The obligations and requirements of an expert and their conduct affirmed by the court in Blackmores Ltd v Jestins Enterprises Pty Ltd [2020] NSWSC 1177.

 Facts:

  • The Defendant, Jestins Enterprises (‘Jestins’), entered into an agreement with the Plaintiff, Blackmores, to acquire products on credit. Jestins proceeded to create a second account on credit with Blackmores and used these funds to transport the Plaintiff’s products to China, this deal resulted in them trading as ‘Pharmadeal’.
  • Jestins failed to make consistently make repayments to the credit taken out with Blackmores and sought to enter into a Deed of Settlement (‘The Deed’) to assist with repayment.
  • The Deed stipulated an initial payment by Jestins of $800,000 and a following $1,193,813.53 within 12 days. The first payment was made, however Jestins failed to make the second payment.
  • Blackmores proceeded to commence proceedings against Jestins, however the Defendant claimed that the behaviour of the Plaintiff substantiated a breach of contract and resulted in a $7,000,000.00
  • To assess the allegations of Jestins, an expert was appointed to determine the quantum of the Defendant’s alleged loss. The court rose concerns with the methodology of the expert and accountant, Mr S, and addressed this in their judgment.

Judgment:

  • The court noted the following issues with the reasoning of Mr S in relation to the Defendant’s losses;
    • The expert assumed that the dealings of Pharmadeal should be combined as part of the value of Jestins’ business. This was done without consideration of the original contract.
    • The expert relied on information that was provided by the Sole Director of Jestins, without question of the reliability and accuracy of the material provided.
    • The court was also informed of discrepancies by the Plaintiff’s expert which Mr S was unable to substantiate or explain.
    • The report of Mr S was informal and presented evidence via Audio Visual Link. Mr S dressed informally in what the court noted as a “sweatshirt” and was occasionally attending to emails and text messages.
  • The court noted that the behaviour of Mr S was below the standard of formality expected by experts, even via video link. The Justice Ball brought concern with whether it would be appropriate for Mr S to charge for the work done based off of the inadequacy of it.
  • The court held judgment in favour of Blackmores, the plaintiff, rejecting the conclusions posed by the report of Mr S.

Key Points from this Case:

  • For Experts:
    • The reporting of an Expert’s Report should have a verified basis for their reporting. You should be able to prove the assumptions made or show that you have attempted to verify the material provided.
    • Experts should always adhere court etiquette, regardless of whether they are attending court or via Audio Visual Link. This includes; correct formality when addressing the court, the presentation of any reports physically produced to the court and attire for appearance at court.
    • The court may entitle parties to reduce the amount paid to an expert if there is a clear and evident disregard for the procedure and formality of court proceedings.
  • For Parties contracting an Expert:
    • Ensure that the Expert has been presented with the requisite code of conduct for the court proceedings are commenced in.
    • Ensure you have communicated with your Expert prior to hearing to ensure they are aware of their obligations.

 

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