FEDERAL COURT OF AUSTRALIA

Rush v Nationwide News Pty Limited (No 5) [2018] FCA 1622

ORDERS

THE COURT ORDERS THAT:

1.    The respondents’ application that the opinion evidence of Mr Frederic Schepisi and Mr Frederick Specktor be ruled inadmissible, or alternatively for an order that the evidence of Mr Schepisi and Mr Specktor be excluded pursuant to s 135 of the Evidence Act 1995 (Cth), be refused.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WIGNEY J:

1    Mr Geoffrey Rush has sued Nationwide News and Mr Jonathon Moran for defamation. The background to this action is outlined in previous judgments of the Court: see Rush v Nationwide News Pty Ltd [2018] FCA 357 and Rush v Nationwide News Pty Ltd (No 2) [2018] FCA 550.

2    On the fifth day of the trial, Mr Rush called Mr Frederic Schepisi to give evidence in his case. There were two aspects to Mr Schepisi’s evidence. The first aspect was evidence concerning Mr Rush’s reputation. That evidence was to be given viva voce, though an outline of the expected evidence had been served. The second aspect was expert opinion evidence concerning various issues relevant to the financial losses that Mr Rush would incur by reason of the alleged defamatory publications. Mr Schepisi’s opinion evidence, which was to be adduced by way of the tender of a written report, was, to a large extent, responsive to expert opinion evidence that Nationwide and Mr Moran intend to adduce from a Beverly Hills-based entertainment attorney, Mr Richard Marks.

3    Nationwide and Mr Moran objected to the tender of Mr Schepisi’s expert report.

4    Mr Rush also intends to call evidence from his Los Angeles-based agent, Mr Frederick Specktor. Like Mr Schepisi’s evidence, the evidence intended to be adduced from Mr Specktor includes evidence concerning Mr Rush’s reputation and expert evidence, again in the form of an expert report, containing Mr Specktor’s opinions regarding matters relevant to Mr Rush’s future economic loss.

5    Nationwide and Mr Moran also objected to the tender of Mr Specktor’s expert report.

6    After hearing argument concerning the admissibility of the expert reports, I decided to admit the expert opinion evidence of both Mr Schepisi and Mr Specktor. These are my reasons for arriving at that decision.

7    Nationwide and Mr Moran advanced three reasons for why the opinion evidence of Mr Schepisi and Mr Specktor was either inadmissible or should be excluded.

8    The first reason was based on the assertion that both Mr Schepisi and Mr Specktor were not independent and were “necessarily incapable of being impartial”.

9    The second reason was based on the assertion that each of Mr Schepisi and Mr Specktor had obtained information relevant to the formation of their respective opinions in the course of their relationship with Mr Rush which was “not part of the identified body of information to which the expert is authorised to have regard in preparing the report”.

10    The third reason was that the evidence was unfairly prejudicial and ought to be excluded pursuant to s 135 of the Evidence Act 1995 (Cth).

The independence ground

11    Nationwide and Mr Moran alleged that Mr Schepisi and Mr Specktor were not independent because both knew Mr Rush well and had a close relationship with him. That was said to be apparent from, amongst other things, the fact that they were both giving evidence concerning Mr Rush’s reputation. While the outlines of the reputation evidence to be given by Mr Schepisi and Mr Specktor were not before the Court for the purposes of this application, it was common ground that Mr Schepisi had known Mr Rush for 12 years socially and professionally and that they had worked and spent a lot of time together. It was also common ground that Mr Specktor was Mr Rush’s agent and had represented him for over 20 years.

12    It should be noted, in this context, that Nationwide and Mr Moran did not seek to cross-examine either Mr Schepisi or Mr Specktor, in a voir dire, about their ability to give impartial and objective opinions about matters within their area of specialised knowledge, despite their relationships with Mr Rush.

13    The argument advanced by Nationwide and Mr Moran based on the alleged lack of independence of Mr Schepisi and Mr Specktor relied entirely on certain provisions in Part 23 of the Federal Court Rules 2011 (Cth) and the Court’s Practice Note concerning expert evidence (GPN-EXPT).

14    Rule 23.11 of the Rules provides that a party may call an expert to give expert evidence at trial only if the party has delivered an expert report that complies with r 23.13.

15    Rule 23.13(1)(h) of the Rules provides that an expert report must comply with GPN-EXPT.

16    Clause 2.2 of GPN-EXPT provides that the purpose of the use of expert evidence in proceedings is for the Court to receive the benefit of the objective and impartial assessment of an issue from a witness with specialised knowledge (based on training, study or experience).

17    Clause 3.3(b) of GPN-EXPT provides that a witness retained as an expert should be provided with all relevant information (whether helpful or harmful to that party’s case) so as to enable the expert to prepare a report of a truly independent nature.

18    Clause 4.1 of GPN-EXPT provides that the role of the expert witness is to provide relevant and impartial evidence in his or her area of expertise.

19    Clause 4.4 of GPN-EXPT provides that every witness must read and agree to be bound by the Harmonised Expert Witness Code of Conduct.

20    Clause 2 of the Code of Conduct provides that an expert witness is not an advocate for a party and has a paramount duty, overriding any duty to the party to the proceedings or other person retaining the expert witness, to assist the Court impartially on matters relevant to the area of expertise of the witness.

21    Nationwide and Mr Moran relied on the decision of Mortimer J in Guy v Crown Melbourne Limited [2017] FCA 1104 where her Honour, after analysing the relevant provisions of Part 23 of the Rules, GPN-EXPT and the Code of Conduct said (at [50]):

In my opinion this means, at a minimum, that there must be substantial, at least purportedly substantial, compliance with Part 23, or a capacity substantially to comply with Part 23, by both a party and that party’s proposed witness, including a preparedness and capacity to acknowledge the necessity for an expert witness to be independent in the sense set out in the authorities, the Practice Note and the Harmonised Code.

22    Mortimer J found that there had been “no attempt to comply with Part 23 in the first place” (at [52]) and (at [55]) “no compliance at all” with Part 23 of the Rules by the expert in question. Her Honour also found that, in the particular and fairly unique circumstances of the case, and given what the expert had deposed, there was no question that the expert was “an advocate for the cause” of the party who proposed to call him (at [51] and [56]). Nor was there “any reason to believe [the expert] would even consider attempting to proffer the declarations of independence required, or the acknowledgements of the need for independence” (at [56]). In those circumstances, her Honour refused to waive compliance with Part 23 of the Rules and refused to admit the evidence. Her Honour concluded (at [58]):

In those circumstances, it would be inimical to the structure and purpose of Part 23 to waive the requirements of that Part entirely; or of r 23.11. This Court’s Rules do not intend that there are two kinds of expert evidence admissible in proceedings in this Court – independent and non-independent; substantially compliant with Part 23 and wholly non-compliant. The purpose of Part 23 as a whole is to regulate the form and preconditions to admissibility of opinion evidence within the terms of s 79(1) of the Evidence Act. That is why substantial compliance (at least purported), or the capacity substantially to comply, with Part 23 must be, in this Court at least, a precondition to admissibility of evidence within s 79(1) of the Evidence Act.

23    Nationwide and Mr Moran submitted, in effect, that the same reasoning applied to the expert evidence of Mr Schepisi and Mr Specktor.

24    I disagree with that submission for a number of reasons.

25    First, the submission appears to be premised on the contention that Mr Schepisi and Mr Specktor failed to comply with Part 23 of the Rules. There was and is, however, no demonstrated or demonstrable non-compliance with Part 23 of the Rules on the part of either Mr Schepisi or Mr Specktor.

26    The alleged non-compliance was said to be a failure to comply with r 23.13(1)(h) of the Rules and cll 2.2 and 4.1 of GPN-EXPT, the content of which was summarised earlier. There is, however, no basis at this stage to conclude that Mr Schepisi and Mr Specktor will not be able to give the Court the “benefit of the objective and impartial assessment of an issue” from their area of specialised knowledge (cl 2.2 of GPN-EXPT), or that they will not be able to fulfil the role of providing “relevant and impartial evidence” in their area of expertise (cl 4.1 of GPN-EXPT). Nor is there any basis for the contention that Mr Schepisi and Mr Specktor are, or will be, advocates for Mr Rush’s cause.

27    The fact that both Mr Schepisi and Mr Specktor have known Mr Rush for many years, are on close terms with him and, in Mr Specktor’s case, have an ongoing relationship of principal and agent, does not necessarily mean that they cannot give impartial and objective evidence concerning the matters referred to in their reports. Nor does the fact that Mr Schepisi and Mr Specktor will be giving reputation evidence in relation to Mr Rush. It certainly does not mean that Mr Schepisi and Mr Specktor are, or will be, advocates for Mr Rush’s cause when giving their expert opinion evidence.

28    Unlike the expert witness in Guy v Crown, both Mr Schepisi and Mr Specktor stated that they had read and understood GPN-EXPT and agreed to comply with it. There is no basis to disbelieve their statements to that effect. Nor is there any basis to conclude that, despite acknowledging the need to give impartial and objective opinions about the matters within their area of specialised knowledge, they will act as advocates for Mr Rush, will express opinions simply designed to assist him, or, worse still, will mislead the Court. Nationwide and Mr Moran did not cross-examine Mr Schepisi or Mr Specktor on the voir dire and put to them that they were, in fact, unwilling or incapable of being objective or independent. Nothing in the reports prepared by Mr Schepisi or Mr Specktor provides any basis for the conclusion that the opinions that they express therein are not impartial or objective opinions.

29    Second, and in any event, the admissibility of expert opinion evidence is governed by the Evidence Act, not by the Rules, or GPN-EXPT, or the Code of Conduct.

30    Section 76 of the Evidence Act sets out a general rule (“the opinion rule”) which excludes the admission of opinion evidence to prove the existence of a fact in issue. Section 76(1) provides as follows:

Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.

31    Section 79 of the Evidence Act creates an exception to the opinion rule in the case of expert witnesses. Section 79(1) provides as follows:

If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.

32    It can readily be seen that the exception to the opinion rule in s 79 of the Evidence Act applies if two preconditions are fulfilled or established: first, the witness has specialised knowledge derived from training, study, or experience; and, second, the opinion expressed by the witness is wholly or substantially based on that specialised knowledge. Nothing in s 79 imposes an additional condition that the witness be independent or that his or her opinion is demonstrably objective or impartial.

33    Nationwide and Mr Moran did not contend that the opinion evidence failed to meet or satisfy the two preconditions in s 79 of the Evidence Act. Rather, they contended that the references to objectivity and impartiality in GPN-EXPT, and the requirement in the Code of Conduct that an expert witness not be an advocate for the party calling him or her, effectively create an additional precondition or requirement for the admissibility of expert opinion evidence. That contention, however, is wrong.

34    The relevant statements of the duties and responsibilities of expert witnesses that are contained in GPN-EXPT and the Code of Conduct may be traced back to the judgment of Cresswell J in National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1993] 2 Lloyd’s Rep 68 at 81-82; see Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 at [79]. Those statements, however, are “admonitions to those who would give expert evidence” or “precepts or ideals towards which expert witnesses should strive” or “moral exhortations”; they are not principles of the laws of evidence, or exclusionary rules, or legal requirements: FGT Custodians Pty Ltd (formerly Feingold Partners Pty Ltd) v Fagenblat [2003] VSCA 33 at [15], [17] (Ormiston JA, with whom Chernov and Eames JJA agreed); Australian Securities and Investments Commission v Rich (2005) 190 FLR 242; [2005] NSWSC 149 at [254]; Fortson Pty Ltd v Commonwealth Bank of Australia (2008) 100 SASR 162; [2008] SASC 49 at [114] (Debelle J, with whom Doyle CJ and Bleby J agreed); Sydney South West Area Health Service v Stamoulis [2009] NSWCA 153 at [200]-[208] (Ipp JA, with whom Beazley and Giles JJA relevantly agreed); SmithKline Beecham (Australia) Pty Ltd v Chipman (2003) 131 FCR 500 at [32]-[37]; Ananda Marga Pracaraka Samagha Ltd v Tomar (No 4) (2012) 202 FCR 564; [2012] FCA 385 at [35]-[54]; Lake Macquarie City Council v Australian Native Landscapes Pty Ltd [2015] NSWLEC 92 at [9]-[15].

35    The relevant principle established by those and other authorities was neatly summarised by Dodds-Streeton J in Ananda Marga in the following terms (at [35]):

In my opinion, relevant authority establishes that while (as reflected by the Federal Court Practice Note and like curial protocols) objectivity and independence are sought of expert witnesses, such qualities are not preconditions of competence, even in the case of expert witnesses. The sanction for failure to fulfil the obligations imposed by relevant authority and curial protocols is not the exclusion of the expert’s evidence, but rather, the significant risk that it will fail to persuade.

36    In other words, an actual or perceived lack of independence, impartiality or objectivity of an expert witness goes to weight, not admissibility.

37    It follows that opinion evidence which otherwise complies with s 79 of the Evidence Act is not excluded because the expert is a party to the proceedings, or has a material interest in the proceedings, or is an employee of one of the parties: see Stamoulis at [211]-[219] and the cases there cited.

38    It must also follow that the opinion evidence of Mr Schepisi and Mr Specktor is not inadmissible merely because they have both been on close terms with Mr Rush for many years, or, in Mr Specktor’s case, because he has some commercial arrangement with Mr Rush, or by reason of any perception of partiality or lack of objectivity that might arise from their connections with Mr Rush. Those are matters which may well factor into the assessment of the weight to be given to their opinion evidence. They are not, however, grounds for exclusion of the evidence.

39    Third, the heavy reliance placed by Nationwide and Mr Moran on the judgment of Mortimer J in Guy v Crown was misplaced. In Guy v Crown, Mortimer J referred to the judgment of Dodds-Streeton J in Ananda Marga. Her Honour did not say that Dodds-Streeton J’s statement of principle at [35] of that judgment (cited and extracted earlier) was wrong. Rather, her Honour distinguished Ananda Marga on the basis that Dodds-Streeton J was not dealing with a case where there had been no compliance at all with Part 23 of the Rules: see Guy v Crown at [53]-[55]. The compliance with Part 23 in Ananda Marga was said to be that the expert had acknowledged the need for independence: see Guy v Crown at [53]. That is also the case here, as both Mr Schepisi and Mr Specktor have stated that they had read and understood GPN-EXPT and agree to comply with it.

40    Like Ananda Marga, this case is clearly distinguishable from the circumstances considered by Mortimer J in Guy v Crown, where the expert candidly disclosed that he was an advocate for the cause of the party calling him and made no attempt to comply with Part 23: see Ananda Marga at [23] and [51].

41    Lest there be any doubt about it, however, to the extent that there is any inconsistency between Ananda Marga and Guy v Crown in relation to the matters of principle, I would follow Ananda Marga, which is entirely consistent with the long line of authority referred to earlier. The qualities of objectivity and independence on the part of an expert witness, as referred to in GPN-EXPT and the Code of Conduct, are not preconditions of competence. Rather, they are matters that may go to weight. That is not to say that Mortimer J was wrong to exclude the opinion evidence in the case before her Honour. The nature of the opinion evidence and the circumstances of the expert in Guy v Crown were exceptional. It is perhaps not difficult to imagine cases where the proposed expert is so fundamentally biased or conflicted that his or her opinion evidence should be excluded. But the exclusion in such cases would generally be either because the bias of the expert meant that the preconditions in s 79 were not met, or by operation of provisions such as s 135 of the Evidence Act, not by operation of the Rules, or GPN-EXPT or the Code of Conduct.

42    Fourth, it is accordingly unnecessary to consider whether non-compliance with Part 23, or r 23.11 can be waived, or should be waived in the particular circumstances of this case: cf Guy v Crown at [58]. Here, there has been no demonstrated non-compliance with r 23.11, or any other rule in Part 23, let alone a complete failure to comply, or even purport to comply, as was the case in Guy v Crown. Nor has it been demonstrated that Mr Schepisi and Mr Specktor do not have the capacity to comply with r 23.11, or any other rule in Part 23, merely because of their friendship and association with Mr Rush over the years.

43    I should emphasise that if, as events transpire, the opinion evidence of either Mr Schepisi or Mr Specktor is ultimately shown to lack objectivity or impartiality, or if either Mr Schepisi or Mr Specktor are shown to be mere advocates for Mr Rush in relation to the opinions that they have expressed, that would most likely lead me to give little or no weight to those opinions. Whether that turns out to be the case, however, remains to be seen.

Unidentified body of information ground

44    The basis for this ground of exclusion was that both Mr Schepisi and Mr Specktor state in their reports that their evidence was based, not only on their specialised knowledge of the acting and entertainment industry, but also their personal knowledge of Mr Rush. Nationwide and Mr Moran contended that Mr Schepisi’s and Mr Specktor’s reports did not set out the facts arising from their personal knowledge of Mr Rush which they relied on in forming their opinions and the reports. The reports therefore do not comply with r 23.11(1)(e) of the Rules. They also argued that the information obtained by Mr Schepisi and Mr Specktor in the course of their relationship with Mr Rush was not part of the “identified body of information” that they were “authorised to have regard to” in preparing their reports. That argument was based on the following statement by Austin J in Rich (at [348]):

One additional factor especially pertinent in the present case is that expert opinion evidence might be excluded if the expert, in the course of his or her prior relationship with the party who has retained him or her, has obtained information relevant to the formation of his or her expert opinion, which is not part of the identified body of information to which the expert is authorised to have regard in preparing the report. Here the problem is not lack of independence per se, but the fact that, in the course of acting in relationship with a party to the litigation in a non-independent way, the expert may have obtained information which is not appropriate or permissible to be used as a factual basis for expert opinions.

45    The arguments based on r 23.11(1)(e) of the Rules and Rich have no merit for a number of reasons.

46    First, both Mr Schepisi and Mr Specktor have set out their personal knowledge of Mr Rush in their outlines of evidence relating to Mr Rush’s reputation. More significantly, in their expert reports, both Mr Schepisi and Mr Specktor have set out exactly how they have used information gleaned from their personal knowledge of Mr Rush in forming their opinions. It is sufficient to give one example in relation to each witness.

47    Mr Schepisi was asked whether he agreed with Mr Marks’ opinion that “[a]s a general rule … actors’ roles and remuneration over the course of their career are speculative, uncertain, and unpredictable especially because they are dependent on offers from third parties which ebb, flow and/or dry up based upon the producers’ perceptions of the actor and the marketplace”. Mr Schepisi’s response in his report is that, while that proposition may be generally true, he does not think it applies to Mr Rush. That is because Mr Rush “enjoys a special position as an elite actor” and that for actors in that special category “… age is no impediment to getting work”. It can be seen that Mr Schepisi’s opinion is based in part on his personal knowledge of Mr Rush’s skills and reputation as an actor, though equally it could be said that Mr Schepisi’s specialised knowledge of the acting and entertainment industry plainly includes personal knowledge of Mr Rush. In any event, the facts upon which Mr Schepisi has expressed his opinion are clearly set out.

48    Mr Specktor was also asked to respond to Mr Marks’ opinions concerning various matters. One of those matters was Mr Marks’ opinion that there tend to be more roles for younger actors than older actors. Mr Specktor’s response in his report is that Mr Marks’ generalisation to that effect does not apply to a “pedigree actor” like Mr Rush and that, but for the publications the subject of these proceedings, “Mr Rush would have continued to act, and would have continued to earn similar income, for at least another 10 years”. It is, again, abundantly clear how Mr Specktor has used his personal knowledge of Mr Rush in forming his opinions.

49    There is accordingly no basis for the contention that the reports of Mr Schepisi and Mr Specktor do not comply with r 23.11(e) of the Rules.

50    As for Nationwide and Mr Moran’s reliance on Rich, the facts, circumstances, and nature of the expert opinion evidence considered in Rich are fundamentally different to the facts, circumstances, and nature of the expert opinions of Mr Schepisi and Mr Specktor. The observation made by Austin J in Rich at [348] cannot simply be transposed and applied, without analysis or close consideration, to the facts, circumstances, and opinion evidence under consideration in this case. In any event, for the reasons already given, there is simply no basis for the assertion that the personal knowledge that both Mr Schepisi and Mr Specktor have of Mr Rush is “not part of the identified body of information” that they are authorised to have regard to in preparing their reports.

51    Finally, it should be noted that Austin J’s decision to exclude the expert opinion evidence in Rich was reversed on appeal: Australian Securities and Investments Commission v Rich (2005) 218 ALR 764; [2005] NSWCA 152. The Court of Appeal found that Austin J’s approach and reasons for excluding the report were erroneous. It is, therefore necessary to approach some of Austin J’s statements of principle with some considerable caution. The reliance placed on what some of what Austin J said in Rich was accordingly misplaced.

Exclusion under s 135 of the Evidence Act

52    Nationwide and Mr Moran simply asserted that the opinion evidence of Mr Schepisi and Mr Specktor was unfairly prejudicial and should be excluded under s 135 of the Evidence Act. They did not expressly identify how or why it was unfairly prejudicial, though it can perhaps be assumed or inferred that the unfair prejudice somehow arose as a result of the fact that, so Nationwide and Mr Moran asserted, Mr Schepisi and Mr Specktor lacked independence and had personal knowledge of Mr Rush. Exactly why those considerations resulted in the evidence being unfairly prejudicial, however, remained unclear. It was not addressed in either the written or oral submissions advanced by Nationwide and Mr Moran. Nor was any attention given to the probative value of the evidence or the balancing exercise that is required when applying s 135 of the Evidence Act.

53    For the reasons already effectively given, the opinion evidence of Mr Schepisi and Mr Specktor was not unfairly prejudicial simply because they knew and had longstanding relationships with Mr Rush. Nor was the opinion evidence unfairly prejudicial because Mr Schepisi and Mr Specktor used their personal knowledge of Mr Rush in forming some of their opinions, particularly as they identified that knowledge and its use in their reports. In any event, even if the evidence was in some way unfairly prejudicial, Nationwide and Mr Moran did not even attempt to demonstrate how or why that prejudice “substantially outweighed” the probative value of the evidence.

Conclusion

54    Because there was no substance or merit in any of the arguments advanced by Nationwide and Mr Moran, I decided to admit the evidence. As I have already said, the weight that will be given to the opinions expressed by Mr Schepisi and Mr Specktor is entirely another matter. That cannot be determined until they have been cross-examined, as they both will be, and after all the evidence is before the Court, including the evidence of Mr Marks.

Associate:

Dated:    29 October 2018