Full Federal Court Takes ‘New Aim’ at Experts: Appeal Decision Handed Down in New Aim Pty Ltd v Leung [2023] FCAFC 67

The Full Court of the Federal Court of Australia handed down its appeal decision on 10 May 2023 in New Aim Pty Ltd v Leung [2023] FCAFC 67 (Appeal). A five judge panel presided over the Appeal and ultimately found in favour of the Appellant, New Aim Pty Ltd, including in relation to appeal ground 12 which contended that the primary judge erred in rejecting the entirety of the written and oral evidence of New Aim’s expert at trial, Ms Chen.

The Appeal contains notable commentary on the obligations which are imposed on Australian solicitors when retaining and working with expert witnesses and the source of those obligations.

Background

At trial in New Aim Pty ltd v Leung [2022] FCA 722, Justice McElwaine of the Federal Court found that New Aim failed to establish each of its claims and dismissed the proceeding. In doing so, Justice McElwaine rejected Ms Chen’s expert report in its entirety. One key detail which was queried at trial was the fact that Ms Chen’s expert report comprising 60 paragraphs and 16 pages was said to have been prepared by her within 24 hours of receiving a formal instructions letter from New Aim’s solicitors. Aspersions were cast as to the role of New Aim’s solicitors in the preparation of Ms Chen’s report.

His Honour was critical of the manner in which the expert witness was retained, stating at [76] that “what occurred in this case went far beyond the permissible scope of involvement of lawyers who retain an independent expert in order to give evidence in a proceeding”.

Appeal findings

The Appeal was successful and the Full Court ordered a retrial before another single Federal Court justice. In relation to appeal ground 12 regarding Ms Chen’s expert report, the Full Court made a number of comments around the obligations solicitors have when retaining and communicating with expert witnesses.

The Full Court took a somewhat less proscriptive stance regarding the obligations imposed on solicitors when retaining and working with expert witnesses. Their Honours found at [112] of the Appeal:

“The majority of [Ms Chen’s] report was factual in nature, describing ChinaDirect’s business and processes… There was no separate explanation given for why the factual material (in paragraphs 1 to 55) was rejected. The drafting of written evidence of a factual nature from a statement or other material provided by a witness is far from unusual”.

Their Honours went onto say at [121] of the Appeal:

“The primary judge observed at [76] that, if legal practitioners are involved in the drafting of an expert report that fact must be disclosed in the expert report. This may well be desirable, forensically or otherwise, but there is no legal obligation as such to do so. Whether there is an ethical obligation to do so depends on the particular circumstances”.

Their Honours found that different scenarios can call for slightly different approaches when it comes to corresponding with expert witnesses, stating at [120] of the Appeal that “there is no one rule or practice which covers all experts or all situations”.

In terms of the 24 hour timeframe between the letter of instruction being sent to the expert to the report being finalised by Ms Chen, this was of less concern for the Full Court. Their Honours found at [87] of the Appeal judgement that “it is not unusual for a final letter of instructions, containing the final form of the questions to be answered by an expert, to be prepared shortly before an expert report is finalised”.

Despite these opinions diverting from the findings of the trial judge, the Full Court agreed at [89] of the Appeal judgement with what they viewed as Justice McElwaine’s “core point”, namely “…that the process [in retaining expert witnesses and drafting reports] should be transparent so that what has occurred is clear”.

Conclusion

Although their Honours agreed with the trial judge that transparency is key when retaining and corresponding with experts, the Full Court found that the approach taken by the solicitors for New Aim in retaining Ms Chen and contributing in drafting the report were not impermissible or in breach of their various obligations.

The Full Court preferred a less restrictive approach which recognised that the manner in which solicitors retain different types of experts ought to differ at times depending on the circumstances and the type of expert evidence in question. Further, a distinction can be made between factual material in expert reports and the part of the evidence that is opinion evidence.

It will be interesting to see what another Federal Court justice makes of Ms Chen’s expert report and how it was drafted when the retrial takes place.

By Patrick Sands and John McLellan