THE EXPERT EVIDENCE APPLICATION
26 Turning to the third decision, as outlined above (at [2(c)]), the applicants have applied for leave to rely upon certain expert financial planning evidence from Mr Neil Kendall. Mr Kendall's proposed evidence is contained in a report that was served on the Commonwealth Bank on 1 May 2013: the twenty-second day of the trial of these proceedings. The submissions regarding Mr Kendall's evidence were completed on the twenty-sixth day of the trial. By that time, Mr and Mrs Sherwood and Mr and Mrs McArdle had completed their evidence. I will return to the significance of this fact later in these reasons.
27 The Sherwoods require leave to rely upon Mr Kendall's evidence because the often-extended timetable for the service of such expert evidence under the trial programming orders made in these proceedings expired more than three months ago. The history to those trial programming orders, specifically as they relate to expert evidence, is particularly pertinent to this application, so it is appropriate to briefly set it out.
28 The first set of orders dealing with the service of all witness evidence, including expert witness evidence, was made on 23 September 2011. Those orders required that the Sherwoods were to file affidavits, or outlines of evidence, in respect of any witness they proposed to call at the trial of these proceedings by 13 April 2012. The Commonwealth Bank was required to do likewise in relation to their witnesses by 6 July 2012.
29 In time, it became clear that the Sherwoods sought to rely upon two kinds of expert evidence to support their claim for damages (see [6] above): expert accounting evidence from Mr Andrew Perkins from the firm of Williams Hall Chadwick and expert financial planning evidence from Adjunct Professor McMaster. The Commonwealth Bank elected not to retain a financial planning expert, but sought to adduce expert accounting evidence from Mr Tony Samuel of Sapere Forensic.
30 By the end of August 2012, among other extensions of time granted to both parties, the Sherwoods had obtained two extensions for the service of their expert accounting evidence and one extension for the service of their expert financial planning evidence. The Commonwealth Bank was also granted an extension for the service of their expert accounting evidence.
31 These proceedings and two other sets of proceedings variously involving the Australian Securities and Investments Commission (ASIC), Mrs Tracey Richards as the lead applicant, the Bank of Queensland and Macquarie Bank Limited (Macquarie Bank) were originally set down for trial to commence in September 2012. However, when the Commonwealth Bank reached a settlement of its dispute with ASIC in those combined proceedings, these proceedings were separated from them and the trial dates for these proceedings were moved back to March 2013. This did not affect the trial of the remainder of those combined proceedings. That trial began in late September 2012 and continued through the latter part of 2012 and into February 2013.
32 Those combined proceedings included representative proceedings by Mrs Richards against Macquarie Bank. Mrs Richards is represented by the same firm of solicitors as the Sherwoods in these proceedings. However, different counsel have appeared at the respective trials of the two sets of proceedings. At about the same time as these proceedings were separated from the combined proceedings, the accounting experts for the parties in these proceedings were ordered to confer and produce a joint report. Both parties subsequently sought an extension of time for the production of that joint report.
33 On 10 December 2012, Professor McMaster gave evidence for the applicant in the trial of the representative proceedings against Macquarie Bank mentioned above. In the course of his cross-examination, Professor McMaster was forced to make a number of concessions about the inaccuracy of some of the calculations contained in his report. That culminated in him being given leave to amend his report overnight. He did that and his cross-examination was completed on the following day.
34 These proceedings were listed for pre-trial directions some days after Professor McMaster had completed his evidence in the combined proceedings. At that directions hearing, the Sherwoods sought leave to file supplementary reports from each of Mr Perkins and Professor McMaster. Mr Finch objected to that leave being granted. In the course of submissions on that application, I had the following exchange with Mr Lo Surdo SC, who appeared as counsel for the Sherwoods:
HIS HONOUR: In order 1(c) of your short minutes, you refer generally to a financial planning expert without identifying Professor McMaster as that person. Was that deliberate?
MR LO SURDO: Your Honour, the intention at this stage is that it be a supplementary report from Adjunct Professor McMaster. If that changes, we will certainly take the necessary steps.
35 Since the trial of these proceedings was not then due to commence until early March 2013, I concluded that allowing the Sherwoods leave to file those reports would not unduly interfere with the efficient case management of these proceedings. Accordingly, I allowed the Sherwoods until 28 January 2013 to file any further expert reports they wished to. I also allowed the Commonwealth Bank a corresponding extension until 21 February 2013 and I made orders for a further joint conference of the accounting experts.
36 Professor McMaster's further report was served one day late, on 29 January 2013. The trial of these proceedings commenced on 4 March 2013.
37 During the course of opening submissions for the Sherwoods, Mr Dubler made a number of references to Professor McMaster's report. Then, on the second day of his opening submissions, Mr Dubler informed me that the Sherwoods had engaged a second financial planning expert. Mr Finch informed me that he had first received notice of this development earlier that morning. Mr Dubler stated that he expected the new expert's report to be available in mid-April and that he was not sure what use they would make of it, specifically whether he would make an application to replace, or supplement, Professor McMaster's evidence with it.
38 Mr Finch opposed the course proposed by Mr Dubler and sought to have me make a guillotine order preventing any such expert's report being relied upon at the trial of these proceedings. Mr Finch expressed concern that his client would be disadvantaged if the Sherwoods were to obtain leave to replace, or supplement, Professor McMaster's evidence after he had already cross-examined the principal applicants on the basis of the views expressed in his reports.
39 Mr Dubler submitted that neither party could, at that stage, properly address me on Mr Finch's application for a guillotine order because it was not then known whether or not the proposed expert's report would be used and, if so, how. Given that Mr Dubler was not actually making an application to rely on this proposed expert's report and was merely informing me of his intention to obtain that report, I did not consider it was appropriate for me to make a guillotine order of the kind sought by Mr Finch.
40 Nonetheless, I consider at least two things were clear to everyone as a result of that exchange. First, Mr Finch made it clear that he intended to proceed to conduct the cross-examination of the four lead applicants based on the statements contained in their affidavits of evidence that had, by that time, long since been served. In particular, he pointed to their statements that they had read and adopted specific parts of Professor McMaster's reports. Secondly, the Sherwoods had made a deliberate forensic decision to proceed with the trial on the basis of the reports of Professor McMaster that had already been served and to leave any decision whether to seek leave to call replacement or supplementary evidence from another financial planning expert, to a later time of their choosing.
41 The trial proceeded and, as I have already noted, all four lead applicants gave their evidence and were cross-examined at quite some length by Mr Finch.
42 In the meantime, the question of this further expert evidence lay dormant until last Wednesday, 1 May, when the Sherwoods served the report of Mr Kendall on the Commonwealth Bank. At the same time, they filed the present application seeking leave to call evidence from him.
43 In submissions, I was referred to a number of authorities. However, with the exception of one of them, viz Williams v Commonwealth Bank of Australia Ltd (unreported, Tamberlin J, 5 May 1995) (Williams), I did not find those authorities to be of much assistance to me. That was so essentially because they dealt with very different situations to the present one and/or were decisions of courts that did not operate a docket system, as this Court does. Williams is of assistance because it is a decision of this Court that dealt with a not dissimilar situation. There, Tamberlin J allowed the applicant to call further expert evidence on the seventh day of a trial, which had at that stage only been fixed to last for about that period. However, his Honour ordered the applicants to pay the costs thrown away on an indemnity basis. It is worth noting that this decision was delivered in 1995, about one and a half decades before the seminal High Court decision of Aon. Aon is the most obvious and authoritative source of the relevant principles in dealing with this application.
44 Before examining those principles it is useful to briefly discuss the High Court decision of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; [1997] HCA 1 (JL Holdings), which preceded Aon. The situation that arose in JL Holdings was very different to both Aon and the current application. There, the application (to amend the defence) was made well before trial, indeed, about six months, and involved an issue that could not have been avoided at the trial. Nonetheless, that decision was interpreted by the courts as placing more emphasis on the injustice of shutting a party out from pursuing an arguable claim or defence in proceedings and placing less emphasis on case management considerations when dealing with applications of the present kind.
45 In Aon, French CJ observed (at [30]), after quoting from JL Holdings:
It might be thought a truism that "case management principles" should not supplant the objective of doing justice between the parties according to law. Accepting that proposition, JL Holdings cannot be taken as authority for the view that waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants, should not be taken into account in the exercise of interlocutory discretions of the kind conferred by r 502.
46 Rule 502 was the applicable rule of the Australian Capital Territory Supreme Court in issue in Aon.
47 His Honour continued (at [30]):
Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes.
48 The joint decision of Gummow, Hayne, Crennan, Kiefel and Bell JJ contains similar observations (at [98]). Their Honours also rejected a costs order as the universal panacea for the prejudice suffered by the opposite party, observing (at [99]):
In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. In Cropper v Smith Bowen LJ described an order for costs as a panacea that heals all. ... The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment.
(Footnotes omitted)
49 Their Honours went on to refer to what they described as the strain that litigation imposes upon litigants as an important factor that could not be addressed by a costs order. Lest it be thought that that consideration does not apply to corporate entities like the Commonwealth Bank in these proceedings - one of the world's largest banks - their Honours made the following remarks (at [101]):
In Ketteman, Lord Griffiths recognised, as did the plurality in JL Holdings, that personal litigants are likely to feel the strain more than business corporations or commercial persons. So much may be accepted. But it should not be thought that corporations are not subject to pressures imposed by litigation. A corporation in the position of a defendant may be required to carry a contingent liability in its books of account for some years, with consequent effects upon its ability to plan financially, depending upon the magnitude of the claim. Its resources may be diverted to deal with the litigation. And, whilst corporations have no feelings, their employees and officers who may be crucial witnesses, have to bear the strain of impending litigation and the disappointment when it is not brought to an end.
(Footnotes omitted)
50 These excerpts from Aon emphasise that the paramount consideration in an application of this kind is ensuring that justice is done between the parties, that is, both fairness for the party wishing to pursue a particular course and the corresponding fairness to the party who is resisting that course being taken. As between the parties, these considerations essentially go to prejudice and where it should fall in the particular circumstances of the application at hand. In this application, that requires me to balance the corresponding prejudices that may flow to the Sherwoods and to the Commonwealth Bank, depending on whether the Sherwoods are allowed to rely upon the evidence of Mr Kendall. Before doing that, it is worth emphasising the other considerations identified in Aon that are external to the interests of the parties to the particular litigation in question. Those include the importance of case management considerations, the public interest in the efficient use of public resources, avoiding undue delays in litigation, and avoiding the stress and uncertainty that is inevitably engendered by such delays.
51 I will deal with the prejudice that will likely be occasioned to the Commonwealth Bank first, assuming this application were to be granted. Mr Finch submitted that the Commonwealth Bank's prejudice is such that it cannot be cured by time in the usual way, that is, by an adjournment with costs. He submitted that he had tailored the cross-examination of the four lead applicants, as he said he would at the outset of this trial (see at [40] above), based upon the specific parts of Professor McMaster's reports that were adopted by them in their affidavits that had earlier been served. At paragraph 33 of his written submissions, Mr Finch set out a detailed summary of the approach he had taken in that cross-examination. It is not necessary to set out that summary in these reasons, but I consider it is generally accurate.
52 Whilst I accept the accuracy of that summary, I do not accept Mr Finch's submissions that this particular prejudice cannot be cured by an adjournment with costs. I consider it can be assuaged, if not cured, by requiring the lead applicants to submit themselves to further cross-examination based upon the new or additional matters contained in Mr Kendall's report. It is true, as Mr Finch submits, that this further cross-examination could fall both ways, viz it may provide an opportunity for some of the lead applicants to attempt to overcome any perceived deficiencies in their evidence now that they have had a chance to leave the witness box and discuss their evidence with their lawyers and others. However, if such an attempt were to be made, I consider it would be fraught. That is so because it is likely to be quite obvious and therefore likely to undermine the credibility of the witness concerned.
53 For these reasons, I consider that this particular aspect of the Commonwealth Bank's prejudice can be addressed by requiring the lead applicants to be called for further cross-examination. However, that effectively means this trial would have to be adjourned to allow Mr Finch sufficient time to analyse the contents of Mr Kendall's report and prepare his further cross-examination of the lead applicants. In that process, he will most probably need to obtain advice from a financial planning expert and consider whether his clients now wish to seek to call their own financial planning expert. As I mentioned above at [29], the Commonwealth Bank has thus far proceeded on the basis that they do not wish to adduce evidence from a financial planning expert.
54 As to the period of such an adjournment, Mr Finch says that he should be allowed at least the same amount of time as the Sherwoods' lawyers have had to obtain and consider the report from Mr Kendall. That is, about two months: from 27 February, when they first decided that they should obtain that report, to 1 May, when Mr Kendall's report was served. In my view, this two month period is too generous. That is so because the process that Mr Finch proposes to carry out of consulting with an appropriate expert and undertaking the other preparations I have mentioned above at [53] will occur during an adjournment of this trial rather than while the trial is continuing, as has largely been the case with the Sherwoods' lawyers. Therefore, if he is to be allowed a period which is not interrupted by having to attend to the daily exigencies of the trial, I consider a period of about four weeks is closer to the mark as a fair period for any such adjournment.
55 The other aspect that calls for consideration in assessing the Commonwealth Bank's prejudice in the event of an adjournment is the utility of any associated order for costs. The Sherwoods, through their counsel, advised me this morning that they would submit to an order for the costs thrown away by the late introduction of Mr Kendall's evidence. However, Mr Dubler submitted that indemnity costs should not be ordered and he also opposed the other costs order sought by Mr Finch, viz that costs be taxed and payable forthwith.
56 Rather than decide whether to make those orders, I consider that the most efficient and practical approach is to proceed to assess the efficacy of any associated costs order on the basis proposed by the Sherwoods, that is, that I would only make the usual order for party and party costs thrown away by the late introduction of Mr Kendall's evidence. On that basis, there is a number of matters that combine to significantly reduce whatever panacea may be offered to the Commonwealth Bank by such an order for costs.
57 First, if the order were limited to the usual costs thrown away by the adjournment, that order is, in my view, likely to give rise to the inevitable argument about how much of the Commonwealth Bank's costs were attributable to the late introduction of Mr Kendall's evidence. Secondly, there will be the fact that a party and party costs order usually only covers about 60-70% of the non-defaulting party's costs. Thirdly, I know from other evidence before me that Mr and Mrs McArdle have no assets available to meet such an order for costs and, whilst Mr and Mrs Sherwood are in a better financial position, there is no way of knowing what their financial position may be some years hence when, on the Sherwoods' position, this costs order would most likely be enforced. Finally, as mentioned in Aon (see at [48]-[49] above), no order for costs can remove the stress and anxiety associated with the prolongation of these proceedings.
58 In summary, because of these considerations, an order for costs in the form proposed by the Sherwoods will not, in my view, offer a sufficient panacea to the Commonwealth Bank if this trial were to be adjourned.
59 I will now turn to consider what prejudice is likely to flow to the Sherwoods if the application to rely upon Mr Kendall's evidence is refused. The first point to be made about that prejudice is that Mr Dubler quite properly conceded in submissions that the evidence of Mr Kendall could not be described as being of fundamental importance to the success of the Sherwoods' case. With his written submissions, Mr Dubler provided a schedule comparing the differences between the two sets of experts' reports - that is, Mr Kendall's report and Professor McMaster's various reports. Having examined that schedule, I consider that it demonstrates that there is no significant difference between the evidence these two expert witnesses propose to give.
60 Whilst Mr Dubler submitted that Mr Kendall addresses some issues, such as lifestyle cash, that Professor McMaster does not address and he also uses some different terminology, I do not consider these differences are of such importance or significance that they justify a completely new expert being introduced into this case at this stage. I am left with the clear impression, after hearing the oral submissions on this application, that the Sherwoods' position can largely be reduced to this proposition: they consider that Mr Kendall will be a better witness for them, that is, he will be better able to articulate their case.
61 That is not, of course, the essential role of an expert witness, as Mr Dubler readily conceded. The primary role of an expert witness is to assist the judge to understand evidence about a field of endeavour or study with which he or she may not be familiar. Nothing has been put before me to show that Professor McMaster will not be able to fulfil that role. I include in this, although it is really irrelevant to this case, the calculation errors that he was forced to concede in his evidence in the proceedings against Macquarie Bank (see [33] above). On that aspect, I am assured by Mr Dubler that the Sherwoods are not aware of any such calculation errors in the three reports of Professor McMaster that have been served in these proceedings.
62 Finally, there is the Sherwoods' deliberate forensic choice I discussed above (see at [40]), namely to proceed to rely upon Professor McMaster as their expert witness from the service of the last of his reports in late January 2013 throughout the months leading up to this trial, throughout the opening submissions and then throughout this trial until last Wednesday, when this application was eventually made.
63 In Aon, French CJ made the following observations about that sort of approach (at [24]):
Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials either because of non-compliance with court timetables or, as in this case, because of a late and deliberate tactical change by one party in the direction of its conduct of the litigation.
64 Whilst the application in that case related to a significant amendment to the pleadings, given the stage to which this trial has proceeded, I consider the application is likely to have the same impact in these proceedings even though it is of a different nature.
65 To sum up on this question, I do not consider the Sherwoods will suffer any irremediable prejudice if I refuse their application. They will have the evidence of Professor McMaster, whom they have been content to rely upon throughout the course of these proceedings and up until last Wednesday. Conversely, they cannot claim the evidence of Mr Kendall is so important that it is likely to affect their prospects of success in these proceedings. There is also the significant factor that this application is inextricably linked to a deliberate forensic choice made by the Sherwoods.
66 On the other side, I consider an adjournment with an order for costs of the kind proposed by the Sherwoods will not provide sufficient amelioration of the prejudice the Commonwealth Bank will suffer. Nor will it remove the continuing strain that is presented by these proceedings. The flip side of the deliberate forensic choice made by the Sherwoods (above) is that the Commonwealth Bank has devoted considerable time and effort pursuing an approach to the cross-examination of the lead applicants based upon their reliance on parts of Professor McMaster's reports. The Commonwealth Bank should not, without good reason, be deprived of whatever benefit it considers it has gained from that approach.
67 Finally, overshadowing the countering prejudice that is likely to be suffered by the parties to these proceedings is the broader public interest considerations discussed in Aon. In this regard, taking into account the various contingencies involved, I have concluded that, if I allow the Commonwealth Bank an adjournment of this trial for about four weeks, six to eight days of precious hearing time will be lost and the trial of these proceedings is unlikely to be completed until early September 2013. That is about three months later than is currently planned. That will mean the hearing dates that have been allocated to these proceedings will be lost, not only to the parties, but also to other litigants awaiting their dates; there will therefore be a consequent waste of the limited public resources that are made available to the court system; and there will be a delay of some months in the finalisation of these proceedings. All of this will occur in a proceeding that has been closely case managed throughout to endeavour to avoid these sorts of consequences. Accordingly, I do not consider it is in the public interest to adjourn this trial.
68 For these reasons, I refuse the Sherwoods leave to rely upon the expert evidence of Mr Kendall.