COURT OF AUSTRALIA
Oztech Pty Ltd v Public Trustee of Queensland (No 11) [2016] FCA 1091
File number: NSD 937 of 2014 Judge: YATES J Date of judgment: 6 September 2016 Catchwords: EVIDENCE – rulings – expert evidence – non-compliance with r 23.13 – whether to dispense with compliance of the Rules Legislation: Evidence Act 1995 (Cth) ss 79, 135
Federal Court of Australia Act 1976 (Cth) s 37M
Federal Court Rules 2011 rr 1.34, 23.11, 23.13
Practice Note CM 7
Date of hearing: 5 September 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 23 Counsel for the Applicant: Mr RPL Lancaster SC with Mr CH Withers,
Mr AM Hochroth and Mr RJ MaySolicitor for the Applicant: Squire Patton Boggs Counsel for the Respondent: Mr W Sofronoff QC with Mr DB O’Sullivan QC,
Mr MJ O’Meara, Mr JP O’Regan, Ms E Hoiberg and
Ms F LubettSolicitor for the Respondent: Clayton Utz ORDERS
NSD 937 of 2014 BETWEEN: OZTECH PTY LTD ACN 005 907 871
Applicant
AND: THE PUBLIC TRUSTEE OF QUEENSLAND
Respondent
JUDGE:
YATES J
DATE OF ORDER:
6 SEPTEMBER 2016
THE COURT:
1.Rejects paragraph [99] of the affidavit of Ian Richard Hall made 21 June 2016.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)YATES J:
The applicant objects to the third sentence of paragraph [91]; paragraph [94]; the words “and do not” in the last sentence of paragraph [96]; the last sentence of paragraph [98]; paragraph [99]; and paragraphs [104] to [107] of the affidavit of Ian Richard Hall made 21 June 2016 (the affidavit).
BACKGROUND
At times relevant to the facts in issue in this proceeding, Mr Hall was a partner at PricewaterhouseCoopers (PwC). PwC provided advice to the respondent. Mr Hall is a chartered accountant, an official liquidator, and a registered liquidator. He has been an insolvency practitioner for over 30 years, including 17 years as a partner at PwC.
His work as an insolvency practitioner has been predominantly in the areas of corporate restructuring. He has deposed to the fact that he has expertise in both financial viability investigations and fraud investigations. His corporate restructuring role has involved two major limbs. The first is acting in a formal capacity as liquidator, administrator, or receiver and manager. The second limb is conducting business reviews; in other words, acting in an investigative accounting role. All of these roles have required him to investigate the financial affairs of businesses and the conduct of directors and management, as well as investigating specific transactions.
No challenge is made to Mr Hall’s expertise to express the opinions he has given in the passages to which objection is taken, although the applicant submits that some statements in these paragraphs are no more than speculation or argument and do not stand as opinion evidence.
OBJECTIONS
The applicant argues that the passages to which objection is taken do not comply with r 23.11 of the Federal Court Rules 2011 (FCR or the Rules) which provides that a party may only call expert evidence at trial if that party has delivered a report of the expert that complies with r 23.13 FCR. Rule 23.13 sets out the formal requirements for an expert report.
There does not seem to be any dispute that the passages in the affidavit to which the applicant objects do not comply with the requirements of form stipulated in r 23.11 or, indeed, Practice Note CM 7 (CM 7). That said, the applicant correctly acknowledges that the Court can dispense with the operation of r 23.11 under r 1.34 FCR. Rule 1.34 provides that the Court may dispense with compliance with any of the Rules either before or after the occasion for compliance arises. Section 37M(3) of the Federal Court of Australia Act 1976 (Cth) provides that the Rules must be interpreted and applied in a way that best promotes the overarching purpose of facilitating the just resolution of disputes according to law, and as quickly, inexpensively and efficiently as possible.
The applicant submits that the Court should not dispense with the operation of r 23.11 FCR because the respondent proposes to call expert evidence in response to the evidence of Mr Borrelli and Mr Joseph, namely evidence from Mr McCann and Mr Anthon respectively. The applicant says that, as a general matter, a party should only be permitted to call more than one expert on a given topic where there is some compelling reason to do so. The applicant points to the fact that each respective set of expert witnesses has participated in a conference and produced a joint report. It is contemplated that those witnesses will give concurrent evidence. The applicant argues that, in these circumstances, the Court will not be assisted by a further expert opinion that traverses much of the same ground as is covered by those experts. The applicant also points to the fact that neither Mr Borrelli nor Mr Joseph has had the opportunity to engage with or respond to Mr Hall’s intended evidence. The applicant says that this is so in light of the Court’s direction that there be no expert evidence in reply.
I pause here to note that it is not correct to say that the Court has directed that there be no expert evidence in reply. Rather, I have resisted the notion that reply affidavits of experts be filed. I have instead directed that the experts confer and provide a joint report identifying the points of disagreement between them and the reasons for that disagreement. The intention of this order was to provide a more efficient and hopefully more helpful way in which the experts will address their disagreements. Whether that object will be achieved remains to be seen.
The applicant’s relevant expert, Mr Borrelli, and the respondent’s corresponding expert, Mr McCann, conferred between 29 July and 2 September 2016. I note, however, that Mr Hall was not part of that process, even though his affidavit was made on 21 June 2016 and filed on 22 June 2016.
The applicant also says that the fact that the requirements of r 23.11 FCR and CM 7 have not been met makes it difficult to determine whether the requirements of s 79 of the
Evidence Act 1995(Cth) (the Evidence Act) are met.
It can be seen from these submissions that the applicant’s objections extend beyond a failure to comply with r 23.11 FCR and extend to whether I should permit Mr Hall’s intended evidence (to which objection is taken) to be called when a regime has been put in place for dealing with expert evidence and Mr Hall has not been part of that process. Moreover, the objection taken is not really about the admissibility of evidence in accordance with the Evidence Act, although aspects of the applicant’s submissions touch upon the application of s 79 of that Act.
CONSIDERATION
I should say at once that I propose to admit the third sentence of paragraph [91] and the words “and do not” in the last sentence of paragraph [96] of Mr Hall’s affidavit. Those parts of the affidavit merely signify that the stated views that Mr Hall held in 2007, to which no objection is taken, are views that he continues to hold at the present time. I also propose to admit the first two sentences of paragraph [94] of the affidavit. I regard these sentences as a reiteration of the first two sentences of paragraph [91] of the affidavit, to which no objection is taken.
I do not think that the failure to comply with r 23.11 FCR should stand as a reason to exclude the other passages of Mr Hall’s affidavit to which objection is taken.
There may be a question as to whether r 23.11 FCR and CM 7 are directed to all evidence that involves the expression of an opinion admissible under s 79 of the Evidence Act or whether they are directed, more narrowly, to the evidence proposed to be given by an expert who is independent of the events, facts and circumstances with which the case deals. Mr Hall is not an expert who is independent in this sense because he was intimately involved in giving advice to the respondent in 2007 and 2008 in connection with the very matters that lie at the heart of whether the respondent breached his duty as trustee to noteholders as alleged.
I do not find it necessary to express a view on that question. To the extent that r 23.11 FCR applies to Mr Hall’s intended evidence, I waive compliance with it. I do so because these passages in his affidavit are plainly relevant and perfectly intelligible without the need to comply with the formal requirements of the rule.
The only real issue is whether I should allow the respondent to call this evidence because it stands outside the regime in place for the preparation and calling of expert evidence that applies to the experts who are independent of the events in issue.
In this connection, it is true that the applicant’s intended witness, Mr Borrelli, has not engaged directly with Mr Hall’s intended evidence in the remaining passages to which objection is taken. However, so far as I can see, these passages in the affidavit do not really raise issues which are in substance different to the issues raised by Mr McCann, who has prepared a joint experts’ report with Mr Borrelli. Indeed, the applicant’s submissions acknowledge that the remaining passages in Mr Hall’s affidavit (to which objection is taken) traverse much the same ground as covered by these experts.
As I have noted, Mr Borrelli and Mr McCann conferred after Mr Hall’s affidavit was filed. If Mr Borrelli’s direct engagement with Mr Hall’s intended evidence was important, I do not understand why steps were not taken by the applicant to arrange for Mr Hall to be part of the conferral process or, if that was a matter of dispute between the parties, to bring that question before the Court for resolution.
In any event, the relevant passages of Mr Hall’s affidavit deal with very confined subject matter. They deal essentially with the question of whether the information which Mr Borrelli says he would have required, if acting as an investigative accountant engaged by a trustee in the position of the respondent, was an appropriate request in the circumstances or, conversely, was too extensive or detailed for the task at hand and would have been resisted by the issuer of the notes. I do not think that the reception of Mr Hall’s evidence on this limited area would be unfairly prejudicial to the applicant simply because Mr Borrelli has not directly engaged with Mr Hall.
In all the circumstances, I propose to admit the remaining passages, other than paragraph [99] of the affidavit. In my view, this paragraph is essentially argumentative in character and should be rejected. It is not based substantially on Mr Hall’s specialised knowledge.
For completeness, I should record that the applicant has raised two additional submissions. The first was that the form of the passages to which objection is taken is such that one cannot tell whether the requirements of s 79 of the Evidence Act are met. Other than in respect of paragraph [99] of Mr Hall’s affidavit, I reject that submission.
The second submission is that the passages to which objection is taken should be excluded under s 135 of the Evidence Act because the probative value of the evidence is “diminished” by its form and failure to comply with r 23.11 FCR and by the fact that Mr McCann will give evidence on the same topic. I do not consider that these passages, other than paragraph [99], have “diminished” probative value.
The applicant also submitted in this connection that there is substantial prejudice to the applicant if the respondent is permitted to adduce expert evidence from multiple witnesses on the same topic, particularly where the applicant has not been permitted to adduce expert evidence in reply to address that evidence. I have already dealt with that submission and rejected it.
I certify that the preceding
twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.Associate:
Dated: 13 September 2016
0
0
4