Chi Building Pty Ltd v Wedgwood

NCAT Appeal Panel|2016-02-23|Before: Compania Naviera J

Solicitor: S Wedgwood (Respondents) File Number(s): AP 15/67975 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 04 December 2015 Before: D Barnetson, General Member File Number(s): HB 15/29312

REASONS FOR DECISION

By Notice of Appeal filed 23 December 2015 Chi Building Pty Ltd (Chi) appeals an interlocutory decision of the Tribunal delivered on 4 December 2015. By such decision, the Tribunal determined that evidence of a building expert, Mr Andrew Connor (Mr Connor), was inadmissible because he had previously, prior to the litigation, assisted Chi and was therefore not independent.

Submissions

The Appeal Panel has heard submissions from both parties at the hearing, and considered written submissions. The Appeal Panel has considered those submissions and we make our findings as follows.

What is an expert?

First, we observe that no objection was taken to Mr Connor on the ground that he did not have the relevant expertise to constitute an "expert". Where a person is called as a witness in any civil proceedings his opinion is admissible on any relevant matter on which he is qualified to give expert evidence.
Traditionally, an expert's opinion was admissible to furnish a Court with scientific information. In Folks v Chadd (1782) 3 Doug KB 157 at 159; 99 ER 589 at 590 the Court found that an expert's opinion is admissible to furnish the Court with scientific information which is likely to be outside the experience and knowledge of a judge or jury.
Naturally, the facts on which an expert's opinion is based must first be established in order that there be a proper foundation for the expert's opinion: see Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 at [85]; also see the discussion in Dule v Johnson (1870) 50 N. Hamp. 454. See also Weal v Bottom (1966) 40 ALJR 436; Clark v Ryan (1960) 103 CLR 486; and R v Silverlock [1894] 2 QB 766 at 771.
If the subject under investigation does not require specialist knowledge, expert evidence will generally be excluded, although a specialist witness may be both an expert witness and a witness of fact: Seyfang v G D Searle & Co [1973] QB 148; 1973 1 All ER 290.

Procedural Direction 3 and the Code

The credentials of Mr Connor not being in issue, the next question is whether any consideration arises which rendered his testimony and/or report inadmissible. The Tribunal relied upon the retainer of Mr Connor prior to the institution of proceedings and Mr Connor's involvement on 29 October 2014 (without prejudice discussions with Mr Robert Wedgwood) and on 29 October (the site meeting with the Fair Trading inspector) to find that such conduct disqualified him from providing evidence. In doing so, the Tribunal said that it relied upon the provisions of the Code.
The relevant provisions of the Code include cll 11-14 that provide: "11. An expert witness has an overriding duty to assist the Tribunal impartially on matters relevant to the expert witness area of expertise. 12. An expert witness's paramount duty is to the Tribunal and not to any party to the proceedings (including the person retaining the expert witness). 13. An expert witness is not an advocate for a party. 14. An expert witness must abide by any direction given by the Tribunal".
According to the transcript of the hearing, the Tribunal, having referred to the requirement that an expert witness is not an advocate for a party (cl 13), then said: "It further states, 'If that requirement cannot be met by the expert, then that expert is not to give evidence or provide an expert report for use in proceedings in the Tribunal'."
In fact, the quotation by the Tribunal is erroneous. The Tribunal has misunderstood cl 9 of the Procedural Direction 3, which in any event does not strictly form part of the Code. The words of the Tribunal, as quoted in the preceding paragraph, are not contained in the Code or elsewhere in the procedural direction. Clause 9 of the Procedural Direction states: "Where an expert is unable to comply with the experts' code of conduct, whether because of conflict of interest or otherwise, the expert is not to give evidence or provide an expert's report for use in proceedings in the Tribunal, unless the expert raises the inability with the Tribunal and the Tribunal expressly permits the expert to give evidence or provide a report".
From cl 9 it can be seen that the prohibition restraining the expert from giving evidence only arises if the expert, not the Tribunal, concludes that, because of a conflict of interest or otherwise, the expert would be unable to comply with the obligations set out in the Code, including those in cll 11, 12, 13 and 14. In those circumstances, the expert can either inform the party by whom he or she is retained of the inability to give evidence or inform the Tribunal and seek the Tribunal's permission to give evidence notwithstanding the conflict of interest or other problem.
It should also be noted that not only can the Tribunal permit the evidence to be given under cl 9, it can also excuse any expert witness or other person from compliance with Procedural Direction 3, including the Code, under cl 3 of the Procedural Direction whether before or after the time for compliance.
Any issue concerning evidence in the Consumer and Commercial Division of the Tribunal also needs to be considered in the light of s 38(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) which expressly provides that the Tribunal is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.
Procedural Direction 3, including the Code, is a procedural direction made by the President of the Tribunal under s 26 of the NCAT Act. Section 26 invests in the President power to make procedural directions and these directions are binding on the Tribunal and the parties and their representatives by operation of s 26(4). Notwithstanding this, for the reasons given above, the Code does not operate in the manner envisaged by the Tribunal at first instance.
The purposes which Procedural Direction 3, and the Code, are designed to serve are indicated by cl 1 of the Procedural Direction which states: "The Tribunal may rely on evidence from expert witnesses to reach a conclusion about a technical matter or area of specialised knowledge that is relevant to an issue to be determined in proceedings. It is important that experts' opinions are soundly based, complete and reliable."
These purposes include assisting parties and their witnesses to provide to the Tribunal, in appropriate cases, soundly based, complete and reliable expert evidence. The purposes do not include establishing a restrictive regime by which expert evidence must be rejected if the expert had some previous involvement with the party by whom the witness is retained.
The Federal Court of Australia has provided useful commentary on expert evidence and the types of obligations included in the Code. The Federal Court has had a Practice Note concerning expert witnesses for some time. The latest version is a Practice Note CM7 "Expert witnesses in proceedings in the Federal Court of Australia" (issued by Allsop CJ on 4 June 2013). That practice note includes what are called "Guidelines", which are similar in substance to the Code included in the Tribunal's Procedural Direction 3.
In Ananda Marga Pracaraka Samgha Ltd v Tomar (No 4) [2012] FCA 385; (2012) 202 FCR 564 (Ananda Marga), the Federal Court considered whether, in analogous circumstances, an expert was prevented from giving evidence because of the existence of the "Guidelines" in the Federal Court's Practice Note. The practice note states, inter alia: "3. The guidelines are not intended to address all aspects of expert witness' duties, but are intended to facilitate the admission of opinion evidence, and to assist experts to understand in general terms what the Court expects of them. Additionally, it is hoped that the guidelines will assist individual expert witnesses to avoid the criticism that is sometimes made (whether rightly or wrongly) that expert witnesses lack objectivity, or have coloured their evidence in favour of the party calling them. Guidelines 1. General duty to the Court 1.1 An expert witness has an overriding duty to assist the Court on matters relevant to the expert's area of expertise. 1.2 An expert witness is not an advocate for a party even when giving testimony that is necessarily evaluative rather than inferential. 1.3 An expert witness' paramount duty is to the Court and not to the person retaining the expert. …"
It can be noted that cll 1.1 to 1.3 include obligations very similar in terms to those found in cll 11 - 13 of the Tribunal's Procedural Direction 3.
In Ananda Marga, objection had been taken to the admission of the evidence of two witnesses on the basis that they were disqualified by a lack of independence. At [31] of the decision, Dodds-Streeton J referred to the observations of Heydon JA (as he then was) in Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305 in which his Honour at [69] noted the observations of Cresswell J in the Ikarian Reefer case (National Justice Compania Naviera SA v Prudential Assurance Co Ltd [1993] 2 Lloyds Rep 68 at 81-82), including the following: "An expert witness should provide independent assistance to the Court by way of objective unbiased opinion in relation to matters within his expertise. An expert witness in the High Court should never assume the role of an advocate".
The Federal Court, critically for the matter before it, and also for the Appeal now before us, stated: "[35] In my opinion, relevant authority establishes that while (as reflected by the Federal Court Practice Note and like curial protocols) objectivity and independence are sought of expert witnesses, such qualities are not preconditions of competence, even in the case of expert witnesses. The sanction for failure to fulfil the obligation imposed by relevant authority and curial protocols is not the exclusion of the expert's evidence, but rather the significant risk that it will fail to persuade".
Dodds-Streeton J, in reaching her conclusion concerning the desirability of independence of an expert witness, referred to authorities such as Lord Wilberforce's dictum in Whitehouse v Jordan [1981] 1 WLR 246 at 256-7; [1981] 1 All ER 267 at 276 that: "It [is] necessary that expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation".
Dodds-Streeton J also referred to a decision of the Victorian Court of Appeal in FGT Custodians Pty Ltd (formerly Feingold Partners Pty Ltd) v Fagenblat [2003] VSCA 33 where Ormiston JA, with whom Chernov and Eames JJA agreed, considered that expert evidence given by a valuer, (who was the brother-in-law of a party, and whose sister allegedly stood to gain if that party succeeded in the litigation), to be undoubtedly relevant, and admissible: see [38]-[45]. These considerations resulted in a finding by Dodds-Streeton J as follows (at [46]): " Protocols or judicial statements requiring independence in expert witnesses thus do not constitute a precondition of competence, but rather, a preferred practice.

Is the expert disqualified?

The Appeal Panel considers that the same principles apply, by analogy, in this appeal as applied in Ananda Marga, namely that the Code does not operate to render Mr Connor incompetent to give evidence or to render his evidence inadmissible. Rather, it will be a matter for the decision maker to determine, following a cross examination of Mr Connor, the weight to be given to his evidence as a consequence of his retainer before the proceedings commenced.
Mr Connor may be a witness of fact, in addition to being an expert witness: he may give evidence of various physical features which he has seen. It is not unusual for an expert to have advised a litigant before commencement of litigation. There is nothing objectionable in such evidence. However, when his oral evidence, or even his report, is to be considered, the decision maker, knowing of Mr Connor's prior involvement, will be alert to the challenges which will no doubt be made to his evidence, namely that he is biased and therefore his evidence should be given little or no weight on the ground that it is biased or incredible.
The fact that Mr Connor may have been an advocate, in a loose sense, for Chi prior to the institution of the proceedings is but a factor for consideration. In Tan Pharmaceuticals Ltd (In Liq) v Selim [2008] FCA 416 Emmett J said: "[29] [I]t is not permissible for [an expert] witness to take over the role of advocate, although a witness having expertise in a particular discipline may have a legitimate role of advocacy in that the evidence given by the witness may include arguments as to the conclusions that can be drawn, and perhaps should be drawn, from the facts that the witness is asked to assume".
Mr Connor has not yet become a witness, let alone "an advocate", in the proceedings before the Tribunal. No oral evidence has been given by him. Should Mr Connor be found to have become "an advocate" before the decision maker, then the decision maker has, as already expressed, the right to give such little weight to Mr Connor's evidence as he or she deems fit. Should Mr Connor be considered to be "an advocate" to such an extent that his evidence is worthless, the evidence could be excluded from further consideration.

Natural Justice

Having made the observation that the Tribunal is not bound by the rules of evidence, it is timely to recall the qualification found in s 38(2) of the NCAT Act concerning the rules of natural justice and the caution suggested by Evatt J in R v The War Pensions Entitlement Appeals Tribunal; Ex parte Bott [1933] HCA 30; (1933) 50 CLR 228. His Honour stated at 256: "But this does not mean that all rules of evidence may be ignored as of no account. After all, they represent the attempt made, through many generations, to evolve a method of inquiry best calculated to prevent error and elicit truth. No tribunal can, without grave danger of injustice, set them on one side and resort to methods of inquiry which necessarily advantage one party and necessarily disadvantage the opposing party. In other words, although rules of evidence, as such, do not bind, every attempt must be made to administer "substantial justice."
As is observed by Aronson and Groves in Judicial Review of Administrative Action (5th Ed), at 581: "Provisions which free a tribunal or other body from the rules of evidence are best regarded as facultative. They are intended to provide procedural flexibility but not to displace logic or reasons. A decision-maker freed from the rules of evidence must therefore still consider whether the material it can consider should in fact be considered. The litmus test is usually whether the material is rationally probative. It follows that provisions which free tribunals from the rules of evidence do not allow decision-makers to 'draw inferences or jump to conclusions, which the available material did not adequately support'."
Consistent with such observations, the Tribunal has adopted the basic common law principles with regard to the essential characteristics of adversarial litigation, including principles regarding the requisite standard of proof and the need for a litigant to discharge the burdens of proof. The Appeal Panel accepts the appellant's submission that the Tribunal's practices concerning the admission of expert evidence should not be more restrictive than the accepted court procedures where the rules of evidence apply. To do otherwise could deprive the Tribunal of evidence which would assist it in reaching a determination of the issues before it.
We consider that there could be said to be a denial of natural justice if the expert evidence was rejected on the grounds stated by the Tribunal: see Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153. In this decision, the NSW Court of Appeal found that the rejection of expert evidence was erroneous in similar circumstances to those arising in this appeal. As Ipp JA said at [219]: "Essentially, these matters went to weight, and not admissibility, and in my view, his Honour, with respect, erred in coming to the contrary view."
Beazley JA at [48] said: "A substantial wrong or miscarriage of justice was occasioned by the rejection of Dr Varnava's evidence, at the least, and there should be a new trial as to negligence."
See too Li v R [2003] NSWCA 290; 139 A Crim R 281, a decision of the NSW Court of Criminal Appeal, referred to by the Court of Appeal in Stamoulis at [217]. That decision considered whether the potential bias of an expert was a matter going to weight or to admissibility of evidence. Ipp JA, with whom Whealy and Howie JJ agreed, stated that: "the risk of bias (unconscious or otherwise) is not reason not to admit evidence of an expert".
His Honour referred to FGT Custodians Pty Ltd v Fagenblat; Collins Thomson v Clayton [2002] NSWSC 366, and Kirch Communications Pty Ltd v Gee Engineering Pty Ltd [2002] NSWSC 485 as authorities for that proposition, and also referred to a paper delivered by Heydon J entitled Comments on May LJ's Paper at the Supreme Court Conference on 22 August 2003. Similar observations have been expressed by the Appeal Panel: see Grozdano v N & T Buildings Pty Ltd [2015] NSWCATAP 107 at [42], [46]; El Hage v Ayoub Design & Construction [2004] NSWCTTT 96; J and S Zuvela Pty Ltd v Bindleys Concreting Pty Ltd [2010] NSWCTTT 501.
We are satisfied that the exclusion of the evidence in the absence of a valid reason could be said to constitute a denial of natural justice or a failure to accord procedural fairness.
Finally, we note that the position in Li and Stamoulis is also supported by one of the authorities relied on by the respondent: Knight v Oztrack Pty Ltd [2015] NSWCATAP 119. In that case, the appellant's expert had written correspondence on behalf of the appellant requesting the issue of a summons and complaining about an earlier grant of leave to be legally represented to the respondent. The Tribunal itself raised doubts about the expert's independence. As the hearing progressed, it became clear that the expert was acting both as an expert and as a McKenzie friend to the appellant. The Tribunal in its decision preferred the evidence of the respondent's expert, given its misgivings about the objectivity of the appellant's expert. On appeal, the Appeal Panel relevantly concluded: 15. The role of an expert witness is to assist the tribunal in understanding evidence or factual material which is more complex than a layperson can ordinarily understand without the expert's specialist knowledge and experience being brought to bear. As the Practice Direction states, the expert's overriding duty is to assist the Tribunal impartially and not to act as an advocate for a party. Where, as in this case, the conduct of the expert raises concerns about their impartiality, it is open to the Tribunal to determine what if any weight to give to their opinion. 16. The Reasons reveal that while the Tribunal had misgivings about the evidence given by [the expert] it nonetheless considered that evidence. The Tribunal was not obliged to accept that evidence and did not err in finding that [the expert] was not impartial and on that basis deciding to give his opinion lesser weight. (emphasis added)

Other

There is one other matter to consider. In their written submissions, the respondents submit that no decision, as defined in s 5 of the NCAT Act, had been made. Implicit in the submissions, although not articulated, is the suggestion that appeal was incompetent on that basis.
Section 5 provides: 5 Meaning of "decision" (1) In this Act, "decision" includes any of the following: (a) making, suspending, revoking or refusing to make an order or determination, (b) giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission, (c) issuing, suspending, revoking or refusing to issue a licence, authority or other instrument, (d) imposing a condition or restriction, (e) making a declaration, demand or requirement, (f) retaining, or refusing to deliver up, an article, (g) doing or refusing to do any other act or thing.
The respondents submit that the Tribunal made a ruling, alternatively a finding, neither of which falls within s 5 of the NCAT Act. The respondents submit that "if we accept that a ruling or finding might result in any of sub-paragraphs (d)-(g), none of these are evidence from the Transcript after the Member made the ruling and delivered the finding".
In our view, the ruling made by the Tribunal, namely that Mr Connor could not act as an expert witness for the appellant, was clearly a decision refusing to give "approval, consent or permission" (s 5(1)(b)) and/or a decision " imposing a condition or restriction" (s 5(1)(d)). The decision was an interlocutory decision made during the course of the substantive hearing.
We note that s 4 of the NCAT Act defines "interlocutory" decision as follows: "interlocutory decision" of the Tribunal means a decision made by the Tribunal under legislation concerning any of the following: (a) the granting of a stay or adjournment, (b) the prohibition or restriction of the disclosure, broadcast or publication of matters, (c) the issue of a summons, (d) the extension of time for any matter (including for the lodgment of an application or appeal), (e) an evidential matter, (f) the disqualification of any member, (g) the joinder or misjoinder of a party to proceedings, (h) the summary dismissal of proceedings, (i) any other interlocutory issue before the Tribunal.
The decision under appeal, being an interlocutory decision falling within par (e) of the definition, an appeal may be made to the Appeal Panel with leave: s 80(2)(a) of the NCAT Act.

Conclusion

For the reasons set out above, the Appeal Panel will quash the decision made by the Tribunal which found that Mr Connor was not a competent witness.

Other matters

There are three final matters to consider.

Leave to Appeal

As this was an appeal from an interlocutory decision, the leave of the Appeal Panel is required for the appeal to be heard. Given that we consider that the Tribunal erred, and that it is appropriate to quash the Tribunal's decision, we grant that leave.

Costs

As to costs, Chi has been successful in its appeal, but did not seek costs. The respondents, who sought costs, failed in their opposition to the appeal. In these circumstances, there should be no order as to costs.

Constitution of Tribunal

We raised with the parties at the conclusion of the appeal hearing whether, in the event that the appeal was allowed, the matter should be remitted to the Tribunal constituted by the member who made the interlocutory decision the subject of appeal. The appellant submitted that it should be remitted to another member, on the basis that some of the remarks made by the member below may now be suggestive of apprehended or ostensible bias. The respondents did not disagree that it would be appropriate for the matter to be so remitted.
The question of whether, when an appeal is allowed, the matter should be remitted to a differently constituted Tribunal was considered by the Appeal Panel in Yong v Antworks Pty Ltd [2016] NSWCATAP 14 where it stated at [137]ff: 137. This issue was considered by Adamson J in BCS v NSW Civil and Administrative Tribunal [2015] NSWSC 126 (citing Seltsam Pty Limited v Ghaleb [2005] NSWCA 208). Her Honour observed at [54] that while the power to make such an order should be exercised with caution, such an order should be made in the interests of justice in the circumstances of the case. In making the order, her Honour had regard to that fact that the applicant may have grounds for an apprehension of bias where the Senior Member failed to undertake the statutory task required of him, there may be a risk or the appearance of risk of compensatory bias and the Tribunal Member may feel obliged to recuse himself if the matter were remitted. Her Honour also took account of the fact that both parties requested that the Tribunal be differently constituted. 138. While the Appeal Panel accepts that making such a direction should be exercised with caution and that there are advantages in proceedings being remitted for reconsideration to the same Tribunal, this is a case where the matter should be remitted to a differently constituted Tribunal. First, this case is similar to BCS in that we have concluded that the Tribunal failed to discharge the statutory task required in a number of material respects. Secondly, given the observations of the Tribunal in its Reasons for Decision about Mr Yong, Mr Yong may have an apprehension that the Member will be biased in the conduct of the rehearing. Thirdly, there is a real prospect Mr Yong will request that the Member recuse himself and that the Member may feel obliged to do so. 139. These matters have the potential to unduly delay the finalisation of proceedings that have already been before the Consumer and Commercial Division, and its predecessor, for a number of years. Having regard to the guiding principle for the Tribunal in the exercise of its functions as set out in s 36 of the CAT Act, namely "to facilitate the just, quick and cheap resolution of the real issues in dispute", the Appeal Panel determined that the most appropriate course to give effect to these principles is to remit the proceedings to a differently constituted Tribunal for rehearing.
The Appeal Panel considers that there is some substance in the appellant's submission that some of the remarks made by the member below may ground an application for ostensible bias. We note, in particular, the following observations of the Member: At p 12 of the transcript: "Why did he [the expert] go [to the site inspection] at all?"; At p 15 of the transcript: "I have also had a look at the actual report from Mr Connor and I have some concerns about the actual language and wording there. For instance, in one part, he refers to his findings on whether a breach of the Home Building Act has been substantiated. To me that, is not the expert witnesses field . . . he appears to be trying to submit evidence that is outside that of a technical expert in his report".
The Appeal Panel considers that many of the considerations of the Appeal Panel in Yong are apposite to the circumstances of this appeal. In the circumstances, we will remit the matter to a differently constituted Tribunal.

Orders

The Appeal Panel orders: 1. Leave to appeal granted. 2. Appeal allowed. 3. No order as to costs. 4. The decision of the Tribunal made on 4 December 2015 in proceedings HB 15/29312, not to allow Mr Connor to act as an expert witness is set aside, and the proceedings are remitted to the Consumer and Commercial Division for reconsideration by a differently constituted Tribunal.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 March 2016

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