Case: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 ; (2001) 52 NSWLR 705
Outcome: discussed
That leads to the next basis of objection, that there has not been laid out a sufficient body of reasoning and assumptions to ground the admissible reception of the evidence. It is necessary to be clear about the legal framework in which I am dealing with this question. I begin with the judgment which I wrote in 2003, not because of any reason other than that it is a convenient starting point. In Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 171 , at [68] and following, I said some things about expert evidence. It is important to understand the context of what I wrote, as it is always important to understand the context of the reasons of judges. As can be seen from a discussion of the subject of the objection in that case (and once again with respect to the author of it, who is identified in that case) the expert report was a complete muddle of fact, assertion and opinion that was grounded in common sense only, if that, and with some very minor body of expert opinion sprinkled through over 300 paragraphs. It reflected a trend which is, probably since Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 ; (2001) 52 NSWLR 705 and HG v The Queen [1999] HCA 2 ; (1999) 197 CLR 414 and other cases, somewhat on the wane, of throwing together litigation support reports and tendering them to judges on the basis that the discursive opinions of former auditors and accountants about how damages should be assessed in any particular case should be given weight. That was what I was dealing with: It was that kind of muddled interweaving of argument, fact and assumption with any relevant accounting expertise camouflaged to the point of being unfathomable. This is a somewhat different case. The affidavit of Mr Stokoe does not suffer from that kind of admixture of material, and it was in that context that I said what I did, and from a full reading of HG v The Queen [1999] HCA 2 ; 197 CLR 414, though not a commercial case, it can be seen that it was that very kind of context and problem that the Chief Justice was dealing with in the clear language which he used in that case. 33 In Ocean Marine Mutual Insurance Association v Jetopay [2000] FCA 1463 ; (2000) 120 FCR 146, the Full Court of the Federal Court dealt with the question of the content of an expert report. The matter is conveniently dealt with in Makita [2001] NSWCA 305 ; 52 NSWLR 705, at [86] in which [21], [22] and [23] of the judgment of Black CJ and Cooper and Emmett JJ in Jetopay are set out. Those paragraphs are in the following terms: 21. The primary judge considered that it was permissible to examine the reports and draw inferences from the form and contents of them. His Honour considered that it was permissible to take into account: &#8226; the factual context in which a report was produced; &#8226; the description and designation of the person making the report; &#8226; the contents and language of the report and the nature of the assertions made in it; &#8226; the form of the report; &#8226; the expressed qualifications of the person making it as set out in the report. 22. However, it is not permissible to conclude from those matters alone that an author of a report has any specialised knowledge, except to the extent that the report states (or it otherwise appears from admissible evidence) what that knowledge is. Nor is it permissible, by reason of those matters alone, to conclude that any specialised knowledge that the author of a report has is based on any training, study or experience of the author. Thus, it is not permissible to conclude, simply because a person expresses an opinion on a particular subject, referring to particular technology, that that person has any specialised knowledge in relation to that subject. There must be specific evidence as to specialised knowledge of the person in relation to that subject and as to the training, study or experience upon which that specialised knowledge is based. 23. The further requirement that an opinion be based on specialised knowledge would normally be satisfied by the person who expresses the opinion demonstrating the reasoning process by which the opinion was reached. Thus, a report in which an opinion is recorded should expose the reasoning of its author in a way that would demonstrate that the opinion is based on particular specialised knowledge. Similarly, opinion evidence given orally should be shown, by exposure of the reasoning process, to be based on relevant specialised knowledge. [emphasis in original] 35 In 2001, the New South Wales Court of Appeal in Makita [2001] NSWCA 305 ; 52 NSWLR 705 dealt with the question of the admissibility of expert evidence. Relevantly, Priestley JA expressed his conclusions at page 707 in short form. His Honour agreed with the orders proposed by Heydon JA (as his Honour then was). Powell JA dealt with the expert evidence in his own way, by examining the expert evidence and concluding that as to the value which might properly be attributed to Professor Morton's report, he was led to the conclusion that the respondent at the trial failed to make out an essential element, namely, that the stairs were slippery. Powell JA also agreed with the orders of Heydon JA. 38 The matter then returned to the Federal Court in Red Bull 55 IPR 354. Makita [2001] NSWCA 305 ; 52 NSWLR 705 was the subject of consideration by the Full Court. There were two judgments, one of Branson J, the other of Weinberg and Dowsett JJ. Branson J reiterated her views in Quick v Stoland 87 FCR 371, and in [14]-[17] made the following relevant comments upon Makita : 14. However, if Heydon JA, in the paragraph set out in [6] above, intended to use the word "sure" in its usual sense of subjectively certain, I respectfully disagree with the view that when determining the admissibility of evidence of an expert opinion (perhaps more accurately, a purported expert opinion), it is necessary for the court to be " sure whether the opinion is based wholly or substantially on the expert's specialised knowledge ". The test is whether the court is satisfied on the balance of probabilities that the opinion is based wholly or substantially on that knowledge (s 142 of the Evidence Act ). However, as identified in [12] above, satisfaction of that test is not sufficient to render the evidence of the expert opinion admissible. To be admissible the evidence must also be relevant. It is the requirement of relevance, rather than the requirement that the opinion be based wholly or substantially on the expert's specialist knowledge, that, as it seems to me, most immediately makes proof of the facts on which the opinion is based necessary. If those facts are not at the close of trial proved, or substantially proved (see Paric v John Holland (Constructions) Pty Ltd [1985] HCA 58 ; (1985) 59 ALJR 844 at 846), it is unlikely that the evidence, if accepted, could rationally affect the assessment of the probability of the existence of the fact in issue in the proceeding to which the evidence is directed. 15. A ruling on the admissibility of the evidence of the expert opinion is, however, likely to be required before the end of the trial. The possibility that a determination of relevance might need to be made before the court has made other relevant findings is recognised by s 57 of the Evidence Act . Section 57(1) provides: "(1) If the determination of the question whether evidence adduced by a party is relevant depends on the court making another finding (including a finding that the evidence is what the party claims it to be), the court may find that the evidence is relevant: (a) if it is reasonably open to make that finding; or (b) subject to further evidence being admitted at a later stage of the proceeding that will make it reasonably open to make that finding." Section 57(1)(b) would appear to authorise the admission unconditionally of provisionally admitted evidence on a standard of proof concerning relevance (ie where it is reasonably open to make the finding) which is even lower than the balance of probabilities. 16. Further, the requirement that an expert opinion be wholly or substantially based on the witness's specialised knowledge is not, in my view, intended to require a trial judge to give meticulous consideration, before ruling on the admissibility of the evidence of the opinion, to whether the facts on which the opinion is based form a proper (in the sense of logically or scientifically or intellectually proper) base for the opinion. Were the position otherwise the smooth running of trials involving expert evidence could be expected to be interrupted by the need to explore in detail, in the context of admissibility, matters more properly considered at the end of the trial in the context of the weight to be attributed to the evidence. It is sufficient for admissibility, in my view, that the trial judge is satisfied on the balance of probabilities on the evidence and other material then before the judge that the expert has drawn his or her opinion from known or assumed facts by reference wholly or substantially to his or her specialised knowledge. In many cases the relevant evidence and other material that will be before the judge at the time that the judge is required to rule on admissibility will extend little, if at all, beyond the purported expert's affidavit or report or, where only oral evidence is intended to be adduced, the earlier oral evidence of the witness and the form of the question to which objection has been taken. In the Federal Court, the usual practice of requiring expert evidence to be reduced to writing, together with the Guidelines for Expert Witnesses referred to in [13] above, will generally ensure that there is sufficient material before the judge to enable the judge to form a view, on the balance of probabilities, (albeit, in the context of the trial as a whole, a provisional view) as to whether an opinion is wholly or substantially based on the witness's specialised knowledge. In most other jurisdictions there are now comparable equivalent rules or guidelines. 17. Evidence later adduced, most likely in cross-examination, might reveal that an opinion proffered in an affidavit or report is not wholly or substantially based on the witness's specialised knowledge, or that the expert made an error (whether of logic, science or otherwise) in the process of reaching his or her opinion. While that evidence might be relevant to admissibility in a hypothetical sense, it would not, of itself, demonstrate error in the earlier ruling that the affidavit or report be received in evidence. The correctness of that ruling is to be judged by reference to the relevant evidence and other material before the judge at the time of the ruling. The evidence might, however, be of crucial importance with respect to the weight to be accorded the opinion at the end of the day. 39 Weinberg and Dowsett JJ also addressed the question of Makita [2001] NSWCA 305 ; 52 NSWLR 705 from [84] and following in the section of their judgment dealing with the admissibility of Dr Beaton and Ms Strachan's evidence. It should be said that in Red Bull 55 IPR 354, the matter was different from that which lies before me here, in that the evidence, unlike the evidence today, went in at trial without objection. 40 In the helpful judgment, if I may respectfully say so, of Sundberg J in Neowarra v State of Western Australia [2003] FCA 1399 ; (2003) 134 FCR 208, his Honour discussed the course of this authority under the heading "The Basis Rule". He concluded from these authorities that the basis rule does not feature in section 79 of the Evidence Act , and cites and follows, as his Honour was required to, and as I am required to, the Full Court authority of this Court in Quick 87 FCR 371 and Red Bull 55 IPR 354. His Honour noted the views of Heydon JA in Makita [2001] NSWCA 305 ; 52 NSWLR 705 [85] and the views of the Full Court in Red Bull 55 IPR 354. The reality is that, subject to one matter to which I will come, if there be any difference, as I think, strictly speaking, there is, between the approach taken by Heydon JA in the Court of Appeal and the Full Court of this Court, I must follow the Full Court of this Court. 41 In Australian Securities and Investments Commission v Rich (2005) 54 ACSR 326 at [85] [137], Spigelman CJ dealt with the issue. The Chief Justice discussed, but did not disagree with, the approach of Heydon JA in Makita . 42 In BHP Billiton Iron Ore v National Competition Council (2007) 162 FCR 234, the Full Court of this Court once again returned to the issue. At [185] in the reasons of Greenwood J, with which Sundberg J agreed, his Honour dealt with the whole question of expert evidence as follows: The appellants contend on appeal that the evidence of the economic experts is inadmissible as irrelevant. The evidence was admitted on the basis of contextual elaboration of the extrinsic material. The evidence is relevant if it is evidence that if accepted could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding ( Evidence Act 1995 (Cth), s 55(1)). Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed (s 76(1)) although, if a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge (s 79). The normal role of an expert is to give an opinion based on clearly identified facts ( Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 ; (2001) 52 NSWLR 705), almost invariably assumed to be the facts, on the footing that those facts provide a proper foundation for an opinion within the demonstrated discipline or field of specialised knowledge of the expert witness. Although s 79 of the Evidence Act seems to operate on the footing that the opinion of a person wholly or substantially based on specialised knowledge is not precluded by s 76(1) in the absence of proven foundation facts ( Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 [10]; Neowarra v Western Australia (No. 1) [2003] FCA 1399 ; (2003) 134 FCR 208), little or no weight will be given to such an opinion ( Ramsay v Watson [1961] HCA 65 ; (1961) 108 CLR 642) although the central point may simply be the question of admissibility, not weight ( HG v R [1999] HCA 2 ; (1999) 197 CLR 414 at [39] [44]; Trade Practices Commission v Arnott's Ltd (No. 5) (1990) 21 FCR 324 at 327-330). That question does not arise here. In this case, the experts did not seek to offer an economic opinion related to disputed or undisputed facts probative of a matter in issue. They sought to offer an historical or contextual explanation as an elaboration of extrinsic material going to Part IIIA of the Act. It is difficult to see how that evidence is truly admissible except perhaps in that unusual category of 'expert non-opinion evidence' descriptive of a relevant element of the economic discipline concerning the evolution of economic concepts of access to natural monopoly infrastructure, without offering any opinion about facts in issue. In any event, the material is capable of being received by the court and considered by force of Order 10, rule 1(2)(j) of the Federal Court Rules , by way of a submission rather than admissible evidence. 44 Whether or not the reasoning is fully and completely expressed, in my view, is debatable. Mr Catterns put the proposition that he had satisfied even the Makita [2001] NSWCA 305 ; 52 NSWLR 705 test. I am not prepared to accede to that, but for present purposes it probably does not matter. The weight that ultimately will be given to this opinion, in circumstances where the respondent calls people who were actively involved in decisions to buy particular goods in the relevant period, who give evidence as to what they would have done, faced with the choice in question, may be another matter. However, in my view, looking at the material in the whole of the context of the affidavit, I am satisfied that the opinions given are ones that can legitimately be given from a base of specialised knowledge that Mr Stokoe has and thus are admissible. 45 The question then arises, based on all the material that has been argued, as to whether I should reject the evidence based on s 135 of the Evidence Act , which is in the following terms: The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party; or (b) be misleading or confusing; or (c) cause or result in undue waste of time. 46 This is not, as I said earlier, a case of hopelessly muddled or confused evidence where parties have no idea where to start in relation to the admixture of fact, opinion and assertion. It seems to me fairly plain from Mr Stokoe's evidence that he is putting the proposition that, faced with the advantages of his company's invention, the vast majority of customers would have been driven to the choice of the Gambro machine. Whether or not that opinion is likely to withstand the winds of cross-examination is something that will need to await the cross-examination. However, I think the reasoning process is tolerably clear; whether it is tolerably adequate in terms of the acceptance of the proposition that Mr Stokoe is seeking to put may be another.