Re Earlturn Pty Ltd - [2021] QSC 137

SUPREME COURT OF QUEENSLAND

CITATION:

Re Earlturn Pty Ltd [2021] QSC 137

PARTIES:

MINDORO MANAGEMENT INVESTMENTS PTY LTD

ACN 150 866 676
(applicant)
v
EARLTURN PTY LTD
ACN 091 166 817
(first respondent)
CK Ma INVESTMENTS PTY LTD

ACN 115 205 402

(second respondent)

FILE NO/S:

354 of 2020

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:
Supreme Court of Queensland

DELIVERED EX TEMPORE ON:

28 April 2021

DELIVERED AT:

Cairns

HEARING DATE:

27, 28 April 2021

JUDGE:

Henry J

ORDER:

1. Paragraphs 7.13 to 7.17 inclusive, and 8.6 of the affidavit of forensic accountant, John Goggin are struck out.

CATCHWORDS:

EVIDENCE – ADMISSABILITY – EXPERT EVIDENCE – where a party objected to the tendering of an affidavit by a forensic accountant – where portions of the affidavit relied upon two distinct sources of data authored by others – whether it is permissible for the expert’s reliance upon data, which is hearsay, to form the basis of the forensic accountant’s expert opinion – whether that opinion would be based upon inadmissible evidence – whether the sources of data authored by others were within the expert’s field of expertise – whether habitual use of the data by the trade or profession has tested its usual and practical accuracy and has sanctioned its trustworthiness

Dasreef Proprietary Limited v Hawchar [2011] 243 CLR 588, followed
Borowski v Quayle [1966] VR 382, applied
Bodney v Bennell (2008) 167 FCR 84, considered

COUNSEL:
M A Jonsson QC for the applicant
C J Ryall for the second respondent

(No appearance for the first respondent, the applicant and second respondent constituting the entirety of its members)

SOLICITORS:
Preston Law for the applicant
Devenish Law for the second respondent

(No appearance for the first respondent, the applicant and second respondent constituting the entirety of its members)

HENRY J: In this application for winding up of a company being heard as a trial, objection has been taken to the admissibility of exhibit JJG-1 to the affidavit of forensic accountant, John Goggin. That affidavit has been received, conditioned on the outcome of argument on the objection, as exhibit 5.1 on the proceeding.

Exhibit JJG-1 to the affidavit is an expert witness report by Mr Goggin, dated 12 December 2019. Mr Goggin’s report expresses two ultimate sets of conclusions.

The first conclusion, in summary, is that in the reviewed period of 2015 to 2020, and I observe particularly from 2017, the wages and salary costs of Earlturn Pty Ltd was significantly higher than industry benchmarks. That conclusion is premised upon two aspects of Mr Goggin’s findings.

The first aspect, about which no objection is made, is Mr Goggin’s forensic findings as to the company income revenue expenses, including payroll expenses and profit margin. The second aspect, which is objected to, relies on a report on the purported industry benchmarks contained in annexure 10 to Mr Goggin’s report, namely, the IBIS World Industry Report H4404, titled “Serviced Apartments in Australia”.

The IBIS report refers to various statistics, and, at page 32 under…

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 Re Earlturn Pty Ltd

Details

AGLC: Re Earlturn Pty Ltd [2021] QSC 137
Case: [2021] QSC 137
Decision Date: 28 April 2021

CaseChat Overview and Summary

In the case of Re Earlturn Pty Ltd, the primary focus was on the admissibility of expert evidence tendered by a forensic accountant in the context of a dispute before the court. The court was tasked with determining whether certain portions of an affidavit provided by John Goggin, a forensic accountant, could be admitted into evidence, particularly those sections that relied on data authored by others. The reliance on these data sources raised questions about whether the expert’s opinion was based on inadmissible hearsay evidence. Additionally, the court considered whether the data sources were within the accountant's field of expertise and whether their habitual use in the profession had established their accuracy and trustworthiness.

The legal issues that the court had to resolve centred on the principles of expert evidence admissibility. Specifically, the court needed to determine if an expert could rely on hearsay data to form their opinion and whether such reliance would render the expert’s opinion based on inadmissible evidence. The court also had to assess whether the data sources in question were within the expert’s area of expertise and whether the profession had tested and sanctioned their accuracy and trustworthiness.

The court concluded that certain sections of the affidavit were not admissible as they relied on data that constituted hearsay and was not within the expert’s field of expertise. The court found that the expert's reliance on these data sources did not meet the necessary criteria for admissibility under the rules of evidence. As a result, specific paragraphs of the affidavit were struck out. This decision underscored the importance of the foundational reliability and relevance of data used by experts in forming their opinions, particularly in the context of admissibility in court proceedings.

The court’s final orders included striking out paragraphs 7.13 to 7.17 inclusive, and 8.6 of the affidavit provided by John Goggin, the forensic accountant. These sections were deemed inadmissible due to their reliance on hearsay evidence and the lack of expertise regarding the data sources used.

Orders

Orders of the court

1. Paragraphs 7.13 to 7.17 inclusive, and 8.6 of the affidavit of forensic accountant, John Goggin are struck out.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Re Earlturn Pty Ltd [2021] QSC 137
PARTIES:	MINDORO MANAGEMENT INVESTMENTS PTY LTD ACN 150 866 676 (applicant) v EARLTURN PTY LTD ACN 091 166 817 (first respondent) CK Ma INVESTMENTS PTY LTD ACN 115 205 402 (second respondent)
FILE NO/S:	354 of 2020
DIVISION:	Trial
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court of Queensland
DELIVERED EX TEMPORE ON:	28 April 2021
DELIVERED AT:	Cairns
HEARING DATE:	27, 28 April 2021
JUDGE:	Henry J
ORDER:	1. Paragraphs 7.13 to 7.17 inclusive, and 8.6 of the affidavit of forensic accountant, John Goggin are struck out.
CATCHWORDS:	EVIDENCE – ADMISSABILITY – EXPERT EVIDENCE – where a party objected to the tendering of an affidavit by a forensic accountant – where portions of the affidavit relied upon two distinct sources of data authored by others – whether it is permissible for the expert’s reliance upon data, which is hearsay, to form the basis of the forensic accountant’s expert opinion – whether that opinion would be based upon inadmissible evidence – whether the sources of data authored by others were within the expert’s field of expertise – whether habitual use of the data by the trade or profession has tested its usual and practical accuracy and has sanctioned its trustworthiness Dasreef Proprietary Limited v Hawchar [2011] 243 CLR 588, followed Borowski v Quayle [1966] VR 382, applied Bodney v Bennell (2008) 167 FCR 84, considered
COUNSEL:	M A Jonsson QC for the applicant C J Ryall for the second respondent (No appearance for the first respondent, the applicant and second respondent constituting the entirety of its members)
SOLICITORS:	Preston Law for the applicant Devenish Law for the second respondent (No appearance for the first respondent, the applicant and second respondent constituting the entirety of its members)