R v Dowding & Grollo [2000] VSC 222

[2000] VSC 222

Supreme Court of Victoria|2000-05-31|Before: TEAGUE, J.

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Court

Supreme Court of Victoria

Decision date

2000-05-31

Before

TEAGUE, J.

Catchwords

Expert accounting witness - Role of expert - Independence - Impartiality - Reasoning processes - Accounting principles - Tax consequences - Mixed questions law and fact.

Source

Original judgment source is linked above.

Catchwords

Expert accounting witness - Role of expert - Independence - Impartiality - Reasoning processes - Accounting principles - Tax consequences - Mixed questions law and fact.

Judgment (59 paragraphs)

[1]

These are the reasons for my ruling that I would not accede to a pre-trial application made on behalf of the accused. The application was to exclude in whole or in part a witness statement of Leon Maddern dated 28 April 2000 ("the April 2000 statement"). A like application had been made in September 1999 relative to a May 1998 statement of Leon Maddern. After hearing submissions then, I ruled that I was not prepared to accede to that application. I briefly indicated my reasons. On 9 December 1999, I provided more detailed reasons.

[2]

I indicated in the December 1999 reasons that I perceived that there were deficiencies in the May 1998 statement. I indicated respects in which I believed that those deficiencies should be remedied. Those perceived deficiencies went to matters including inadequate identification of documents, defining of terms, and references to principles and sources. The April 2000 statement has been prepared in response to the December 1999 reasons. The April 2000 statement has pages numbered to 87, paragraphs numbered to 388 and footnotes numbered to 227. It is divided into sections with one section split into divisions focused on six issues highlighted in the December 1999 reasons.

[18]

I do have a concern as to independence. The problem of the independence of expert witnesses has long occupied the attention of lawyers and judges. In recent years, it has excited a lot of attention. It has been much discussed in major reports on civil justice, at legal conventions and elsewhere as in articles such as that of Cooper placed before me by Mr Judd. I am closely familiar with the reports of Woolf, Freckleton/AIJA, and Sallman. Cooper has noted that the judges of the Federal Court agreed with Lord Woolf's assessment that experts had lost their independence and become partisan. In an attempt to deal with this development both the recommendations of Lord Woolf and the Federal Court guidelines provide that an expert has an overriding duty to assist the Court rather than the person retaining the expert, and that an expert not be an advocate for a party. This is a highly laudable ideal. On the other hand, the comments of the High Court in Vakauta at 570 illustrate that a certain degree of unavoidable partiality by expert medical witnesses can be tolerated without undermining the proceedings. More stringent guidelines may be appropriately applied where there is a large pool of experts. Because of the adversarial nature of litigation, there will almost always be at least a suspicion of a degree of partiality. In Arbinger, Jessel MR expressed the view that there is a natural bias on the part of the expert in favour of the person employing him. I am reassured by what was said in More, where the cynical universal categorising of experts was criticised. Freedman JA maintained that to generalise in this manner was "an act of gross unfairness against men and women who from time to time assist the judicial function by placing before the court fair and reasoned conclusions which are the product of their training, experience, examination and research." The majority of the Supreme Court of Canada later expressed agreement with Freedman JA's assessment. In this regard, I would also refer to what is said by Rich ACJ in Adelaide, at 563-564, as to the position of a decision-maker relative to hearing expert testimony. In circumstances where suspicion or more as to impartiality exists, it has been my experience that the process of cross-examination can usually be expected to elucidate whether and to what extent the evidence of an expert witness might be seen not to be impartial. It is then a question of what weight can be ascribed to the evidence in the light of any partiality revealed in cross-examination. In the instant case, I do not consider that there are, or are likely to be, grounds for concern as to the jury misunderstanding Leon Maddern's position. I cannot conceive that cross-examination will not be utilised to bring out the potential for impartiality at least adequately. Being particularly alive to the issue, I propose to take up the subject with the jury in the usual or stronger terms as appropriate.

[24]

In my December 1999 ruling I adverted to many references in cases and articles to "accounting principles". I had assumed then that there was a repository or source of such principles. I now consider that there is no repository of the kind that I had contemplated. There are lots of books about the fundamentals of accounting. In response to a question I put to Mr Judd, he referred me to three such texts. One was Yorston. Those texts explain how books of account should be kept, and provide examples of how to keep books correctly. My review of them and of Yorston in particular, taken with events during argument, including that Mr Robberds made clear that the focus of the April 2000 statement was on accounting, not on tax accounting, has helped to clarify my thinking. I am now satisfied that it is those fundamentals that are a significant part of what I have chosen, as others have chosen, to describe as "accounting principles". Every accountant and bookkeeper should: be accurate as to date and amount; match income and expenses as to time; be consistent; place entries in books of account in the right place; describe entries accurately; and more. Leon Maddern has not said expressly in his statement that these fundamentals are the principles, but that is implied. Mr Robberds put the proposition to me in these terms: that accounting principles were the distillation of matters that the accounting profession recognises when treating money in the accounts. I would add that a review of Yorston and the CCH/Macquarie dictionary and many cases makes it hard to distinguish accounting (or commercial or bookkeeping): aspirations; concepts; conventions; doctrines; elements of theory; policies; postulates; practices; principles; procedures; rules and standards. It may or may not help to have added as a qualifying word: accepted; basic; established; fundamental; ordinary; recognised; or standard. It seems that there is a significant level of interchangeability, save that some words are clearly more conceptual and others are more practical in character. I obtained reassurance in my conclusion when I reviewed many of the cases referred to in my December 1999 ruling. There were lots of references to variations of "established accounting principles". I was struggling to find reference to a particular principle, save to the "matching principle" in AGL and Coles Myer.

[27]

In argument before me, there was reference to the question of whether an accountant can be asked for his understanding of the effect of legal documents. Mr Judd argued for a very restrictive approach, after referring to instances where he claimed that the April 2000 overstepped the line. Mr Robberds argued that that was not so, Leon Maddern having simply stated his assumptions and conclusions which were not as to law or mixed fact and law. Neither referred to authorities on the subject of where the line was to be drawn. I have no doubt that an accountant cannot be asked to authoritatively construe a document. That is a role reserved for the judge. I see no difficulty in an accountant giving his understanding of or assumption as to a documents' effect, where that is one of the assumptions of fact upon which he draws inferences. Aspects of the role of the judge in construing documents and statutes and in the context of a jury trial were considered in several of Stephens, Mainwaring, Mumford, Spens, Adams, Maharaj and Baxter, to which I have earlier referred. Those same cases are also helpful to me in assessing the appropriate course on other questions. Such questions include when and how, in the context of a jury trial, a judge ought to address a question of law - like the interpretation of a document - or of a statute. The focus of the court in most of those cases was on the interpretation of either or both of a provision in a Crimes Act or an agreement. The focus in the instant case will be on provisions in the Income Tax Acts as to income and deductions. For example, because of the Acts, "income derived" is a statutory concept, and the jury will have to be instructed as to parts of it as a matter of law. Both prosecution and defence have given indications of the matters of law that they say will or might have to be addressed at some point. Unless, it is by consent, or unless there is an extremely compelling case for doing so in the face of opposition, I am not disposed to make preliminary findings on matters of law.

R v Dowding & Grollo [2000] VSC 222

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