Supreme Court New South Wales Medium Neutral Citation: In the matter of Optimisation Australia Pty Ltd [2015] NSWSC 2072 Hearing dates: 16 November 2015 Date of orders: 16 November 2015 Decision date: 16 November 2015 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Leave to adduce expert evidence granted. Catchwords: PROCEDURE – expert evidence – application by defendants for leave to adduce expert evidence – where expert evidence to be adduced to challenge Court expert's report – Court should be relatively ready to grant such leave where some arguable basis for challenging Court expert's report shown – whether belatedness of application militates against grant of leave – whether grant of leave would subject plaintiff to financial hardship in funding independent expert – whether difficulty of plaintiff's lawyers in approaching Court expert to discuss issues militates against granting leave. Cases Cited: Tomko v Tomko [2007] NSWSC 1486 Category: Procedural and other rulings Parties: Brian Kearney (plaintiff) Optimisation Australia Pty Limited (first defendant) Gary Williams (second defendant) Susan Williams (third defendant) Sharmark Pty Ltd (fourth defendant) Orchard Office Services Pty Ltd (fifth defendant) Representation: Counsel: A Fernon (plaintiff) M P Cleary (defendants) Solicitors: Self-represented (plaintiff) Australian Business Lawyers & Advisors Pty Limited (defendants) File Number(s): 2013/153589 Judgment (ex tempore) 1. HIS HONOUR: On 19 December 2014, the Court made an order pursuant to (NSW) Uniform Civil Procedure Rules 2005, r 31.46, appointing (subject to his consent, which was subsequently forthcoming) Mr Mullins of Axiom Forensic Accounting as Court expert to inquire into and report on the issues stated in the seventh schedule, and authorising him to inquire into and report on any facts relevant to the inquiry. Broadly, those issues concerned the valuation of the company the subject of these proceedings, and the plaintiff's shareholding in that company. 2. Mr Mullins in due course produced a report on 15 April 2015. The matter has been the subject of subsequent directions hearings on a number of occasions without any issue concerning the report being raised, and on 3 August 2015 the proceedings were set down for trial to commence on 1 March 2016 for ten days. 3. Subsequently, the defendants' solicitors applied by letter to the plaintiff for agreement for the defendants to file valuations which had earlier been prepared by an accountant retained by them, Mr Wayne Lonergan of Lonergans. Agreement to that course was not forthcoming. The defendants then filed a notice of motion, on 27 October 2015, seeking leave (said to be under UCPR, r 31.44 – but I will take it to be a reference to r 31.52) – to adduce expert evidence of one Mr Toscan of Lonergan Edwards, which report analyses certain sections of Mr Mullins' report. Essentially, Mr Toscan disputes the EBIT multiplier adopted by Mr Mullins, and Mr Mullins' assessment of surplus assets. It is that motion that comes before the Court today. 4. In this case, a Court expert was appointed partly because the plaintiff claimed to be having difficulty in accessing the relevant documents and information, and I thought that the appointment of a Court expert to undertake the requisite tasks would remove from the scope of dispute the various interlocutory contests that were, until that point, taking place over access to information and documents – partly because the plaintiff was then unrepresented, and partly because in circumstances where the plaintiff's financial position was difficult, it was unlikely that a suitable expert would otherwise be retained, at least on the plaintiff's side. 5. The facility to appoint a Court expert is, for those and other reasons, a highly beneficial one. However, the risk that attends appointment of a Court expert, at least if parties are precluded from adducing their own expert evidence, is not only that trial by judge becomes trial by expert on what is in this case a very important issue, but even more importantly, that error by the expert may go unexposed. The beauty of the adversarial system in this respect is that the competing opinions of two experts enable each to be tested and refined so as at to least reduce the scope for error. If the Court relies solely on a Court expert, except where the parties are content with that approach, it runs the risk that error – even serious error – might not be exposed. That is not to suggest for a moment that Mr Mullins has committed any such error; that remains to be ascertained. But it would be a serious denial of the rights of the defendant to have the Court, and not the expert, decide the relevant issues, to preclude it from adducing evidence limited to two issues in Mr Mullins' report for the purpose of contesting and challenging it. 6. As I observed in Tomko v Tomko [2007] NSWSC 1486 (at [8]), albeit in the context of a single expert as distinct from a Court expert, the Court should be relatively ready to grant leave to adduce evidence from a separate expert lest trial by single expert otherwise becomes substituted for trial by judge. Where some arguable basis is shown to challenging the report of a single expert, the Court should be disposed to grant such leave. That arguable basis has, in my view, been shown here. 7. Essentially, three matters are advanced against the granting of the leave sought. The first is that the application is a belated one, six months having passed since the service or delivery of the Court expert's report without objection or the issue being raised, and the trial having been set down in the meantime. I accept that that is a legitimate criticism, but in circumstances where I do not think it will impact on the dates already set down for hearing – since the report of Mr Toscan has been prepared and has been served annexed to Mr Seaton's affidavit in support of the motion of 27 October 2015 – the procedural delinquency, if that it be, in making the application late, is not sufficient to outweigh the substantive injustice of denying the defendants the opportunity to contest by a contrary report aspects of the Court expert's report. 8. The second is Mr Kearney's financial position, and the difficulty he may encounter in funding an independent expert of his own to review the issue. In my view, that is not a significant consideration for a number of reasons. First, Mr Kearney has had, in essence, the benefit of Mr Mullins' expert report funded by the defendants, or at least the first defendant, already. Secondly, the financial position of one litigant that may make it difficult for that litigant to adduce expert evidence is no reason for precluding another litigant from obtaining an expert and exercising its legitimate rights. Thirdly, in any event, Mr Mullins will be able to defend his own position, or if confronted with Mr Toscan's report and persuaded that it is partly or totally incorrect, to make concessions or adjustments to that report, even if there is not a competing plaintiff's expert. And if Mr Kearney is able to obtain his own expert, the circumstance that there is the best part of four months before the hearing commences should enable such an expert to address the refined issues on which Mr Toscan's report focuses amply within that time. 9. Finally, it was submitted that there would be difficulty – or at least lack of clarity – in the entitlement of Mr Kearney's lawyers to approach Mr Mullins and discuss the issues with him. If there is – and it may be a fair submission that it would be inappropriate to discuss the matter with the Court expert without the leave of the Court – that can plainly be addressed by a grant of leave under UCPR, r 31.50, and in my view it would be entirely appropriate for the plaintiff to have leave to obtain clarification of Mr Mullins' report on the issues that have been raised by Mr Toscan. However, because he is a Court expert, and not a party's expert, that should, I think, be the subject of monitoring, in the sense that it is not, at least at this stage, in my view appropriate for the parties to have separate conferences with Mr Mullins, although I might in due course be persuaded that that is appropriate. 10. It seems to me that the appropriate course, at least at this stage, is for Mr Toscan's report to be provided to Mr Mullins, and for Mr Mullins to be asked to provide a response to the issues raised by Mr Toscan. It will then be possible to see whether he concedes any of the criticisms, or whether he maintains his previous position. 11. I might also, in due course, be persuaded that Mr Mullins and Mr Toscan should confer for the purpose of discussing those issues. 12. The Court orders that: 1. pursuant to UCPR, r 31.52, the defendants have leave to adduce expert evidence of Mr Nathan Toscan of Lonergan Edwards and Associates Limited in accordance with his report dated 27 October 2015; 2. pursuant to UCPR, r 31.50, the plaintiff may seek clarification of the report of the Court expert, Mr Mullins, by submitting to Mr Mullins a copy of Mr Toscan's report and together with questions designed to elicit from Mr Mullins his response to the matters raised in Mr Toscan's report and his reasons for that response; 3. the plaintiff provide to the defendants a copy of any such communication with Mr Mullins; 4. the plaintiff include a copy of this order with any such communication with Mr Mullins; 5. there be liberty to apply for further directions in the event of any difficulty arising in obtaining clarification of Mr Mullins' report by arrangement with my associate. ********** 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. Decision last updated: 11 March 2016