Introduction

In this Update we look at a recent Victorian Supreme Court decision regarding expert evidence.[1]

Background

Dura agreed to build 29 apartments for Hue under an AS2124 contract for $8.45 million.  Dura commenced works in October 2004.  The project was anticipated to take 70 weeks but fell into delay.  Hue became concerned about the delays and about defective workmanship.  It raised concerns about the amounts of progress payments Dura had requested and been paid.  A dispute ensued and ultimately in September 2006, Hue served notices to show cause as to why it should not terminate the contract.  Hue then terminated Dura’s contract and engaged others to complete the works.

When Hue’s subsequent contractors began the completion works, they found that some of Dura’s concealed work was also defective and required demolition.  The project was eventually completed in January 2008.  The parties entered litigation.

Experts engaged

Both sides engaged experts to give opinions as to various aspects of the dispute. Expert opinion frequently assists the Court in determining issues of a technical nature. However, opinions of experts can be inadmissible in evidence when certain tests imposed by the law are not met.

In this case, the experts gave conflicting opinions on:

  • the amount of defective work identified prior to termination of the contract;
  • the amount of defective work identified after termination;
  • whether Dura’s claims for extensions of time (EOT) should have been granted by Hue; and
  • whether Dura’s claims for variations should have been approved by Hue.

Evidence at trial

In general a Court will only accept evidence from witnesses with first hand knowledge of a relevant issue.  Courts can make an exception to this general rule for expert witnesses who are then entitled to give their opinions as to matters in dispute.  Courts expect experts to give impartial and balanced opinion and rules have developed to attempt to exclude unsuitable expert evidence.

Considerations for expert evidence

In this case, the Court outlined four such rules (one of which is in three parts) that it required to be met before allowing expert evidence to be admitted:

  1. Is the opinion relevant? (relevance rule)
  2. Does the witness have properly based ‘specialised knowledge’? (the expertise rule)
  3. Is the opinion ‘wholly or substantially based’ on specialised knowledge? (the expertise basis rule)
  4. Is the opinion ‘wholly or substantially based’ on assumed or observed facts that have been or will be proved at trial? (the factual basis rule)  In particular:
    1. Are the facts and assumptions on which the opinion is founded disclosed? (the assumption identification rule)
    2. Is there evidence to prove the assumptions? (the proof of assumptions rule)
    3. Is there a statement of reasoning showing how the facts and assumptions relate to the opinion?

The “rules” outlined above have both statutory and common law support and are not new.  Identical or similar tests are applied by courts in other jurisdictions.

Irrelevant evidence

Dura sought to lead evidence from Mr M, an expert in construction defects.  His evidence was that the rework performed by Hue’s new contractors after the termination of the Dura contract was also defective in that it did not comply with accepted industry tolerances.  Dura said that this evidence demonstrated that Hue’s demolition of its earlier work was “wrongful”.  The Court found that Mr M’s evidence was not relevant to the issue and it was not admitted.

Lack of specialised knowledge

Dura also sought to lead programming evidence from Mr B in an effort to justify its claims for EOTs.  Hue said that Mr B was not an expert in programming.  Mr B’s reports did not include details of any specialised knowledge.  His CV was updated and specially printed for his report but it said nothing of education, training or experience in construction programming.

In order to decide on whether to admit his opinion in evidence, Mr B was allowed to give oral evidence of his over 30 years’ experience as a building consultant and expert witness in court proceedings and arbitrations.  Mr B had worked principally in disputes over defective work.  During his final year of his Bachelor of Building he studied construction programming but had not practised in this field.  Mr B had used programming in some personal residential building projects and had been required to investigate a programming issue for the purposes of giving expert evidence on about half a dozen occasions over the last 15 years.  These were mostly residential projects, with one commercial project similar in size to this project.  On that matter, he prepared a report but the dispute settled prior to trial.

The Court ruled that his programming evidence was inadmissible.  The Court said that his evidence was:

ultimately an exercise in putting through the mouth of an apparent expert the inferences and hypotheses on which Dura advanced its position. Experts who permit a commitment to the cause of their instructing party to overshadow their commitment to the Expert Code of Conduct do not ultimately serve that party’s cause.

The Court said that Mr B did not have a basis of specialised knowledge that permitted an independent appreciation of the processes and practices of proper construction programming.

Other reports inadmissible

Dura also led evidence from Mr L, an expert building consultant whom the Court found to be suitably qualified and experienced.  Mr L had prepared five reports on the alleged defects.  Each was deemed inadmissible by the Court for differing reasons.  The second and third reports detailed the status of the works at the times of inspection, including descriptions accompanying photographs but contained no opinion and were therefore inadmissible.  The fourth and fifth reports were inadmissible as they dealt with the standard of the remedial work performed by others and therefore were irrelevant.

The first report contained opinion as to the defective work observed at the first inspection, however it too had failings.  Mr L failed to disclose in it what contract documents Dura had provided to him.

When cross-examined, he conceded that he did not have the contract, any of the drawings, the specifications, the visual audit report, the underlying works report, nor the reports of the experts he met in conclave.  The report was inadmissible due to having inappropriate factual bases.

Two other expert costing reports tendered by Dura were also found inadmissible for similar reasons.  In the end result, Hue was successful at the trial and was awarded over $4.5m on its counterclaim.

Conclusion

Dispute resolution can be assisted by expert evidence, but it is essential that any expert opinion relied upon is going to be admissible in evidence if the matter finally heads to court.

Expert opinion may not be admissible if the four “rules” are not met.  If a party’s expert evidence is deemed inadmissible during the trial, the outcome may well be an adverse decision.

A party’s lawyers should instruct any experts and should take a leading role in ensuring that an appropriate expert is properly instructed.  All the expert’s assumptions should be listed in the report and the lawyer should check that each will be made out at trial.

Lawyers with relevant experience in the field of the dispute are likely to be familiar with the expert’s stated assumptions and more readily able to identify any issues.

Contributor:

Tom Grace

 


[1]Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No. 3) [2012] VSC 99.