Real world experience trumps reasoning based on academic research

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Australian Securities and Investments Commission v Australia & New Zealand Banking Group Limited (No 2) [2023] FCA 1217


In Australian Securities and Investments Commission v Australia & New Zealand Banking Group Limited (No 2) [2023] FCA 1217, the evidence of an expert with “real world experience” was preferred over that of an expert relying on academic research to form the basis of his opinions.


The Australian Securities and Investments Commission (ASIC) alleged that Australia & New Zealand Banking Group Limited (ANZ) had breached its continuous disclosure obligations under the Corporations Act 2001 (Cth) (the Act) by failing to disclose certain information that a reasonable person would expect, if the information was generally available, to have a material effect on its share price.

Expert evidence

ANZ and ASIC each called one expert witness. The two experts had different backgrounds and areas of expertise.

The experts were required to give their opinion as to whether market participants were aware of certain information as at a particular date, and whether that information was material for the purposes of the relevant provisions of the Act.

Mr P, the expert for ASIC, had extensive experience in advising investors in Australia in relation to share market transactions.

Mr H, ANZ’s expert, had deep expertise in economic and financial matters and had given evidence in many proceedings, including shareholder class actions.

They each prepared a number of reports, and a joint report dated 7 March 2023. There was little agreement between the experts on the issues dealt with in the joint expert report. The experts also gave evidence concurrently during the hearing.

Moshinsky J observed that:

“[B]oth experts gave evidence in a clear and helpful way. I am satisfied that they each expressed their honest opinions on the issues they addressed. Both experts were evidently conscious of their duty to assist the Court and made appropriate concessions.” [305]

ASIC submitted that where the experts’ evidence differed, the evidence of Mr P ought to be preferred, citing ASIC v Fortescue Metals Group Ltd (No 5) [2009] FCA 1586 in which Gilmour J stated at [511]:

“In my opinion the resolution of the question upon an ex ante approach involves a matter of judgment, informed by commercial common sense and, if necessary, by evidence from persons who have practical experience in buying and selling shares and in the workings of the stock market.” [432]

ANZ submitted that the factual premises on which ASIC’s argument was based was misplaced. It argued that the disclosure of the relevant information to market participants would not have had the impact on its shares as alleged by ASIC, and therefore its case should fail.

Mr P’s evidence was informed by his real-world experience over many years advising investors in the Australian share market. His reasons in forming his opinion were clear and logical.

Mr H’s evidence, in part, was informed by academic research. The court was not persuaded that market participants would have conducted the same type of analysis of the incentives of underwriters as conducted by Mr H. Moshinsky J found it unlikely that:

persons who commonly invest in securities (a broad class) would approach the matter in that way. It assumes a level of sophisticated analysis that may be justified in some cases, but is unlikely to be true in general.” [440]

ANZ was ultimately found to have breached its continuous disclosure obligations under the Act.

Key takeaways

  • Experts with different backgrounds and areas of expertise may be asked to opine on the same issue.
  • In this case, the court was required to consider what the expectation of the reasonable person would be in the circumstances. The court of was of the view that an expert with real world experience in dealing with that class of reasonable person was favourable to that of a more academic or theoretical approach.
  • Depending on the issues to be resolved by the court, it may be useful to assess whether an expert’s area of expertise should be considered in light of the factors to be considered by the court when resolving those issues.

Read the full decision here.

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