The opinion rule: Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed (section 76 of the Evidence Act 1995 (NSW) (the Act)).
As with most rules, there come the exceptions. One such exception is if a person has specialised knowledge based on the person’s training, study or experience and their evidence of an opinion is wholly or substantially based on that knowledge (ie, expert knowledge) (section 79 of the Act).
The application of section 79 was recently considered in Canon Finance Australia Limited v Reliance Medical Practice Pty Ltd & Ors (No 2)  NSWSC 1374.
In Canon, the affidavit evidence of Christopher Benson, a purported IT expert, was challenged as to whether it came within the s 79 exception. The Court ruled only parts of Mr Benson’s affidavit evidence admissible and, in doing so, provided insight into the operation of section 79.
For section 79 to apply, the Court must be satisfied that the expert has the requisite expert knowledge. Mr Benson overcame that threshold.
The contentious issues before the court were that:
- The facts upon which the opinions were based were not transparent; and
- The reasoning which led or supported the opinions were not set out in the affidavits.
His Honour noted that “both matters are essential to the admissibility of expert evidence”.
As to the first point, his Honour stated that identifying the facts upon which the opinion is based is “essential”, as it demonstrates the relevance of the opinion to the facts in issue.
As to the second point, his Honour stated that setting out the reasoning process supporting the opinion is necessary to demonstrate that:
- The opinions are indeed based upon the expert’s specialised knowledge; and
- That those opinions do not extend beyond the bounds of the expert’s specialised knowledge.
Canon follows on from the proceedings brought by John Rolleston against his insurer ( NSWCA 168).
In that case, John Rolleston owned property upon which he was constructing a residence. The property was damaged by fire and Mr Rolleston made a claim under his insurance policy. The claim was denied. Mr Rolleston then sold the Property in its damaged state and commenced proceedings against his insurer seeking loss and damage arising from the fire damage to the property on the basis that the file had adversely affected the market value of the property. In doing so, Mr Rolleston relied on the report of an ‘expert’ valuer.
The valuer’s evidence was excluded at trial because the valuation report did not expose the expert’s reasoning sufficiently to demonstrate how it was based on his specialised knowledge.
On appeal, Meagher JA recognised that the valuer had adopted the “comparable sales method” in arriving at his valuation. The valuation report identified the differences between comparable properties in general terms. His Honour considered that the valuer ought to have explained how the comparable sales justified his conclusion in a way which demonstrated the application of the methodology he adopted, and the specialised knowledge he had.
The trial judge had also indicated that had the report not been inadmissible under section 79, it would have been excluded under section 135.
Section 135 allows the court to refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might be – amongst other things – unfairly prejudicial to a party.
In the Rolleston case, given that the expert’s reasoning process was not apparent, had the valuation report been tendered, the insurer would have been put in the position of needing to expose the expert’s reasoning in cross-examination, or alternatively, not to challenge the report and risk the Court accepting the expert’s opinions.
The trial judge considered that to put the insurer in that position would be both unfair and ‘prejudicial in the extreme’. As such, the trial judge held that the report should also be excluded under section 135 of the Act.
Expert reports: what to look for?
When considering relying on expert evidence, make sure you:
- Choose an expert that has the requisite specialised knowledge to fall within the s 79 exception to the opinion rule; and
- Assess whether the expert report adequately sets out the facts upon which the opinions were based; and the reasoning which led to, or supported, the opinion.
What to look for:
- Has the expert clearly set out their reasoning process? This will enable the Court to ascertain whether the opinion was wholly or substantially based on the expert’s ‘specialised knowledge’;
- Has the expert explained how their ‘specialised knowledge’ applies to the facts, so as to produce the opinion propounded? This will also enable the Court to ascertain whether the opinion was based wholly or substantially on the expert’s ‘specialised knowledge’; and
- Has the expert confined their opinion to those that are wholly or substantially based upon their specialised knowledge?
Absent consideration of these issues you risk having an expert report which will be inadmissible.
This article was written by Rebecca Hosking, Partner, and Edward Basha, Paralegal.
P: +61 2 9334 8632