The High Court has recently reiterated that a party seeking to recover damages should support their claim with reasoned, cogent expert evidence. A failure to do so may result in a refusal of, or reduction in, damages.

Singh v Rutherford & Another [2013] NZHC 1276 was an appeal against a District Court decision on a claim for loss of profits. The claim was based on a breach of a warranty in an agreement for sale and purchase of a fruit orchard. The District Court had dismissed the claim on the basis that the plaintiffs had not established that the losses they claimed had been incurred.

The High Court overruled the decision but was very critical of the manner in which the plaintiffs had presented their evidence on damages. In particular:

  • It would have been helpful if, in addition to claiming loss of profits, the plaintiffs had advanced diminution of value as an alternative measure of loss. This would have made the valuation exercise simpler and less prone to challenge and would have provided a helpful yardstick against which to assess the loss of profits claim.
  • There should have been a conference of the expert witnesses before the District Court trial. In the absence of a joint statement from the expert witnesses setting out areas of agreement and disagreement, the Court is left in the difficult position of "doing the best it can" to arrive at a figure.
  • There was a fundamental flaw in the reasoning of the plaintiffs' expert witness in that, in her view, it made no difference what the plaintiffs did with the land once purchased. This was not the correct approach as, if the land was not to be used as an orchard, there could be no basis for a loss of profit damages assessment.
  • The plaintiffs' expert also made a number of technical errors, including failing to take into account variable costs, taking only one production cost into account and failing to make an allowance for contingencies. Moreover, her approach was flawed by a lack of transparency.

Notwithstanding the above difficulties, the Court allowed the plaintiffs' claim, taking a conservative approach to ensure that the damages awarded were not inflated or unjustly damaging. The Judge noted that while this might mean that the plaintiffs received less than they would have done if their claim had been better presented, as this was a matter within their control, they were responsible for the consequences.

The case highlights the importance of carefully analysing, testing and presenting expert evidence on damages, rather than relying blindly on the expert's report. It also emphasises the value in ensuring that experts confer before trial, so that weaknesses in the evidence can be identified and dealt with before the matter goes before a Judge.