The interlocutory decision referred to below is an important reminder to all practitioners that when an expert witness claims to require access to certain documents to complete his or her report this should not necessarily be taken as gospel, and the expert may be required to provide a rational explanation.

Background facts

Mr Noble brought a cross-claim against Secure Logic Pte Ltd (SL Singapore) and Secure Logic Pty Ltd (SL Australia). SL Singapore is a wholly owned subsidiary of SL Australia.

Mr Noble relies upon the terms of a written employment contract with SL Singapore which he claims entitled him to a 6 percent shareholding in SL Singapore together with the possibility of a further 6 percent (based upon performance). Mr Noble also claims that the contract entitled him to trade his shares in SL Singapore for an equal number of shares in SL Australia.

His cross-claim seeks damages for the loss of the shareholding in SL Singapore and the loss of the opportunity to trade shares in SL Singapore for shares in SL Australia.

For the purposes of quantifying his damages Mr Noble intended to lead evidence from an expert accountant, Mr Ross Mottershead, concerning the value of shares in SL Singapore and SL Australia at the relevant time.

Mr Mottershead provided an opinion to Mr Noble’s solicitors in the following terms:

… it is my expert opinion that the value of Secure Logic Pty Ltd (Australia) and Secure Logic Pte Ltd (Singapore) may be determined in part by considering the value of the other companies within the group.

It is my experience that different corporate group structures hold business assets and functions in different companies for reasons that include but are not limited to asset protection and tax saving. This inter-company relationship may have degrees of bearing on a single company’s value.

Relying upon the above expert opinion, Mr Noble’s solicitors issued three notices to produce and caused the Court to issue three subpoenas in an effort to obtain financial information from related companies of SL Singapore and SL Australia.

Parker J characterised the notices to produce and subpoenas as seeking “a comprehensive disclosure of the financial position of each of the companies in question and their dealings within the so-called “Secure Logic Group”, with a particular focus on the potential for transfer pricing and sharing of services within that “Group”.

The plaintiffs applied to the Supreme Court of New South Wales to have the notices to produce and subpoenas set aside, including on the grounds of relevance and oppression.

Link between relevance and oppression

It is well established that the requirement of relevance needed to support a notice to produce or a subpoena is not a demanding one. The test to be applied has been stated in various ways. For example, it has been said that a category of documents is sufficiently relevant for the purposes of a notice to produce or a subpoena if “it is likely the documentation will materially assist on an identified issue, or there is a reasonable basis beyond speculation that it is likely the documentation will” (Nicholas J in ICAP Pty Ltd v Moebes [2009] NSWSC 306 at [30]).

In the present case the presiding judicial officer, Parker J, accepted that there may be documents of potential relevance in the extremely wide range of material sought (that is, documents touching upon the value of shares in SL Singapore and SL Australia). However, he determined that the notices to produce and subpoenas should be set because they were not “appropriately directed”.

Notwithstanding that the test of relevance is not a demanding one, in Parker J’s opinion (at [27]):

… this test must be applied having regard to the scope of the production which would be required as a whole. It cannot be a justification for issuing a subpoena which would require the production of thousands of documents that one particular document, or an identifiable small subgroup of the documents, may in some way or another add to the relevant evidence in the case if the other documents called for will not. The test … , in my opinion, does not excuse the legal representatives from doing their best to frame subpoenas and notices to produce in such a way as to target documents which are likely to be relevant.

Furthermore, even though there was no evidence before the Court of the difficulty or otherwise in complying with the notices to produce and the subpoenas, Parker J held that this was a case “where it is clear from the terms of the request itself that the request is oppressive” and that the task of compliance “will be expensive or, at least, is likely to be expensive enough to justify complaint”.

Expert’s opinion as to relevance not gospel

As mentioned above, Mr Noble’s legal representatives relied upon the opinions expressed by an expert accountant, Mr Mottershead, as to why the documents sought were necessary for him to complete his report. They submitted that the task of identifying what documents were needed was itself a matter for expertise and that the Court should not seek to go behind Mr Mottershead’s opinion in this regard.

Mr Noble’s legal representatives pointed to the decision of Stevenson J in in RSA (Moorvale Station) Pty Ltd v VDM CCE Pty Ltd [2013] NSWSC 534. In that case an expert engineer, Mr Senogles, maintained the position that he needed certain documents to complete his report for the reasons which he identified. Stevenson J stated at [23] that “In my opinion, it is neither necessary, nor appropriate, for me to express any view about the correctness of Mr Senoogles’ contentions”.

Mr Noble’s legal representatives submitted that Parker J should follow the same approach in the present case. However, Parker J declined to do so for the following reasons:

  1. The opinions of Mr Mottershead were expressed at an extremely general level. This was to be contrasted with the RSA case, where the expert identified specific categories of documents which were sought;
  2. Mr Mottershead had not sought to explain, by reference to the accounts of SL Singapore and SL Australia which had been made available to him, the particular transactions or classes of transactions with other related companies he needed to further investigate (for the purpose of the valuation of those two companies);
  3. Even if Mr Mottershead had expressed an opinion by reference to particular categories of documents sought, “it would be no more than an oracular pronouncement on his part” in the absence of a rational explanation as to why the documents were necessary to complete his report. This was a reference to the following judicial statement which was cited with approval by Heydon JA in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 729–30 [59]:
“the bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross-examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert.”

Take home points

  1. There is an overlap between the ‘relevance’ and ‘oppression’ grounds of objection to a notice to produce/subpoena. If the categories of documents sought are not appropriately directed with the result they capture both apparently relevant and irrelevant documents, the notice to produce/subpoena may be characterised as oppressive and set aside accordingly.
  2. Legal practitioners have a duty to frame notice to produce/subpoenas so that they target documents which are likely to be relevant. This is consistent with furthering the overriding purpose set out in s 56 of the Civil Procedure Act 2005 (NSW) (to facilitate the just, quick and cheap resolution of the real issues in the proceedings).
  3. An expert witness has a duty to furnish the Court with the necessary criteria to enable evaluation of the validity of the expert’s opinions. It is well understood that this duty applies to opinions expressed in an expert report. The present decision confirms that the duty also applies to an opinion expressed by an expert as to the documents apparently required to complete his or her report.