Australian Securities and Investments Commission v Money3 Loans Pty (Expert Evidence Admissibility) [2025] FCA 75
Key Takeaways
- Experts must clearly identify the factual basis of their opinions. The overall foundation of the report must be grounded in the expert's specialised knowledge.
- Experts should ensure that their conclusions are based on direct experience or well-established industry practices.
- Expert factual evidence (vis-à-vis expert opinion) generally does not affect admissibility, as long as it meets the threshold requirements.
In this case, the Federal Court held that an interlocutory objection to admissibility of an expert report in its entirety, failed. The expert evidence was challenged on the basis its opinions were not based on, or supported by, the relevant experience and specialised knowledge of the expert, and that the expert's opinions were not based on disclosed relevant factual bases. The Court disagreed and considered that, on its face and read as a whole, the report sufficiently exposes the expert's specialised knowledge and that this knowledge is the substantial basis for the evidence detailed in the report. Justice McElwaine did acknowledge, however, that an assessment as to the extent the expert's opinions may not be sufficiently explained in the report was a matter which may impact weight, and this was best considered in the context of the full trial.
Background
The Australian Securities and Investments Commission (ASIC) has filed a proceeding against Money3 Loans Pty Ltd (Money3), seeking declaratory relief, injunctions, compliance orders, and financial penalties for alleged violations of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act). These alleged breaches concern five consumer loans taken by six individuals to finance the purchase of second-hand motor vehicles between 8 May 2019 and 18 February 2021.
The trial in the proceedings commenced on 5 February 2025. As part of its evidence, ASIC intends to rely on the testimony of an expert, Mr MH, who was the author of a detailed report dated 19 December 2023 (Expert Report). The matter before the Court in this application was a challenge by Money3 to the admissibility of the Expert Report in its entirety, rather than an objection to specific sections.
Expert evidence
Mr MH is a risk and compliance expert who provided evidence regarding procedures for a licensee to achieve compliance with obligations under the Credit Act. He was briefed through ASIC's letter of instruction (LOI) with a series of questions relating to industry practices commonly adopted to address regulatory requirements under the Credit Act.
The Court observed that the manner in which LOI questions were framed did not directly ask Mr MH the straightforward question, such as: "Were there commonly adopted industry practices and procedures, regarded as good practice, by licensees to ensure compliance with their Credit Act obligations in the relevant period, and if so, what were they?" [5]
In challenging the entirety of the Expert Report, Money3 argued that it was inadmissible for two main reasons: (1) Mr MH offers opinions on industry practices and standards, including his assessment of "Minimum Expectations" and the practices of "Reasonable and Prudent Lenders," without demonstrating the relevant experience or specialised knowledge required under section 79 of the Evidence Act 1995 (Cth) for admissibility; and (2) his opinions on industry practices, procedures, and standards lack a disclosed factual foundation, making them impossible to properly test through cross-examination (at [16]).
ASIC countered that the Expert Report is admissible when viewed in its entirety, as the factual basis for each opinion can be identified, even though Mr MH does not specify the particular practices, procedures, methods, or policies he was aware of during the relevant period—whether through direct involvement or general industry experience. Alternatively, ASIC contended that if there is any uncertainty regarding admissibility, the Expert Report should be received provisionally, allowing Mr MH to be cross-examined, with a final determination deferred until the conclusion of the case.
The primary critique of the Expert Report was that Mr MH did not clarify which lenders followed specific practices and procedures, whether certain lenders adhered to higher or lower standards (and the outcomes of such variations), which practices or procedures—if any—he was personally involved in developing and implementing during the relevant period, and whether there were widely accepted industry policies or procedures that exemplified good practice.
The Court declined to rule that the Expert Report was entirely inadmissible. It held that Mr MH's credentials indicate significant industry experience with lending practices for new and used vehicle loans. Further, while the Expert Report lacks specificity and particularisation in parts, this affects its usefulness, not its admissibility (at [62]). The Court classified Mr MH's evidence as "expert factual evidence as opposed to expert opinion evidence", but this distinction is irrelevant for admissibility. The report details steps taken by "Reasonable and Prudent Lenders" in statutory assessments, linking them to Mr MH's industry experience (at [63]). The Court held that Mr MH's conclusions are based on industry observations, which appears grounded in his experience in and knowledge of the finance industry (at [64]).
Ultimately, the Court was not satisfied that the Expert Report, read as a whole, is a mere ipse dixit (unsupported opinion). Overall, it was held that the Expert Report outlines practices and procedures that Mr MH believes were followed during the relevant period, largely based on his specialised industry knowledge (at [68]). The objection to the admissibility of Mr MH's expert evidence was therefore rejected (at [70]).
Read the full decision here.
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