Expert matters: Be careful what you wish for

“…any ‘shutting out’ of the applicant will be the result, not of the making of any unjust order or miscarriage of discretion of the Court, but the applicant’s own actions in consenting to the making of the order...”

Where parties to a dispute obtain orders by consent to appoint a Chartered Accountant to prepare a ‘forensic report’ and agree that the resulting report ‘shall be binding’, what are the options for a party who seeks to dispute the findings of the report?

These proceedings related to the estate of Schaja Ruschinek, who died on 31 January 2008.

The respondent, Mr Tiernan, was the executor of the estate. The will provided for a distribution of the estate to Mr Ruschinek’s two children, a son (the applicant in this matter) and daughter.

The administration of the estate was the subject of extensive litigation. In September 2014 the daughter began proceedings against the executor seeking that he file an account of the administration of the estate. After that account was provided, the son sought repayment by the executor of $524,377 to the estate, alleging discrepancies in the administration.

Consent orders made in December 2014, provided:

The parties within 7 days appoint Sothertons Chartered Accountants to prepare a forensic report as to the Defendant’s administration of the estate of Schaja Ruschinek deceased and the parties will make all relevant documents available to Sothertons Chartered Accountants for the purpose of preparing the forensic report, which shall be binding.

Mr L of Sothertons delivered a report in April 2015. The report found that only $2,486 of the amounts challenged had been, in fact, invalid payments from the estate.

The son approached Deloitte Touche Tohmatsu with a view to obtaining a review of the Sothertons report. However, when the son sought a timetable which would allow such a report to be prepared, the Court refused the application, apparently on the basis that the proposal that a report be prepared by Deloitte was inconsistent with the consent orders for the preparation of a single joint report. The Court also suggested that submissions that the Sothertons report was not a ‘forensic report’ could be made at trial and that the matters being raised could be issues for cross-examination. A similar application subsequently made by the son for leave to obtain and file material from Deloitte was also rejected.

The son nonetheless filed an affidavit setting out his concerns regarding aspects of the Sothertons report as well as the conduct of the administration of the estate by the executor. The executor objected to large parts of this affidavit. These objections were allowed: the Court’s reasons included that the parties had consented to, and were bound by, the order that the Sothertons report would be binding; and that the impugned parts of the affidavit represented the applicant’s opinion, or were in the nature of submissions.

The son appealed these findings, seeking an order that he be permitted to lead admissible evidence, including expert evidence, and that the Sothertons report be excluded in its entirety. He submitted that:

…it was unreasonable and plainly unjust for the Sothertons report to be relied on, in light of the significant prejudice to the applicant and the alleged manifest irregularities, deficiencies and unreliability of the opinion evidence contained in it, and the fact that the report is not shown to be based on specialised knowledge, so that [Mr L] has usurped the function of the trier of fact … [and] …that the judge failed to take account of the prejudice to the applicant in not being permitted to adduce evidence to impugn the admissibility or reliability of, or the weight to be attributed to, the Sothertons report, and that she wrongly proceeded on the premise that she was not shutting the applicant out from being able to deal with the respondent’s case.

The Court of Appeal rejected the son’s application, finding that, for the most part, it was misconceived. It said that:

...the question of admissibility of the Sothertons report is yet to be determined at trial. In the circumstances, the applicant has not been shut out from being in a position to deal with the respondent’s case … [and] …if the applicant is unsuccessful at trial in excluding the Sothertons report from evidence, and it is held to be binding in accordance with the order made on 5 December 2014, any ‘shutting out’ of the applicant will be the result, not of the making of any unjust order or miscarriage of discretion of the Court, but the applicant’s own actions in consenting to the making of the order and joining, pursuant to that order, in the instructing of Sothertons in accordance with the terms of the joint engagement.

A jointly appointed single expert can be efficient in addressing matters in dispute, particularly where the amounts are small or the funds available are limited. However, agreeing to such an appointment, and, in particular, committing to be bound by its outcomes, can leave limited options to party who is unhappy with those outcomes.

In this case, it would appear that the applicant jumped the gun in his challenge to the jointly appointed expert’s report. While the Court had indicated an intention to hold the parties to their agreement in relation to that report, it had not precluded the son from any form of challenge.

The ultimate outcome of any such challenge remains to be determined at trial (which is scheduled to commence on 16 March 2016).