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[2013] ACTSC 283
Supreme Court of the ACT
2013-12-10
Refshauge J, Nield AJ
Original judgment source is linked above.
1. The tender of the Report of Anthony Lane be rejected.
2. The parties be heard as to consequential orders.
1. These proceedings arise from the sale of a business, Coral's Cafe in Belconnen, on 28 February 2004. The defendant, Sonja Vaughan, was, for some reason that I do not understand, renamed the plaintiff by an order of Nield AJ made on 17 May 2013 in respect of third party proceedings she commenced against Clarkson William Partners Pty Ltd by a third party notice.
2. That order of Nield AJ also renamed Clarkson William Partners Pty Ltd as the defendant. That renaming may have some current superficial convenience, for the plaintiff who commenced the proceedings, Coral Jardine, is not presently taking any part in the proceedings. She has, however, re-surfaced and sought to activate the proceedings which makes the re-naming now inconvenient.
3. In a decision in which I adjourned the proceedings between Ms Jardine and Ms Vaughan (Jardine v Vaughan [2013] ACTSC 264), I also outlined briefly the tortuous and sluggish progress of these proceedings. I do not need to repeat that.
4. The proceedings on the third party notice arise because about a month prior to the sale, Ms Jardine, Ms Vaughan and their respective husbands visited Paul Clarkson of the firm of accountants now known as Clarkson William Partners Pty Ltd, to which I will refer as "the accountants". It is claimed by Ms Vaughan that Mr Clarkson was the accountant for the business.
5. It is alleged that, at this meeting, Mr Clarkson read the contract that had been prepared for the sale of the business and advised on a minor change. It is claimed that he was asked whether the contract was appropriate and whether there was anything that Ms Vaughan needed to know about the business; he replied "You'll be right".
6. It is alleged that, because Mr Clarkson had prepared business activity statements, a prescribed form of return to give the Commissioner of Taxation a GST return under s 31.5 of the A New Tax System (Goods and Service Tax) Act 1999 (Cth) and bringing together within one form the reporting of a number of obligations, as well as the income tax returns and financial statements for the business, he knew various matters, including that the turnover and profitability of the business did not justify the sale price of $130,000, which was much greater than the fair value of the business.
7. In her case against the accountants, Ms Vaughan has sought to tender a Report prepared by Anthony Lane, a chartered accountant. The Report was prepared while he was employed as a senior accountant with a firm of chartered accountants and business advisors. It was actually signed by the partner of that firm for whom Mr Lane then worked.
8. Because of this relationship, Ms Vaughan's lawyers wrote to the accountant's lawyers about that issue stating, inter alia:
The person primarily engaged in the preparation of that report in the office of Sims Partners was Tony Lane. Mr Lane, at the time, carried out the necessary work under the supervision of Mr Kazar as Mr Lane did not have the requisite qualifications. The report was then provided by Mr Kazar.
Mr Lane is now fully qualified to be the expert witness himself. It is now proposed that Mr Lane will do the necessary review of the Report, agree to be bound by the Expert Witness Code of Conduct, and be available to provide further evidence at hearing if so required.
Kindly advise if you have any objection to this process.
9. The accountant's lawyers did object, responding, inter alia:
We are instructed to object to the tender of that report and to object to any application to lead oral evidence in-chief from Mr Lane.
In taking those objections, we will rely on both your letter of 26 November 2013, particularly in relation to whether Mr Lane's report was based on specialised knowledge which was in turn based on his training, study or experience, and this letter.
10. When the Report was sought to be tendered, objection was raised to its admissibility. I heard evidence from Mr Lane about himself and the Report in a voir dire hearing. It appears that Mr Lane was the real author of the Report and he said that he considered the documents provided by Ms Vaughan's solicitors, analysing them in conjunction with publicly available information and formulating the conclusions. He referred it to the partner, who signed the Report and who considered the Report for what he described as "reasonability testing", that it was logical, of appropriate quality and reasonable. The only change that was made was spelling, grammatical and formatting alterations. There were no substantive changes.
11. It appears to have been, in truth, Mr Lane's report. It was said, however, in Ms Vaughan's lawyer's letter to which I have referred, that Mr Lane at the time "did not have the requisite qualifications", though by the time of the trial he had qualified himself as an expert witness. It was apparently this that required the partner to sign the Report.
12. In fact, while the practice of the firm of chartered accountants precluding non-partners from signing such reports may have been their policy and approach, it is not clear to me that Mr Lane was not, at the relevant time, appropriately qualified. The statement of his qualifications at the time he prepared the Report, which set out his experience, was reproduced in the Report as follows:
Tony Lane is a Senior Accountant with over 14 years experience in insolvency, forensic accounting and audit environments in both the public and private sectors. Mr Lane has worked in audit and fraud investigation fields - developing specialised skills in forensic accounting. Mr Lane has prepared several business valuations and forensic accounting reports for commercial and family law matters. Mr Lane holds a Diploma in Government (Fraud Control Investigation).
13. It seems to me that this experience meets the test for expertise set out by Dixon CJ in Clark v Ryan [1960] HCA 42; (1960) 103 CLR 486 at 491. This would permit Mr Lane to give an opinion, if it otherwise complied with s 79(1) of the Evidence Act 2011 (ACT), namely that it was "completely or substantially" based on the specialised knowledge that Mr Lane's expertise provided.
14. Indeed, had the partner been called to give evidence, there may have been a question as to which parts of the Report were "completely or substantially based" on his specialised knowledge (see Cooke v the Commissioner of Taxation [2002] FCA 1315 at [38]).
15. When Mr R J Arthur, who appeared for Ms Vaughan, sought to tender the Report, however, Mr G E S Ng, counsel for the accountants, objected to it, as I have noted above (at [10]). It is necessary to say something about the Report to understand the objection.
16. The Report sought to establish a value for the business on various assumptions. These included the representations that Ms Jardine had actually made about the turnover and profitability of the business, an analysis of the financial statements of the business, and the trading performance of the business in the hands of Ms Vaughan.
17. The approach to valuation was that, of the common methods of business valuations considered, the most appropriate method was that described as the capitalisation of future maintainable earnings. This required, as the Report set out, a derivation of the maintainable earnings of the business and then the application of a capitalisation rate to those earnings.
18. The approach to the first step, the ascertainment of the maintainable earnings, was set out in four steps. I do not need to consider them here.
19. The next step was, as described in the Report, that it was necessary to
[d]etermine and apply an appropriate capitalisation rate which accounts for both the systemic and specific risks faced by the business.
20. The Report then considered what was described as "the errors of methodology" to certain areas. So far as the capitalisation rate was concerned, the Report listed a number of factors that required consideration as follows:
The capitalisation rate to be applied in this engagement requires the consideration of a number of factors, including but not limited to:
21. When then considering the appropriate capitalisation rate, the Report set out the methodology as follows:
22. Mr Ng objected to these paragraphs as he submitted they did not comply with the requirements placed on experts when preparing reports to the standard of admissibility required under s 79 of the Evidence Act 2011 (ACT).
23. The starting point for a consideration of this issue is usually an oft-cited passage of the judgment of Heydon JA in Makita Australia Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, at 743-4; [85]:
In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of 'specialised knowledge'; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be 'wholly or substantially based on the witness's expert knowledge'; so far as the opinion is based on facts 'observed' by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on 'assumed' or 'accepted' facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal characterisation of the evidence in HG v The Queen (at 428 [14]), on 'a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise.
24. In Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157; (2002) 55 IPR 354 at 379; [87]- [88], Weinberg and Dowsett JJ said of the above passage:
The use of the phrase "strictly speaking" in the last sentence should not be overlooked. It may well be correct to say that such evidence is not strictly admissible unless it is shown to have all the qualities discussed by Heydon JA. However, many of those qualities involve questions of degree requiring the exercise of judgment. For this reason it would be very rare indeed for a court at first instance to reach a decision as to whether tendered expert evidence satisfied all of his Honour's requirements before receiving it as evidence in the proceedings. More commonly, once the witness' claim to expertise is made out and the relevance and admissibility of opinion evidence demonstrated, such evidence is received. The various qualities described by Heydon JA are then assessed in the course of determining the weight to be given to the evidence. There will be cases in which it would be technically correct to rule at the end of the trial that the evidence in question was not admissible because it lacked one or other of those qualities, but there would be little utility in so doing. It would probably lead to further difficulties in the appellate process.
We should add one rider to these observations. As Heydon JA pointed out in his reasons at [62], there are difficulties in cross-examining upon a report which does not provide detail as to the way in which the particular opinions have been formed. Increasingly, courts seek to facilitate cross-examination by practice directions and other devices designed to ensure that expert evidence is presented in the most effective way having regard to the purpose for which it is presented. However, such procedures are not designed to avoid the testing of expert evidence in cross-examination, nor is it expected that they will obviate the need for evaluation of the evidence having regard to qualities such as those discussed by Heydon JA. The decisions in Ocean Marine and Henschke take the matter no further.
25. In Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588, the High Court approached this issue and considered it. French CJ and Gummow, Hayne, Crennan, Kiefel and Bell JJ said, at 604; [37]:
... The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita that "the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience' and on which the opinion is 'wholly or substantially based' applies to the facts assumed or observed so as to produce the opinion propounded". The way in which s 79(1) is drafted necessarily makes the description of these requirements very long, but that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily, that a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying 'specialised knowledge' based on his or her 'training, study or experience', being an opinion 'wholly or substantially based' on that 'specialised knowledge' will require little explicit articulation or amplification once the witness has described his or her qualifications and experience and has identified the subject matter about which the opinion is proffered.
(footnote omitted)
26. In the same case, Heydon J, though dissenting in the result, analysed the position in a way that did not appear to differ from the approach of the other members of the Court. His Honour particularly referred to what he described as two rules: the assumption identification rule; and the reasoning rule. It is the latter, which is relevant in this context, for it was the alleged failure to comply with it which Mr Ng submitted made the relevant material inadmissible.
27. In respect of the reasoning rule, his Honour said at 622; [91]:
At common law, there is no doubt that an expert opinion is inadmissible unless the expert states in chief the reasoning by which the expert conclusion arrived at flows from the facts proved or assumed by the expert so as to reveal that the opinion is based on the expert's expertise. The court does not have to be satisfied that the reasoning is correct. 'The giving of correct expert evidence cannot be treated as a qualification necessary for giving expert evidence.' But the reasoning must be stated. The opposing party is not to be left to find out about the expert's thinking for the first time in cross-examination.
28. His Honour then described the function of the reasoning rule, at 624; [93], as follows:
The rule protects cross-examiners by enabling them to go straight to the heart of any difference between the parties without the delay of preliminary reconnoitring. It also aids the court in a non-jury trial, because at the end of the trial it is the duty of the court to give reasons for its conclusions and it aids jurors because at the end of the trial they have the duty of assessing the rational force of expert evidence. If there is not some exposition of the expert's reasoning it will be impossible for the court to compose a judgment stating, and for the jurors to assemble, reasons for accepting or rejecting or qualifying the expert's conclusions.
The process of inference that leads to the [expert's] conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them.
(footnote omitted)
29. So far as s 79 of the Evidence Act and the reasoning rule is concerned, his Honour said, at 638-9; [129]-[130]:
There is ample authority supporting the view that it is not enough for evidence tendered under s 79 merely to state the expert's qualifications in a field of expertise and the conclusion. It is necessary to avoid the insidious risk that the trier of fact will simply accept the opinion without careful evaluation of the steps by which it was reached, and hence the evidence must state the criteria necessary to enable the trier of fact to evaluate that the expert's conclusions are valid.
The evidence must reveal the expert's reasoning, how the expert used expertise to reach the opinion stated. It is not enough for evidence tendered under s 79 merely to state the expert's qualifications in a field of expertise and a conclusion. Admissibility does not depend on the reasoning being accepted as correct. That is a matter for consideration at the end of the trial, but admissibility does depend on the reasoning being stated.
Principle. In principle, that line of authority is correct. There is nothing in s 79 which suggests that the corresponding common law rule has been abolished, and the language of s 79 positively supports its continuance. Without a statement of the expert's reasoning it is not possible to say whether the opinion is wholly or substantially based on the specialist knowledge claimed.
30. The need for such an approach was spelt out by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 995, where his Honour set out a series of propositions said to be derived from the summary of them in Makita Australia Pty Ltd v Sprowles. The relevant propositions identified, at [7], by his Honour included:
(1) the duty of expert witnesses is to furnish the court with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the court to form its own independent judgment by the application of these criteria to the facts proved in evidence;
(2) scientific opinion evidence, if intelligible, convincing and tested, becomes a factor for consideration along with the whole of the other evidence in the case;
(3) the bare ipse dixit of a scientist/expert, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross-examination nor independently appraised - [the parties having "invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert"];
(4) the importance that the expert's reports identify the criteria by reference to which the court can test the quality of the expert's opinions;
(5) that examining the substance of an opinion cannot be done without the court knowing what are the essential integers underlying the opinion;
(6) the importance of the court being placed in a position to test the validity of the process by which an opinion has been formed so as to be in a position to adjudicate upon the value and cogency of the opinion evidence;
(7) the hallmarks of unreliable science and the not-so-qualified expert, being the inability to articulate the principal tenets that need to be understood, or to describe in ordinary language, the methods used and the reasons that point to a particular conclusion;
(8) the crucial significance of the expert revealing the whole of the manner in which the appropriate information utilised by the expert was dealt with in arriving at the formation of the expert's conclusions;
(9) that expert opinion evidence is to be judged like any other evidence: it must be comprehensible and reach conclusions that are rationally based; the process of inference that leads to the conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them; and
(10) the intellectual basis of the opinion has to have been laid out.
31. Three examples of how this approach is developed may be given. The first is set out in what Spigelman CJ said about the report of a particular expert in R v Tang [2006] NSWCCA 167; (2006) 65 NSWLR 681. There, his Honour was considering three reports that had been prepared by an expert, Dr Sutisno, who had received a videotape of the robbery of which the appellant was convicted and still photographs taken from that videotape. Dr Sutisno was an expert in forensic anatomy. She looked for features of the face in these materials and then compared them with particular photographs of the appellant.
32. His Honour referred to a number of important statements about the contents of an expert's report. In Ocean Marine Insurance Association (Europe) OV v Jetopay Pty Ltd [2000] FCA 1463; (2000) 120 FCR 146 at 150; [18], [23], the Full Court of the Federal Court of Australia required "exposure of the reasoning process", so as to demonstrate "that the opinion is based on ... specialised knowledge". See also Australian Securities and Investment Commission v Rich [2005] NSWCA 152; (2005) 54 ACSR 326 at 350; [96]- [102].
The three opinions of Dr Sutisno in the present case do not, in my view, go beyond a 'bare ipse dixit'. Dr Sutisno did not identify the terms of the "strict protocol" that she purported to have applied, nor did she set out the basis on which the 'protocol' was developed. Indeed, she said that this information was confidential because of what she described as a 'process of patenting my innovations'. Accordingly, she had not published any of these 'innovations'. The critical matter is that she did not identify her 'protocol' or explain its basis.
34. His Honour held that the conclusions expressed by Dr Sutisno were not admissible.
35. In Chambers v Brice [2012] QSC 305, a report was prepared by an accountant, Paul Vincent, into certain conduct of the defendant, who was the first plaintiff's accountant, and who was claimed to be a fiduciary who breached his fiduciary obligations in respect of discussions leading to the entry into certain agreements by the first plaintiff. The defendant denied entering into some of the agreements, and said that he had retired as the first plaintiff's accountant before he entered into the remaining agreements and so he was not a fiduciary at the time.
36. The report set out the author's views on "industry practice" and "best practice" in relation to the retirement of accountants. Objection was taken to the report. The Court held that the parts of the report referring to industry practice were admissible as "a summary description of observations apparently made by the author of the report". As to the part of the report referring to "best practice", however, the Court said at [28]-[29]:
The reference as to "best practice" in these paragraphs of the Vincent report presents some difficulty. The expression rather suggests that some standard has been applied, and that standard has some recognition in the accounting profession. However, that standard is not revealed in the report, nor does the report reveal the reasoning process by which it is said that the conduct described in these parts of the report amount to "best practice".
In Makita, Heydon JA stated that for expert evidence to be admissible it must explain how the field of specialised knowledge in which the witness is expert applies to the assumed fact so as to produce the opinion advanced by the expert. In Australian Securities and Investment Commission v Rich, Spigelman CJ (with whom Giles and Ipp JJA agreed), accepted that the expert's "prime duty" is to identify "the facts and reasoning process which he or she asserts justify the opinion". Thus a failure to state the reasoning process by which the opinion is reached has the consequence of the opinion is itself inadmissible. It follows that in these paragraphs the references to best practice, as distinct from industry practice, in the Vincent report are not admissible.
(footnotes omitted)
37. The final example is in Bone v Wallalong Investments [2012] NSWSC 137, when damages were claimed for breach of a contract for sale of certain land. Reports prepared by Todd Hadley, a qualified registered and practising valuer, were tendered by the plaintiff to show the value of the relevant land. Mr Hadley used the "direct comparison" method of valuation, setting out market evidence of sales on which he relied. In the "valuation rationale", Mr Hadley simply said that, relying on the direct comparison method, the value of the subject land, unzoned, was $150,000 per hectare. He also assessed the land as zoned at $400,000 per hectare. He then considered the zoning process, and applied a discount factor at two different rates.
38. The Court considered the report as deficient by want of reasoning, holding, at [28]-[31]:
First, there is no explanation as to how Mr Hadley moved from the market evidence to which he referred to the derivation of an unzoned value at $150,000 per hectare. It may be - I do not know - that if one added up all the "urban potential" sales rates per hectare and divided them by the number of sales one might arrive at some such rate, but that is not my understanding of how the direct comparison method works. As I have said, I understand that method to require the application of specialised knowledge to the raw data to show how, from that raw data, a value may be deduced from the subject site.
Equally, there is the same deficiency in relation to the assertion of a value of $400,000 per hectare for the "zoned" land.
The second defect, in my view, applies to the discount rates which are used, as I understand it, in the check based on the zoned value. It is true, as I have noted, that Mr Hadley says that the discount rate reflects the council's changes in position and the continuing uncertainty of a timeframe for re-zoning, but he does not explain how it does so. He does not say why, for example, a rate of 30% is appropriate rather than 40% or 27.5% rather than 20%. Thus, although the arithmetic accuracy of the calculation may be assumed, the intellectual basis for the choice of the underlying assumption is not explained.
It is thus not practical for the defendants to make some assessment of the integrity of Mr Hadley's reasoning process, which of course is a necessary element of cross-examination of an expert.
39. In general, cross-examination of an expert is directed towards the assumptions on which the opinion is based or on the reasoning process that traces the link between the assumptions of fact to the opinions expressed or both.
40. Where the reasoning has not been exposed in the report, counsel are put in the entirely unsatisfactory position that they need to expose the reasoning in cross-examination before they can, if they can, attack it. See Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174 at [78] and Harrington-Smith v Western Australia (No 7) [2003] FCA 893; (2003) 130 FCR 424 at 430; [31]. I apply these principles.
41. Mr Arthur submitted that the relevant paragraphs were admissible because
(a) to require the full exposition of the expert's reasoning would be inefficient and produce over-long reports; and
(b) it was not to a lay person that the reports were only directed; an expert retained by the other party would be in a position to evaluate the reports.
42. Both submissions have a certain validity, but do not seem to me to answer the fundamental propositions to which I have referred above. To take paragraph 49 of the Report, which I have set out above (at [21]).
43. I am not particularly concerned about the reference in it to Business Connection International, though the counsel of perfection would require an explanation of what that entity is and what its status is.
44. What is missing, however, is the connection between the specialised knowledge that Mr Lane is said to possess and the conclusion that the appropriate rate is 1.5 to 4 times earnings. There is no exposure of Mr Lane's reasoning in coming to that conclusion which shows that it is a product of that specialised knowledge. Without that, it is merely an opinion that is an opinion rendered inadmissible by the opinion rule in s 76 of the Evidence Act, or mere hearsay inadmissible by the hearsay rule in s 59 of that Act, depending on precisely how the rates are derived from the quoted index.
45. Indeed, the fact that I cannot decide which rule applies points up part of the very problem. In my view, at the very best, this renders the relevant paragraphs, save for paragraph 51 for which I do consider that Mr Lane falls into the same category as a medical practitioner whose status for this purpose was described by the plurality in the extract I cited from Dasreef Pty Ltd v Hawchar.
46. I am, however, not comfortable with excising those paragraphs and in some way leaving the rest of the Report or some portion of it to be admissible. The problems with that approach are easily seen in Rhoden v Wingate [2002] NSWCA 165; (2002) 36 MVR 499. It seems to me that the Report is so fundamentally dependent on the capitalisation rate that is used that, without these paragraphs, it becomes wholly irrelevant. I reject the tender of Mr Lane's Report.
47. That raises the question of what to do now. Mr Ng said that Ms Vaughan has had the Report since 2007, the Report itself being dated August 2007, within which to address its defects. That is certainly a counsel of perfection, given that the defects were presumably not identified then or since. Indeed, the submission by Mr Arthur suggests that they were not considered to be defects.
48. Mr Ng, however, pointed to the correspondence which he submitted has put Ms Vaughan and her advisors on notice. I have set out the relevant part above (at [8]). While the letter does challenge the admissibility of the report, it does not do so on the basis that has been successful, namely for breach of what Heydon J called the reasoning rule.
49. In addition, though in fairness it must be conceded that the letter is in response to that of Ms Vaughan's lawyers, it was only sent on 28 November 2013, just ten days prior to the hearing, hardly time to address the problem identified.
50. In Bone v Wallalong Investments, Mr Hadley's report was said to be deficient in other respects because a number of documents, mostly of a public nature, were mentioned but not annexed. The court relied on s 56 of the Civil Procedure Act 2005 (NSW) to find that a defect of a formal nature is such that a party with a duty under that section "to assist the court to further the overriding purpose" should take prompt action to raise such a matter rather than "lie in wait and raise the objection at the trial". Rule 21 of the Court Procedures Rules 2006 (ACT) is relevantly in the same terms.
51. It is not easy to see whether the same approach applies here. In the first place, the objection is by no means a technical one, but one of real substance going to the heart of the admissibility of the evidence. On the other hand, the lawyers for the accountants chose to raise one substantive objection, though I accept it was that to which it was asked to respond, but did not raise the other objection at that time.
52. Mr Ng, however, submitted that these proceedings have now been on foot since 2004, with the accountants being made a party in 2007. The accountants are professional people whose reputation is at risk in the proceedings and who, no doubt, must report the ongoing proceedings to their professional indemnity insurer every year.
53. An inspection of the court file shows that by November 2008 the proceedings had ground to a halt. Despite forty-three appearances in the Magistrates Court and this Court to that date, the next appearance was not until 31 January 2011. No party seemed to take any interest in the meantime, though notices of intention to proceed were filed by both Ms Vaughan and the accountants in 2009 and 2010.
54. Ms Vaughan's application for Ms Jardine's claim to be struck out for want of prosecution was listed for 31 January 2011 and that order made on 18 April 2011. No steps, however, were taken by Ms Vaughan to progress the third party proceedings, yet no application was made by the accountants to have Ms Vaughan's claim, the third party claim, struck out for want of prosecution until 27 November 2012, when such an application was filed returnable on 3 December 2012.
55. In the light of that history, no party, and indeed perhaps the Court, is hardly covered with glory. I will reject the Report of Mr Lane and I will hear the parties as to what consequential orders should be made.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Solicitor for the third party: Yeldham Price O'Brien Lush by their agents Ken Cush & Associates
Jardine
Vaughan
(1960) 103 CLR 486
(2011) 243 CLR 588
(2003) 130 FCR 424
(2001) 52 NSWLR 705
(2000) 120 FCR 146
(2002) 36 MVR 499
(2006) 65 NSWLR 681
(2002) 55 IPR 354