Industrial Court of New South Wales CITATION: Boyd and Another v Maxx Implementation Pty Limited and Others [2008] NSWIRComm 62 LINDSAY DOUGLAS BOYD First Applicant FINGER LIMEING GOOD PTY LIMITED (FORMERLY ALCONLEIGH PTY LIMITED (ACN 076 969 465) AS TRUSTEE FOR THE ALCONLEIGH TRUST Second Applicant MAXX IMPLEMENTATION PTY LIMITED (ACN 073 058 849) First Respondent PARTIES: MAXX PTY LIMITED (ACN 098 422 354) Second Respondent GERHARD MARTIN LUDWIG Third Respondent EBENEZER GUMNUT PTY LIMITED (ACN 073 555 898) AS TRUSTEE FOR THE GM LUDWIG FAMILY DISCRETIONARY TRUST Fourth Respondent FILE NUMBER(S): IRC 1509 of 2004 CORAM: Schmidt J CATCHWORDS: Unfair Contract - evidence - expert opinion evidence - admissibility of expert's report - evidence received CASES CITED: Makita (Australia) Pty Ltd v Sprowles (2001) NSWLR 705 Sydneywide Distributors v Red Bull Australia Pty Limited (2002) 55 IPR 354 HEARING DATES: 1 April 2008 DATE OF JUDGMENT: 2 April 2008 APPLICANTS: Mr P Strain, counsel SOLICITORS: Hedges Bhatty Solicitors LEGAL REPRESENTATIVES: RESPONDENTS: Mr R Alkadamani, counsel SOLICITORS: Thomas and Company JUDGMENT: - 3 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Schmidt J 2 April 2008 Matter No IRC 1509 of 2004 LINDSAY DOUGLAS BOYD AND ANOTHER v MAXX IMPLEMENTATION PTY LIMITED AND OTHERS Application under s.106 of the Industrial Relations Act 1996 REASONS FOR JUDGMENT [2008] NSWIRComm 62 1 The respondents objected to the tender of an expert's report of Mr Gower. I received the report, indicating that I would later give reasons for the conclusions reached. These are the reasons. 2 There was no question as to Mr Gower's expertise, but various complaints advanced as to the admissibility of his report, including arguments that the report did not provide the advice Mr Gower had been instructed to provide, and that it did not set out his reasoning process, for the opinions expressed. 3 Reliance was placed upon the approach of Heydon JA in Makita (Australia) Pty Ltd v Sprowles (2001) NSWLR 705, including at [85], where his Honour observed: In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal that it is not based on specialised expert knowledge, but, to use Gleeson CJ's characterisation of the evidence in HG v R (1999) 197 CLR 414, on "a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise" (at [41]). 4 While Mr Gower's expertise was not challenged, that his report was based on his expert knowledge, was. The difficulty arose because Mr Gower had identified in his report that what he had been instructed to do, was 'to quantify the economic loss' suffered by the applicants. He identified that in addition to the documents which he had been supplied, in order to provide the requested advice, he required additional documents, which he also identified. Mr Gower noted that the applicants were unable to supply those documents and so, in the absence of those documents, Mr Gower explained that he had based his opinions on 'instructions, discussions with Mr Lindsay Boyd and a number of assumptions'. His report then set out various instructions received and assumptions made, as did the attached schedules, in which his detailed calculations appeared. 5 I was satisfied that the objections advanced in relation to the admissibility of the report could not be upheld. As Heydon JA observed, it is possible for an expert to provide opinion evidence on the basis of assumed, or accepted facts. Whether or not those facts will be established by the applicants in the proceedings, in the necessary way, must be determined on all of the evidence. That cannot necessarily be determined at the time that the expert's report is tendered. As the Full Federal Court discussed in Sydneywide Distributors v Red Bull Australia Pty Limited (2002) 55 IPR 354 at [87], when referring to the earlier quoted observations of Heydon JA: The use of the phrase 'strictly speaking in the last sentence should not be overlooked. It may well be correct to say that such evidence is not strictly admissible unless it is shown to have all of the qualities discussed by Heydon JA. However many of those qualities involve questions of degree, requiring the exercise of judgment. For this reason it would be very rare indeed for a court at first instance to reach a decision as to whether tendered expert evidence satisfied all of his Honour's requirements before receiving it as evidence in the proceedings. More commonly, once the witness's claim to expertise is made out and the relevance and admissibility of opinion evidence demonstrated, such evidence is received. The various qualities described by Heydon JA are then assessed in the course of determining the weight to be given to the evidence. There will be cases in which it would be technically correct to rule, at the end of the trial, that the evidence in question was not admissible because it lacked one or other of those qualities, but there would be little utility in so doing. It would probably lead to further difficulties in the appellate process. 6 It follows that admissibility of an expert's report does not require that all of the assumed facts on which it is based be already established, when it is received. Here, Mr Gower identified in his report that he had not been provided with documents he regarded as necessary to quantify the economic loss suffered by the applicants and so he had proceeded to undertake that task, on the basis of assumptions he had been instructed to make. That approach was not one which could lead to the conclusion that the opinions Mr Gower expressed were not based upon his expert knowledge, as the respondents argued. Whether or not those assumptions would be established by the applicants, had to await subsequent determination, as did the question of what weight Mr Gower's opinions should finally be given, if those assumptions are established. 7 As to the complaints as to Mr Gower's failure to reveal his reasoning process, I took the view that in his report, Mr Gower had identified what he had been instructed to assume and then went on to explain the conclusions he had reached, in a summary form, supported by schedules where the details of his calculations had been set out. Those schedules also contained notes, which identified the source of various figures used in the calculations, along with other matters. 8 No doubt the validity of Mr Gower's approach; the persuasiveness of his reasoning process; the accuracy of his calculations, given the assumptions he has made and the source of the figures which he has used, are all matters which may be relied on by the respondents, in submitting that his conclusions, even if finally supported by evidence which establishes the validity of the assumptions made, should not be given weight. That, however, was not a proper basis for refusing to receive the report. ------------------------ 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. 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