The case of New Aim Pty Ltd v Leung  FCA 722 concerned a dispute between an e-commerce company and its former employees regarding the use of confidential information acquired during the course of employment. A significant issue in the case, which is the focus of this article, was whether the Court should reject an expert report relied on by the Applicant based on the involvement of the Applicant’s lawyers in the preparation of the report.
The Applicant, New Aim, conducts an e-commerce business in Australia, which sources products from China. The First to Third Respondents are its former employees and the Fourth and Fifth Respondents are its competitors. The dispute between the parties concerned, among other things, allegations that the First to Third Respondents provided confidential information acquired during the course of their employment to the Fourth and Fifth Respondents. The Applicant thus claimed relief in the form of declarations, injunctions, damages, delivery up and an account of profits.
In the course of the dispute, the Applicant engaged an expert witness, Ms Chen, to provide an expert report. Ms Chen manages an Australian business that assists clients in procuring products from suppliers in China, and her report expressed opinions about matters pertaining to procurement of products from China.
The Respondents invited the Court to reject Ms Chen’s evidence for the reasons that follow.
The Court received evidence showing that:
The Court also heard that, despite the Respondents’ lawyers requesting copies of communications between the Applicant’s lawyers and Ms Chen, those were not all disclosed. Exchanges between the Applicant’s lawyers and Ms Chen were produced for the first time after Ms Chen conceded during cross examination that she had received emails from the Applicant’s lawyers suggesting that she make changes to her draft report (following which the Respondents’ counsel called for production of the exchanges).
Justice McElwaine acknowledged that in some circumstances (e.g., if an expert is unfamiliar with the form and content requirements for an expert report) it may be appropriate for an expert’s report to be settled in admissible form by someone else; the fact that an expert witness may agree with a form of words put to them may not detract from the expert’s independence or the reliability of the opinion expressed. However, he warned that drafting a report based on instructions from an expert poses a serious risk of compromising the expert’s independence and of undermining the value of the opinion.
In this case, having regard to the way in which Ms Chen’s report was prepared, his Honour was “left in a state of uncertainty” as to who was responsible for drafting which portions of the expert’s report. The evidence indicated that “most of the report … at least initially” appeared to have been drafted by the Applicant’s lawyers (albeit in reliance upon material provided by Ms Chen).
His Honour concluded that the lawyers’ involvement “went far beyond the permissible scope of involvement of lawyers who retain an independent expert in order to give evidence in a proceeding.”
On the issue of disclosure, he also added that:
“Even if in some circumstances it is proper for lawyers to draft an independent expert witness statement for consideration by the putative expert, that fact must be disclosed in the expert report. Moreover, all correspondence relating to the manner of preparation of the report should be disclosed and, to the extent that oral advice is conveyed to the expert, the substance should be documented and disclosed.”
Justice McElwaine emphasised the importance of ensuring experts’ independence and reiterated (by reference to the Federal Court’s Expert Evidence Practice Note and the Harmonised Expert Witness Code of Conduct) that an expert witness is not an advocate for a party and has a paramount duty to assist the Court impartially. Here, he considered the requirement of impartiality was “substantially undermined” by the Applicant’s failure to disclose the methodology of preparation of the expert report. He also held that the lawyers’ conduct was “misleading”, given their letter of instruction dated 7 March 2022 suggested Ms Chen would prospectively consider the questions raised therein, whereas the lawyers at the time were already aware of the answers and the form in which they would be expressed.
Because his Honour could not be satisfied that Ms Chen’s report truly represented her honest and independent opinions, or that matters of significance were not withheld, he rejected all opinions and other factual material set out in her report. He also stated he was not prepared to make findings of fact based on her oral evidence, as he had “no confidence in the ability of Ms Chen to give credible, untainted and independent evidence.” As a result, New Aim had insufficient evidence to prove its case and its action was dismissed.
Unlike in some other jurisdictions, experts giving evidence in Australia are not “hired guns”. Experts have a paramount duty to remain independent and assist the courts impartially. While it is not necessarily inappropriate for lawyers to be involved in the preparation of an expert’s report, it is important that dealings between lawyers (and/or clients) and experts are transparent and that all relevant communications are disclosed.
Note: As at the time of writing, this case is under appeal.
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Guy Edgecombe, Partner
Mitchell Byram, Director