Civil Procedure Amendment Bill 2012 - costs disclosure and expert evidence

The Civil Procedure Amendment Bill 2012 was recently introduced into the Victorian Parliament by Attorney-General Robert Clark and is currently being considered by the lower house. The Civil Procedure Amendment Bill 2012 is an amendment to the Civil Procedure Act 2010.

The explanatory memorandum of the Civil Procedure Amendment Bill 2012 notes that it is being introduced to give additional powers and discretions for the Courts in relation to costs disclosure and expert evidence:

The Civil Procedure Amendment Bill 2012 amends the Civil Procedure Act 2010 to introduce specific powers and discretions for the courts in relation to costs and expert evidence, to amend and create greater flexibility in the overarching obligations and proper basis certification requirements and to make other technical amendments.

The Bill aims to reduce costs and delays for persons involved in civil litigation in Victoria, and improve the effectiveness of the civil justice system. The Bill builds on the foundation established by the Civil Procedure Act 2010 in seeking to give judges and magistrates a clear legislative mandate to proactively manage cases in a manner that will promote the just, efficient, timely and cost-effective resolution of the real issues in dispute in a civil proceeding.

Part 2 of the Civil Procedure Amendment Bill 2012 gives the Court power to require costs disclosure to a lawyer's own client, and expands the type of costs orders which are able to be made:

Disclosure of litigation costs by a lawyer to his or her client is critical for informed decision-making. The Bill gives the courts a discretionary power to order that a lawyer make costs disclosure to the lawyer's own client. The order may be made at any stage of the proceeding. This will allow the courts, in appropriate cases, to increase the parties' access to information in relation to actual and estimated costs and disbursements incurred prior to trial, thereby encouraging more informed decision-making and the settlement of appropriate cases. 

The Bill also clarifies and strengthens the courts' discretionary power to make other costs orders aside from the usual order that the losing party pay the winning party's costs. The Bill provides that the court may make any costs order that it considers appropriate to further the overarching purpose. Specific powers include ordering costs as a lump sum figure instead of taxed costs, ordering a party to pay a proportion of costs or fixing or capping recoverable costs in advance. Such orders avoid or narrow the scope of a taxation of costs. The objective is to increase the use of other costs orders in appropriate cases, thereby reducing the complexity, time and cost associated with taxation. Orders may be made in relation to any aspect of a proceeding, including, but not limited to, any interlocutory proceeding.

Part 3 of the Civil Procedure Amendment Bill 2012 gives the Court greater power to manage expert evidence, including requiring parties to seek directions if the party intends to adduce expert evidence at trial, ordering conferences and joint reports and limiting expert evidence in Court:

Expert evidence plays a critical role in civil litigation and is often essential to the just determination of an issue in dispute between the parties. However, expert evidence can also be a significant source of expense, complexity and delay in civil litigation. For example, the disproportionate use of expert witnesses has the potential to increase costs and delays for parties and reduce the effectiveness of the civil justice system as a whole. The inherent complexity and volume of expert evidence can also limit its usefulness to decision-makers.

The main objective of the expert evidence provisions is to reduce the costs and delays associated with expert evidence by providing clear legislative guidance and encouragement for the courts to actively manage and control expert evidence. The provisions also aim to improve the quality and integrity of expert evidence and enhance its usefulness to judges and magistrates.

Some of the expert evidence provisions consolidate existing powers of the courts, for example in the rules of court and practice directions. Although the existing powers of the court may be sufficient for the court to give directions and impose reasonable limits on any party in respect of expert evidence, clear statutory provisions will have greater impact in encouraging the courts to actively manage and control expert evidence. This will also resolve any argument about the limits of existing rule-making powers and will overcome any constraints on the exercise of powers that exist at common law.

Finally, the Civil Procedure Amendment Bill 2012 amends the certification requirements, including extending certification to any 'substantive document' that a party relies on (with some qualification).

The expert provisions appear to be detailed and, if the Civil Procedure Amendment Bill 2012 is passed and given Royal Assent, practitioners will need to quickly get up to speed with the detail in the bill. The proposed commencement date is 1 May 2012 or on proclamation.

Expert reports: Makita and Idoport.

Evidence of expert opinion is one exception to the rule that opinion evidence is inadmissible (see s79 Evidence Act). In order for that expert opinion to be admissible, it must qualify as expert evidence under s79, which requires the following:

• the person called as an expert has specialised knowledge;
• that specialised knowledge is based on the person's training, study or experience; and
• the opinion of the person which is adduced in evidence is wholly or substantially based on that knowledge.

The most referenced consideration of s79 is the judgment of Heydon JA (as His Honour then was) in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705. In Makita at the trial level, an employee was suing an employer for injuries resulting from slipping on the employer's stairs. The employee relied on an expert which opined that the tread on the stairs was slippery at the time of the accident. That opinion was based on tests performed more than 9 years after the accident on the stairs. Further, evidence was given that the stairs were used by the employee prior to the accident, and by others at all times, without incident. The Trial Judge admitted the report and, on appeal, the NSW Court of Appeal held that the Trial Judge had erred in accepting the evidence.

At [85] Heydon JA set out a summary of the rules for admissibility of expert evidence under s79, as follows:

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 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 The Queen (at 428 [41]), 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".

In Idoport Pty Ltd & Anor v NAB Ltd & Ors [2001] NSWSC 123 Einstein J considered the admissibility of expert opinion evidence under s79 and referred to extra curial commentary of Heydon JA (as His Honour then was) within a paper delivered at a seminar in 2000 dealing with aspects of the Evidence Act. The commentary, according to Einstein J, 'conveniently identifies and elucidates the relevant requirements under the following 7 headings' (at [10]):

1. There must be a field of specialised knowledge and the witness must identify it. 
2. The witness must have expertise in an aspect of that field, and must identify it. 
3. The opinion proffered must be substantially based on the expertise of the witness and the witness must identify it. 
4. Any factual assumptions underlying the witness's opinion must be clearly identified and articulated. 
5. Any factual observations made by the witness which underly the witness' opinion must be clearly identified and articulated, and the observations must have been sufficiently detailed to form a satisfactory basis for the opinion. 
6. If the witness relies on a combination of factual assumptions and factual observations, they must be identified. 
7. The witness must explain how the knowledge on which the witness is an expert applies to the facts assumed or observations made so as to produce the opinion propounded. 

Both Makita and Idoport are useful in that they provide a fulsome consideration of s79 and the requirements for admissibility. Also, they have handy summaries, which can act as a checklist for submissions on the admissibility of expert evidence.

Expert reports - how important is it that the expert has read the code of conduct?

Rule 44.03 of the Supreme Court (General Civil Procedure) Rules 2005 concerns the instructing of experts to give evidence in a trial, and sets out what matters must be in that expert's report if a party intends to adduce evidence from that expert.

Rule 44.03(1) requires the provision of the Form 44A code of conduct to the expert 'as soon as practicable after the engagement of the expert and before the expert makes a report under this Rule'. Rule 44.03(2)(b) requires the expert, in its report, to acknowledge that he or she has read the code of conduct and agrees to be bound by it.

There seems to be a paucity of authority in Victoria concerning the admissibility of expert reports for failure to read the code before authoring the report. However the New South Wales Supreme Court has dealt with this issue in great detail.

The relevant provisions of the New South Wales Uniform Civil Procedure Rules 2005 provide as follows:

31.23 Code of conduct

(cf SCR Part 39, rule 2; DCR Part 28A, rule 2; LCR Part 38B, rule 2)

(1) An expert witness must comply with the code of conduct set out in Schedule 7.

(2) As soon as practicable after an expert witness is engaged or appointed:

(a) in the case of an expert witness engaged by one or more parties, the engaging parties, or one of them as they may agree, or

(b) in the case of an expert witness appointed by the court, such of the affected parties as the court may direct,

must provide the expert witness with a copy of the code of conduct.

(3) Unless the court otherwise orders, an expert’s report may not be admitted in evidence unless the report contains an acknowledgment by the expert witness by whom it was prepared that he or she has read the code of conduct and agrees to be bound by it.

(4) Unless the court otherwise orders, oral evidence may not be received from an expert witness unless the court is satisfied that the expert witness has acknowledged, whether in an expert’s report prepared in relation to the proceedings or otherwise in relation to the proceedings, that he or she has read the code of conduct and agrees to be bound by it.

The New South Wales rules are certainly more prescriptive than the Victorian Rules when describing the effect of non-compliance on the admissibility of the evidence referred to in the report. However when a Victorian Court is faced with a similar issue of non-compliance, it is likely to be persuaded by the decisions in the New South Wales Supreme Court.

I have included a summary of several matters dealing with this issue below:

• Barak v WTH [2002] NSWSC 649 - an expert was called to give evidence in circumstances where his report did not state that he had read and agreed to be bound by the code of conduct. The expert was cross examined and said he was aware of the code and had read it before making the report and in making the report he sought to comply with the code. Barrett J admitted the evidence stating at [5] 'the intent of the rule of ensuring that only reports by experts who have proceeded in accordance with stated norms of conduct should be relied upon can be seen to be satisfied'.
• Commonwealth Development Bank of Australia Pty Ltd v Claude George Rene Cassegrain [2002] NSWSC 1314 - an expert who had not acknowledged having read or agreed to be bound by the code gave evidence that he adhered to the evidence in his report having regard to the obligations imposed under the code, but there was no evidence that he had read and considered the code before he prepared his evidence. Einstein J rejected the report saying at [5] the 'Expert Witness Code of Conduct was promulgated with the clear intent that only reports by experts who have proceeded in accordance with the stated norms of conduct, should be relied upon and may be admitted into evidence'.
• United Rural Enterprises Pty Ltd v Lopman Pty Ltd [2003] NSWSC 870 - an expert had not been given a copy of the code before preparing his report but was given it when he swore his affidavit. In that affidavit the expert said that his report complied with the code and he undertook to be bound by it. Campbell J pointed to the risk that an expert might form an opinion without appreciating the full extent of his obligations, but might find it difficult to retreat from or qualify that view upon a full consideration of those obligations. Because there was no real risk that the Court would be misled or the opposite party prejudiced, Campbell J admitted the report.
• Investmentsource v Knox Street Apartments [2007] NSWSC 1128 - the defendant sought to rely on a report prepared before the litigation which provided a valuation of a property which was prepared without reference to the code of conduct. McDougall J considered it was a business record under s69 Evidence Act, but that it was excluded under the rules because, amongst other things, the expert did not prepare his report with a conscious appreciation of the obligations imposed by the relevant code of conduct.
• CJD Equipment v A & C Construction [2009] NSWSC 1085 - a report by an expert did not contain an acknowledgement of having read the code, but in a later affidavit of the expert that expert said that the report had been prepared in accordance with the code. McDougall J admitted the report, but warned (at [17]) that the Court was not condoning any practice of ex post facto adoption of the requirements of the code.
• Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 49 - an expert prepared a report which was sought to be tendered in evidence. In the report the expert did not acknowledge the code or agree to be bound by it as the report was prepared before the litigation. Once again referring to quality control issues, Barrett J rejected the report for the particular purpose sought, although the Court partially admitted the report for another limited purpose.

It is likely that a Victorian Court will be guided by s135 Evidence Act 2008 (Vic) when faced with an issue of non-compliance, as there appears to be no express rule dealing with the rejection of expert evidence because of a non-compliant report. The considerations are likely to be those discussed in the New South Wales cases above.

Late service of expert reports - Thomas v Powercor Australia Limited (Ruling No 3) [2011] VSC 391

The matter of Thomas v Powercor Australia Limited (Ruling No 3) [2011] VSC 391 is an application by a plaintiff for the Supreme Court of Victoria to accept an expert report served by the plaintiff on the third day of a trial. The trial concerns the Black Saturday Horsham bushfires and the application was before J Forrest J. The trial commenced on or about 3 September 2011 with the issue of liability concerning a conductor falling from a pole on a power line. 

The plaintiff was required to serve its expert report in April 2011 and the experts were ordered to meet and prepare a joint expert report by late June 2011. On the third day of the trial the plaintiff delivered an expert report. The expert opinion in the report concerned the manner in which a coach screw was fixed to the pole, which was considered to be material to the issues.

The report was rejected by the Court. I have included a case discussion and extracts below.

Waiver of privilege in a pleading - Towercom Pty Ltd v Fahour [2011] VSC 455

The matter of Towercom Pty Ltd v Fahour [2011] VSC 455 was an appeal from an Associate Judge to Macaulay J of the Supreme Court of Victoria. In the proceeding the defendant alleged that the plaintiff caused it loss by selling a property at an undervalue. The defendant sought disclosure of an expert report prepared for the plaintiff. The expert report was said to be the report which arrived at the loss alleged in the statement of claim. The only element from the report that was disclosed in the statement of claim was the loss, being the difference between the sale price and the alleged market value.

The defendant sought disclosure of the report under s26(1) of the Civil Procedure Act 2010 (Vic) (the CPA) and, by reason of the refusal to disclose, sought an order under s29. The plaintiff claimed privilege over the report, but the defendant said that privilege had been waived by inclusion of the loss figure from the report in the statement of claim.

The Court held that the inclusion of the loss figure was not inconsistent with the maintenance of privilege, and therefore declined to order its disclosure. I have included a discussion and extracts of this matter below.

Dasreef Pty Ltd v Hawchar [2011] HCA 21 - expert reports

The matter of Dasreef Pty Ltd v Hawchar [2011] HCA 21 (Dasreef v Hawchar) was an appeal to the High Court in respect of a ruling to admit an expert's report under s79 of the Uniform Evidence Act (the NSW version). The matter is interesting because of the High Court's discussion of the matters which must be demonstrated for expert opinion evidence to be admissible under s79.

I have included a case summary and discussion below.

Samenic Ltd v APM Group (Aust) Pty Ltd [2011] VSC 194 - privilege in an investigator's report

The matter of Samenic Ltd v APM Group (Aust) Pty Ltd [2011] VSC 194 (Samenic) concerned an objection to a subpoena before Mukhtar AsJ of the Supreme Court of Victoria. I have included a summary of Samenic below.

At [1] Mukhtar AsJ set out the question being considered by the Court:

The Prothonotary has referred to the Court for hearing and determination an objection to a subpoena for production of documents. The objection involves something which is not uncommon in litigation where insurers are involved, that is, a litigant trying to get hold of an insurance investigator’s report after an insured incident has occurred. The question on this objection concerns legal advice privilege ― not litigation privilege ― under s 118 of the Evidence Act. Does this subpoena result in the disclosure of the contents of a confidential document prepared by another person (the subpoenaed party) for the dominant purpose of the lawyer providing legal advice to the client (the insurer)?

Expert evidence 104 - loss of legal professional privilege

In my previous post on the topic of expert evidence, 'Expert evidence 103 - Formal report requirements', I noted that when an expert report is relied on and served on the other side, then this usually results in the loss of legal professional privilege (LPP) in the expert report and the instructions to the expert.

Sometimes experts say things in their reports (or drafts of reports) which aren't helpful to your case. In that situation, you may not want to disclose this information. So can you avoid having to disclose certain information from an expert? In this article I discuss LPP in expert reports and when it is lost.

Expert evidence 103 - Formal report requirements

In my previous two posts 'Expert evidence 101' and 'Expert evidence 102' I discussed what expert evidence is and when it is required. When an expert is retained for the purpose of giving an opinion for the trial of a matter, the expert must prepare a report setting out his or her opinion and, if the party retaining the expert is happy with the report, the report is given to the other side in support of that party's case.

So what are the formal requirements for preparing an expert report? Compliance with the formal requirements is crucial for ensuring that the trial of the matter goes smoothly, and that there are no technical objections which could prevent a Court from admitting the report and the evidence of the expert. I have provided a discussion of the formal requirements below.

Expert evidence 102 - when do you need it and why?

My earlier post 'Expert evidence 101 - what is expert evidence' concerned what admissible expert opinion evidence is. But when is it required?

If I have a matter where an owner sues a builder because part of the owner's house which the builder constructed has collapsed, does the owner need an expert to help prove it was the builder's fault? If I have a matter in which a business is claiming lost profit because of negligent investment advice, can the Court work out for itself if the advice was negligent? Can a Court reach conclusions on the loss caused in relation to the above actions without the evidence of an expert?

Expert evidence 101 - what is expert evidence?

Admissible expert opinion evidence is evidence of a person's opinion if that person has specialised knowledge based on the person's training, study or experience, and that opinion is wholly or substantially based on that knowledge (s79 Evidence Act 2008 (Vic)).

This can be broken down into the following three mandatory pre-requisites:

1. the person has 'specialised knowledge';
2. that 'specialised knowledge' is based on 'the person's training, study or experience'; and
3. the opinion is 'wholly or substantially based on that knowledge'.

Privilege, expert witnesses and the Evidence Act 2008 (Vic)

In Roads Corporation v Love [2010] VSC 253 (Love) the Supreme Court of Victoria considered the circumstances in which privilege is wavied when a party communicates with expert witnesses in conference.

In Love, counsel for the applicant sought at the trial to cross examine an expert witness on a document, being an 'agenda' which was prepared for a 2006 conference between the respondent, the expert witness, other expert witnesses and the respondent's lawyers. The 'agenda' suggested that the 2006 conference was called for the purpose of getting the expert witnesses to agree on a crucial issue in the trial. The applicant sought to adduce evidence of what was discussed at this 2006 conference. The applicant also sought to tender several documents relating to a 2004 conference with another expert witness. Both experts were called to give evidence at the trial on behalf of the respondent.