Industrial Relations Commission of New South Wales in Court Session CITATION: Thomson and anor v Societe Generale Australia Limited and anor [2005] NSWIRComm 207 FIRST APPLICANT Michael Thomson SECOND APPLICANT Bengoal Pty Ltd PARTIES: FIRST RESPONDENT Societe Generale Australia Limited SECOND RESPONDENT Societe Generale FILE NUMBER(S): 1795 of 2002 CORAM: Marks J CATCHWORDS: Expert evidence - tender of report rejected because the report did not contain within it material which allowed a conclusion to be reached that the opinions expressed were wholly or substantially based on specialised knowledge. LEGISLATION CITED: Industrial Relations Act 1996 ASIC v Rich [2005] NSWCA 152 CASES CITED: HG v The Queen (1999) 197 CLR 414 HEARING DATES: 05/23/2005; 05/24/2005; 05/25/2005; 05/26/2005; 05/27/2005; 05/30/2005; 05/31/2005; 06/01/2005; 06/02/2005; 06/03/2005; 06/06/2005; 06/07/2005; 06/08/2005; 06/09/2005; 06/10/2005 DATE OF JUDGMENT: 06/24/2005 APPLICANTS Mr T D Blackburn SC with Mr I W Raine of counsel Solicitors: Mr H Williamson Debney Williamson Lawyers LEGAL REPRESENTATIVES: RESPONDENTS Mr B D Hodgkinson SC with Mr A B Gotting of counsel Solicitor: Mr A G Shanahan Shanahan Tudhope Solicitors JUDGMENT: - 4 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Marks J Friday 24 June 2005 Matter No IRC 1795 of 2002 MICHAEL THOMSON AND ANOTHER v SOCIETE GENERALE AUSTRALIA LIMITED AND ANOTHER Application under s.106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT ON ADMISSION OF EXPERT REPORT [2005] NSWIRComm 207 1 This interlocutory judgment deals with an application by the respondents in proceedings brought under s 106 of the Industrial Relations Act 1996 ("the Act") for the admission into evidence of an expert report. 2 The report had been prepared by James Oswald Bartle, a director of JKL Treasury and Financial Consulting Pty Ltd ("JKL"), which company was asserted to provide "consulting services in the banking industry". Mr Bartle is a visiting Fellow at the University of New South Wales. 3 The report is intended to provide expert opinion with respect to certain foreign exchange transactions and their interrelationship with, and impact upon, the operations of the respondent banks. The report is also intended to deal with "market practice" in the manner in which foreign exchange transactions are dealt with in terms of allocation of profits amongst various sections of a bank, the period over which such profits are allocated and the like. 4 The report attaches a curriculum vitae of Mr Bartle. It states that JKL provides "comprehensive risk management advice to corporates in the following areas: interest rate risk, foreign exchange risk, credit risk, liquidity risk, settlement risk and funding issues". Mr Bartle's work experience includes a period of eleven years employment with the Commonwealth Bank of Australia in which he said that he progressed through "electronic banking, merchant banking and treasury advisory". There is included within the work experience at that bank reference to a number of clients with emphasis on an investigation of, and implementation of, "appropriate treasury systems". During the period 1993 to 1998 Mr Bartle was predominantly involved in consultancy, again with emphasis on "treasury systems". In 1998 he managed the Australian operation of a New Zealand Merchant Bank "which provided treasury advice". From 1999 to the current time Mr Bartle appears to have lectured in a variety of financial subjects, which include "capital markets and instruments," "credit analysis and lending," "bank financial management" and the like. 5 The curriculum vitae also outlines a number of publications written by Mr Bartle, including an article on "credit derivatives". 6 The report outlines Mr Bartle's experience, which is said to include "development of treasury policies and implementation of treasury systems for a range of companies". That experience is said to include the managing of foreign exchange positions, accounting for foreign exchange positions, managing commodity positions, accounting for commodity positions and implementing instruments "into treasury systems". There is also a reference to the development methods "for entering exotics into systems not designed for this". 7 Mr Bartle did not give oral evidence. The impression that I have gained from the affidavit material to which I have referred is that his experience has been essentially gained by reference to consulting activities, predominantly to trading organisations. I am unable to conclude that Mr Bartle has actually worked for a banking organisation in a role with a close involvement with, or connection to, foreign exchange transactions. Part of the difficulty which arises is that I am unable to comprehend in any concluded manner what is meant by "managing foreign exchange positions" and "accounting for foreign exchange positions". Similarly, I am unable to conclude with any certainty that Mr Bartle's experience would extend to the managing of, and accounting for, such positions from the perspective of a bank in order to allow him, in turn, to be acknowledged as having sufficient expertise with respect to the relevant "market practices" to which a substantial part of Mr Bartle's report is directed. Accordingly, although Mr Bartle undoubtedly has specialised knowledge based on his training, study and experience in terms of particular areas, I am unable to conclude that his opinion, as given in the report, is wholly or substantially based on that specialised knowledge. As Gleeson CJ pointed out in HG v The Queen (1999) 197 CLR 414 at [39]: "The provisions of s 79 (of the Evidence Act) will often have the practical effect of emphasising the need for attention to requirements of form. By directing attention to whether an opinion is wholly or substantially based on specialised knowledge based on training, study or experience, the section requires that the opinion is presented in a form which makes it possible to answer that question". 8 It is possible to "flesh out" the conclusion which I have reached by reference to a number of specific areas of the report. Mr Bartle was asked, initially, whether "a transaction, under which a client provides a bank with a fixed amount of cash collateral for AUD-USD options, use(s) that bank's credit lines or capital?". Mr Bartle answered that question by first referring to the fact that it was ambiguous. He then expressed an opinion that such a transaction would use credit lines and capital of a bank. This may or may not be so. Even if correct, there is nothing that I have discerned within the curriculum vitae or the narration of Mr Bartle's experience which is indicative of general expertise in the use of a bank's credit lines or capital in a general sense. It may be that the areas in which Mr Bartle lectures and his experience cover such matters, perhaps even in a fundamental way. However, there is nothing within the report, either specifically or by way of background information, which states this. In my opinion, based on well known authority, it must be made apparent in the report itself that the opinion is wholly or substantially based on the specialised knowledge of Mr Bartle, in turn based on his study, training or experience. This is a matter which, in my opinion, needs to be expressed in the report in a manner so that such a conclusion can be made comfortably, without endeavouring to divine the subject matter of a particular course of study or the subject matter of a particular area of experience. 9 The bulk of the report expresses an opinion about "market practice" amongst financial institutions with respect to foreign exchange transactions, including collateral commodities transactions. As I have previously pointed out, I am unable to conclude from the material contained within his report that Mr Bartle has sufficient knowledge, experience and expertise to be able to comment on what the market practice within financial institutions is with respect to foreign exchange transactions. Indeed, I am unable to ascertain whether the "market practice" referred to is that which prevails within financial institutions carrying on business in New South Wales, Australia, or other regions. 10 For the above reasons I would conclude that it would be unsafe to allow the report of Mr Bartle to be admitted into evidence. In reaching this conclusion I am mindful of the distinction made by Spigelman CJ between questions of admissibility and questions of weight to be given to an expert opinion (see ASIC v Rich [2005] NSWCA 152 at [136]). In my opinion, this is an appropriate case in which the tendering of the report should be rejected. It is not appropriate to allow it to be admitted into evidence and its tender is rejected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.