New Aim Pty Ltd v Leung [2023] FCAFC 67

Executive summary

Is it ever permissible to assist an expert draft their report and, if so, how far is too far?

As the case of New Aim Pty Ltd v Leung [2023] FCAFC 67 (New Aim) shows, solicitor involvement in the drafting process can be fraught with risk. While some involvement is often necessary and permitted to ensure the report answers the questions posed and is in admissible form, a line is crossed when solicitors seek to influence the expert’s opinion.

In New Aim, the Federal Court of Appeal (FCA) overturned a first instance decision by the primary judge, who found that the line had been crossed. The FCA upheld the fundamental rule that lawyers should never interfere with an expert’s opinion, but found in this instance that while parts of the report were prepared through a “collaborative” process between lawyer and expect, the expert’s opinions remained her own. The court also disagreed with the primary judge’s finding that a letter of instruction dated the day before the report was issued (a relatively common practice) was misleading.

This is an important decision for lawyers engaging experts in all forms of proceedings.

Facts

The appellant, New Aim Pty Ltd (New Aim), is an e-commerce business that procures products from China for the Australian market.  It commenced proceedings against a former employee and two competing businesses for breach of their obligations not to reveal or use confidential information acquired during the course of the employee’s employment with New Aim. The confidential information consisted of details of New Aim’s suppliers based in China, which the former employee had provided to the two competitors.

New Aim procured expert evidence from Ms Chen, the managing director of a company that sources products from China, on the confidential nature and value of the supplier information.

Relevantly, Ms Chen produced an expert report dated 8 March 2022 which annexed a letter of instruction from New Aim’s lawyers dated 7 March 2022. Both were attached to a witness statement dated 8 March 2022, that also annexed a retainer letter (without instructions) dated 21 February 2022.

The merits of New Aim’s claim are not addressed in this note. The focus is on the admissibility of Ms Chen’s evidence.

First instance decision

The primary judge, McElwaine J, rejected Ms Chen’s evidence as he was not satisfied that the opinions expressed in her report truly represented her honest and independent opinions. His Honour came to this conclusion because of the following:

1. Ms Chen’s report was dated 8 March 2022, a day after the letter of instruction from New Aim’s solicitors dated 7 March 2022.
2. From this and the retainer letter dated 21 February 2022, it was obvious that New Aim’s solicitors had been in prior communication with her.
3. Production of those communications revealed that drafts of the report were prepared by New Aim’s solicitors by 25 February 2022.
4. Under cross examination, Ms Chen conceded that certain paragraphs in those drafts and her final report were prepared by New Aim’s lawyers.

For McElwaine J, this was all damning in terms of the expert’s independence and the role of the solicitors involved.

As to Ms Chen’s independence, the above matters left him in doubt as to who actually authored the report. This he said breached the Federal Court Practice Note on Expert Evidence (Practice Note) and the Harmonised Expert Witness Code of Conduct (Code of Conduct).

His Honour considered authorities to the effect that the lawyers can, and in some cases, must be involved in the drafting of reports.¹ His Honour also considered that there is no ethical impropriety in a lawyer preparing the first draft (in conference or alone), based on instructions received from the expert.² However, he found that New Aim’s lawyers had, in this instance, crossed the line, namely that:

1. the letter of instruction dated 7 March 2022 conveyed a misleading representation that Ms Chen was engaged to prospectively consider the questions posed when in fact a draft had been prepared by no later than 25 February 2022; and
2. in response to requests for production of all documents regarding any communications between New Aim’s lawyers and Ms Chen, New Aim’s lawyers had falsely asserted that all such documents had already been produced as attachments to her witness statement of 8 March 2022, when email correspondence from 22 February 2022 revealed instructions as to who would draft the report and what it would be based upon.

He concluded that if lawyers are involved in the drafting of an expert report that fact must be disclosed in the expert report and all correspondence relating to the preparation of a report must be disclosed. Neither had occurred in this instance.

McElwaine J rejected Ms Chen’s evidence in its entirety, i.e., he did not seek to merely give it less weight.

What did the Court of Appeal say?

The FCA did not agree that New Aim’s lawyers had crossed the line or that there was anything misleading about the letter of instruction dated 7 March 2022 or other correspondence between New Aim’s lawyers and Ms Chen. In particular:

1. that although the lawyers had drafted certain paragraphs for her, these paragraphs remained her opinions;
2. that while it is undesirable for lawyers to be involved in the drafting of an expert’s report, other than to ensure that the report is admissible and complies with the Expert Code, there may be physical, language or resource difficulties that may necessitate a greater involvement. The primary question is not whether lawyers assisted in the drafting of a report but whether they influenced the expert’s opinions (which was not found here)the FCA did not agree with the primary judge that:
   1. lawyers have an obligation to disclose any involvement in the drafting of an expert report and
   2. that all correspondence relating to the preparation of the report must be disclosed.
3. the letter of instruction of 7 March 2022 did not convey a representation that Ms Chen had been engaged to prospectively consider the questions posed. It was unlikely to have been understood as conveying such a representation in circumstances where the letter was read (as it was intended to be) as an annexure to a witness statement dated 8 March 2022, to which was annexed a retainer letter dated 21 February 2022 and the expert report.³ In our experience, the issuing of a letter of instruction shortly before the issuance of the final report is a relatively common and unavoidable practice.
4. the FCA also did not agree that New Aim’s lawyers had falsely asserted that all documents evidencing instructions had already been disclosed. The communications ultimately produced did not disclose instructions; they involved an update on the progress of Ms Chen’s draft statement and a request for documents to be attached to it.
5. that much of Ms Chen’s evidence was factual rather than opinion evidence. While the same ethical requirement to avoid influencing evidence applies to both lay and expert evidence, it is more usual for lawyers to take proofs of evidence from oral communications for lay witnesses than it is for experts, and although it is less common for this to occur in the preparation of expert evidence, there are reasons why it might occur.

The FCA overturned McElwaine J’s decision to reject Ms Chen’s evidence in its entirety and remitted the matter for a retrial to take place before a Judge other than McElwaine J.

Key takeaways

• Avoid any involvement in the drafting of an expert’s report other than for recognised reasons (clarification of the expert’s opinions, to put in an admissible form and compliance with the Expert Code of Conduct).
• Where substantial drafting is required because of language or other reasons, care must be taken to record that the draft reflects what the expert has conveyed to the lawyer. This fact does not need to be disclosed in the report, but it would be prudent to record it is communications with the expert.
• A letter of instruction may be dated just prior to the date of the report. It is advisable also to ensure that it is drafted so as to record instructions that may have been provided earlier. In those circumstances, it should not represent that the expert will upon receipt of the instruction set about the task of preparing their report when in fact this has already occurred.
• Finally, this case is an important reminder to legal practitioners that:
  • lawyers should never seek to influence or interfere with the opinions of an expert;
  • once an expert’s report is filed, all correspondence in relation to instructions to the expert may be discoverable; and
  • an expert may be cross-examined on conversations that concern those instructions.

This article was written by Theo Kalyvas, Partner, Brian Rom, Special Counsel and Oli Keats, Solicitor.

¹ Lindgren J in Harrington-Smith on Behalf of the Wongatha People v Western Australia (No 7) (2003) 13 FCR 424; [2003] FCA 893 at [18]- [19]

² Hugh Stowe ‘Preparing expert witnesses – a (continuing) search for ethical boundaries’ [2018] Bar News 72 at 77-78

³ FCA observed at [89] that “it is not unusual in a number of contexts not to finalise the formulation of the question asked of the expert without first discussing the issues with the expert”