New Aim Pty Ltd v Leung [2022] FCA 722 is the latest case from the Federal Court to discuss in detail the responsibilities of lawyers and experts to adduce drafts of their reports and accounts of report drafting processes. While lawyers are expected to participate in the settling of expert reports (see our blog post), this matter demonstrates circumstances of lawyer-expert collaboration that necessitate additional assurances of expert witness independence and impartiality.

Background

New Aim Pty Ltd (the applicant), an Australian e-commerce business, alleged that several of its former employees (the respondents) had shared identity and contact details of its Chinese suppliers, which the applicant identified as confidential information.

The applicant claimed that the respondents had breached their equitable duties and duties under section 183 of the Corporations Act 2001 (Cth) not to disclose that confidential information.

Expert Evidence

New Aim engaged two expert witnesses to prove that the contact details of reliable suppliers of high-quality goods in China were widely considered in the e-commerce industry to be confidential and highly valuable.

One of the applicant’s experts had begun communicating with her instructing solicitors several weeks prior to receiving a letter of instruction. During this period, emails between the applicant’s solicitors and the expert clearly established that the solicitors had authored a draft of the expert report with the expectation that the expert would review it as a draft of her own written expert testimony.

The applicant’s solicitors’ involvement in preparing and finalising the expert’s report led the court to question whether:

• that involvement was permissible guidance as to form and the requirements of the Evidence Act or constituted impermissible influence as to the content of the report;
• the preparation and delivery of the expert’s report was purposefully misleading;
• the applicant’s failure to disclose the methodology of the report substantially undermined the expert’s obligation to be impartial; and
• the whole of the expert’s evidence, including that adduced in cross-examination, should be rejected.

Lawyer-Drafted Reports

When considering these questions, McElwaine J had regard to the Federal Court of Australia Expert Evidence Practice Note (GPN-EXPT) and the relevant authorities addressing a lawyer’s involvement in the preparation of an expert report, including Harrington-Smith on behalf of the Wongatha People v State of Western Australia (No 7) (Harrington-Smith).[1]

In Harrington-Smith, Lindgren J noted that:

“… the distinction between permissible guidance as to form and as to the requirements of … the Evidence Act, on the one hand, and impermissible influence on the other hand, is not too difficult to observe”.[2]

There is a vast difference between a legal advisor making suggestions as opposed to seeking an expert witness to give an opinion “influenced by the exigencies of litigation” or which is “not an honest opinion” that the expert holds or is prepared to adopt. Lawyers have a proper role to perform in the preparation of an expert report, “so long as no attempt is made to invite the expert to distort or misstate facts or give other than honest opinions”. A lawyer’s involvement in the drafting of a report is therefore not in itself unethical, provided it goes to the form and not the substance of the report and allows the expert to maintain the “essential character of independence” required of them.[3]

While the involvement of a lawyer in drafting large portions of an expert’s report is permissible, his Honour stated that the practice nonetheless creates a risk of compromising expert independence that should attract the added scrutiny of the courts. Lawyers’ drafting of the initial wording and style of a report may inherently enable a level of control over the substance of opinions and analysis that undermines the expert’s capacity to present views uninfluenced by preferred case theories.

McElwaine J’s decision makes mandatory in the settling of a report in admissible form by a lawyer (by reason of the expert being unfamiliar with form and content requirements for the report, for example) the disclosure of the lawyer’s role in the report settling process.[4]

Decision – Expert Witness Conduct

McElwaine J identified numerous difficulties with the expert’s report which, when considered individually and cumulatively, led him to conclude that it should be rejected in its entirety.

The first issue concerned the omission by the expert of any mention of the lawyers’ role in drafting the report until cross-examination. McElwaine J did not view the fact that the expert had adopted most of the solicitors’ draft as her own opinion as in itself warranting the rejection of the report or the expert’s claims of independence. However, His Honour did view the lawyer’s role in drafting as sufficiently conducive to a risk of compromising expert independence such that it warranted from the expert an account of her drafting process.

The court framed this disclosure as a necessity by the standards of “good practice” implicit in the Expert Evidence Practice Note and the Harmonised Expert Witness Code of Conduct, which provide that experts should actively pursue impartiality and mitigation of risks to independence:

A party or legal representative should be cautious not to have inappropriate communications when retaining or instructing an independent expert, or assisting an independent expert in the preparation of his or her evidence.[5]

And:

(1) An expert witness has a paramount duty to assist the court impartially on matters relevant to the expert’s area of expertise. (2) This paramount duty to the court, overrides any duty to a party to the proceeding or other person retaining the expert. (3) An expert witness is not an advocate for a party.[6]

(Emphasis added.)

The failure of the expert to disclose in her report her close collaboration with the applicant’s solicitors, details particularly pertinent to the independence and impartiality of the expert’s conduct in the circumstances, was therefore “grossly unsatisfactory”.[7]

The second basis on which McElwaine J rejected the expert’s report was his Honour’s finding that the expert’s conduct demonstrated more than mere inattention to the demands of expert witness impartiality and suggested attempts to mislead the court.

Notably, the expert was aware of the falsity of statements in letters to her instructing her to produce a report, which the expert understood at the time had already been drafted (given her exchange of emails and attendance of conferences with the applicant’s lawyers for the very purpose of the lawyer’s production of her report prior to her receipt of the letter of instruction). His Honour thus found that the letter of instruction conveyed a “false representation” that the expert, acting independently, would commence preparing her report on receipt of that letter.

The expert’s refusal to disclose the fact of this misrepresentation, by excluding lawyers’ drafts of her report from its submission to the court and denying the existence of those drafts at the pre-trial stage, were indicative of the expert’s overall lack of transparency. This disingenuous conduct demonstrated a significant and unambiguous compromise (one that “strikes at the heart”) of expert witness duties to uphold an overriding obligation of impartiality and independence in their assistance of the court emphasised in Expert Witness Codes and Practice Notes.[8]

The expert’s demonstrations of misleading behaviour were therefore sufficiently serious to provoke the court to question the expert’s capacity to provide uncompromised responses in all aspects of her testimony, including even evidence about which sections of the report she had in fact authored. [9] Overall, McElwaine J could be satisfied neither that the opinions expressed in the report represented the honest and independent opinions of the expert, nor that “no matters of significance” had been withheld by the expert. As such, his Honour rejected all opinions and other factual materials set out in the report.[10]

The gravity of the expert’s conduct also led his Honour to carry “no confidence” in the expert’s ability to provide, “credible, untainted and independent [oral] evidence”. McElwaine J subsequently rejected all of the expert’s evidence from cross-examination.

As a result of the expert’s evidence being excluded in its entirety, New Aim was unable to support its claims for the misuse of information and breach of confidence against the respondents, and the claim was dismissed.

Takeaways

• While lawyers should be involved in the writing of expert reports, any such involvement will attract the added scrutiny of the court, through an assessment of whether that involvement goes beyond what is accepted as permissible guidance as to form and compliance with evidentiary and procedural requirements. The precise contributions and roles of a lawyer in the drafting of a report, and any oral advice conveyed to the expert, should be documented, and disclosed.[11]
• Standards of expert independence and impartiality apply not only to the content of expert reports, but also to the conduct of experts. The failure by an expert to show more active attempts to remain impartial and transparent may lead courts to reject expert evidence based on the appearance of the compromised behaviour or character of the expert alone (i.e. without detailed consideration of the substance of the expert report itself). An obvious and simple way for experts and lawyers to demonstrate proactive attempts to protect the independence of experts and their impartial assistance of the court is to disclose any conduct or interactions in which the expert engages that might appear to the court to undermine the expert witness’s duties.

 

This case is now the subject of an appeal to the Full Court of the Federal Court.

 

[1] [2003] FCA 893; 130 FCR 424.

[2] [2003] FCA 893; 130 FCR 424 at [27].

[3] [2003] FCA 893; 130 FCR 424 at [67] citing Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; 199 CLR 270 per Callinan J at [279].

[4] [2003] FCA 893; 130 FCR 424 at [71].

[5] Ibid citing cl 3.2, Expert Evidence Practice Note.

[6] [2003] FCA 893; 130 FCR 424 at [72] citing cl 2, Harmonised Expert Witness Code of Conduct.

[7] [2003] FCA 893; 130 FCR 424 at [71].

[8] [2003] FCA 893; 130 FCR 424 at [74].

[9] [2003] FCA 893; 130 FCR 424 at [70].

[10] [2003] FCA 893; 130 FCR 424 at [77].

[11] [2003] FCA 893; 130 FCR 424 at [76].