Pan Pharmaceuticals Limited (In Liquidation) v Selim  FCA 416
- The Federal Court excluded expert evidence tendered against Pan as it had very little, if any, weight, would be unfairly prejudicial and substantial judicial and court time, involving substantial cost, would be occupied by the examination of its contents.
- Relevant principles of expert evidence discussed.
Australian readers will well remember the collapse of Pan after 28 April 2003 when its manufacturing licence was withdrawn following alleged breaches of good manufacturing practice (GMP).
These proceedings concerned claims by Pan and its liquidators against Mr Selim, who was the chief executive officer of Pan. The liquidators claimed damages against Mr Selim on the basis that he breached the duties that he owed to Pan as its chief executive officer. More specifically, the liquidators said that Mr Selim failed to ensure that Pan adopted and applied good manufacturing principles (GMP).
The issue before the court was to what extent the liquidators should be permitted to rely upon expert evidence concerning aspects of the operations of Pan that were alleged to have resulted in breach of duties by Mr Selim, including opinion evidence. Specifically in dispute were three reports referred to as the GMP Report, the Remediation Costs Report and the Clark Report.
The admission of the disputed reports as evidence was vehemently opposed by Mr Selim, who said that much of their contents was irrelevant or of little weight, that they did not satisfy the requirements of section 79 of the Evidence Act for the admission of opinion evidence and that, even if some of the material was otherwise admissible, it should be rejected as its probative value was substantially outweighed by the danger that the evidence might be unfairly prejudicial to him.
In a lengthy judgment, Justice Emmett considered the content of each of the disputed reports and measured them against the relevant principles as to admissibility. The detail and basis of the numerous objections are not so relevant. However, after examining the reports, the court concluded that:
- to the extent that the disputed reported contained admissible evidence, it considered they should be accorded very little, if any, weight;
- the admission of the disputed reports would be unfairly prejudicial to Mr Selim; and
- substantial judicial and court time, involving substantial cost, would be occupied by the examination of their contents.
Where this decision is of interest is that before reaching this conclusion, Justice Emmett set out the relevant principles relating expert evidence. The court noted that experts perform three legitimate functions:
- generalising from experience: A person experienced in a particular discipline may with training and professional experience accumulate a mass of material about the subject of the person's expertise much of which the person may not be able to recall. Such a witness may base an opinion on his or her experience, without having to prove by admissible evidence all the facts on which the opinion is based;
- acting as librarian: In many instances, a witness who has experience in a particular discipline may not himself or herself know the answer to a particular problem but may be able to refer to works of authority in which the answer is given. In that function, the witness is not giving evidence of his or her own opinion, except to say that, in his or her opinion, the books to which reference is made are of sufficient standing to be accepted by the court;
- and acting as statistician: A witness can apply statistical methods to material available from various sources in order to draw relevant conclusions. The statistical expertise and experience of the witness may be brought to bear on material otherwise in evidence.
However, the court noted that the fourth function of an expert, that is, of acting as advocate, was not permissible, although a witness having expertise in a particular discipline may include arguments as to the conclusions that can be drawn, and perhaps should be drawn, from the facts that the witness is asked to assume.
In relation to opinion evidence, Justice Emmett noted that there were two prerequisites to be satisfied under section 79 for evidence to be admissible:
- specialised knowledge derived from training, study or experience must be identified; and
- the opinion sought to be relied upon must be shown to be wholly or substantially based on that specialised knowledge.
Knowledge is "more than subjective belief or unsupported speculation": it refers to "any body of known facts or any body of ideas inferred from [known] facts or accepted as truth on good grounds". Opinion evidence must go beyond a bare ipse dixit (that is, a bare assertion relying upon the authority of an individual). The evidence must demonstrate an identifiable reasoning process against which the conclusions can be tested.
In considering the weight of so-called expert evidence, it is necessary to consider two aspects of the evidence. The first aspect is the expertise or experience of the expert. An expert witness may have expertise or special knowledge resulting from particular education or learning, such as in the case of lawyers, medical practitioners and the like, where some technical study or education has been undertaken.
Alternatively, such special knowledge or expertise might be the result of experience, where no particular technical study or education has been undertaken by the witness, such as in the case of managers and the like. Such evidence will often have less weight afforded to it.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.