Capitol Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753
Background
This appeal stemmed from a Local Court decision concerning a dispute which arose as a result of the installation of carpet by Capitol Carpets Pty Ltd (Capitol Carpets) in Sydney’s Mecure Hotel. The carpet was supplied by the owner of the hotel, Schwartz Family Co Pty Ltd (Schwartz). Several years after installation, the carpet’s quality began to deteriorate and ripple, causing a tripping hazard. Schwartz alleged that the fault rested with Capitol Carpet and commenced proceedings for breach of contract and negligence in the installation of the carpet. The Local Court found that Capitol Carpets was liable for 50% of the alleged loss.
Expert Involvement
During this dispute, Schwartz retained an expert carpet consultant, Jim Cooper, to provide a report as to the cause of the rippling in the carpet.
During the trial, Cooper gave evidence about the useful life of the carpet. When questioned on his opinion as to how long the carpet would have lasted had the adhesion not failed, he replied that “the major condition of course is that there’s no adhesion failure. If there’s no adhesion failure it could last another five to eight years, even longer”. The acceptance of this evidence by the Magistrate at trial was one ground of appeal.
Capitol Carpets also retained an expert witness, Mr Don Considine. Counsel for Capitol Carpets sought certain information from Schwartz to enable their expert to prepare his report. This information included the carpet’s specifications, the original purchase order, and the manufacturer’s warranty and installation instructions. Schwartz, however, was unable to provide such information.
Ground of Appeal
Capitol Carpets appealed the decision of the trial court on the grounds that, amongst other things, the Magistrate erred in accepting Cooper’s evidence that the carpet should last another 5-8 years in circumstances where:
– The expert made assumptions as to the nature and quality of the carpet based on a packing slip for an order delivered 4 years after the carpet in question;
– Schwartz’s counsel has been unable to provide any documentation regarding the specifications of the carpet; and
– Assumptions underlying Cooper’s report were not provided.
Capital Carpet relied on the following principal outlined in Makita (Australia) Pty Ltd v Sprowles[1] to argue that the Magistrate was in error to accept evidence without proof of the facts upon which the opinion was based:
“The basal principle is that what an expert gives is an opinion based on facts. Because of that, the expert must either prove by admissible means the facts on which the opinion is based, or state explicitly the assumptions as to fact on which the opinion is based. If other admissible evidence establishes that the matters assumed are ‘sufficiently like’ the matters established ‘to render the opinion of the expert of any value’, even though they may not correspond ‘with complete precision’, the opinion will be admissible and material… One of the reasons why the facts proved must correlate to some degree with those assumed is that the expert’s conclusion must have some rational relationship with the facts proved.”[2]
The court noted that this argument invokes “the proof of assumption” rule set out by Heydon J in his dissenting judgement in Dasreef Pty Ltd v Hawchar[3]. Under this rule, opinion tendered under section 79 of the Evidence Act 1995 (NSW)[4] “is inadmissible unless there was evidence, admitted or to be admitted before the end of the tendering party’s case, capable of proving matters sufficiently similar to the assumptions to render the opinion of value”.[5] Heydon J went on to explain the function of this rule:
“The function of the proof of assumption rule is to highlight the irrelevance of expert opinion evidence resting on assumptions not backed by primary evidence. It is irrelevant because it stands in a void, unconnected with the issues thrown up by the evidence and the reasoning processes which the trier of fact may employ to resolve them. If the expert’s conclusion does not have some rational relationship with the facts proved, it is irrelevant. That is because in not tending to establish the conclusion asserted, it lacks probative capacity. Opinion evidence is a bridge between data in the form of primary evidence and a conclusion which cannot be reached without the application of expertise. The bridge cannot stand if the primary evidence end of it does not exist. The expert opinion is then only a misleading jumble, uselessly cluttering up the evidentiary scene.”[6]
While this was a dissenting view, the court in Capitol Carpets noted that regardless of the view taken in relation to the construction of section 79 in relation to assumptions, the failure to prove factual assumptions which underpin an expert’s report “must at the very least be taken into account in assessing the weight that can properly be accorded to the opinion”[7].
Court’s Conclusion
In this case, the Court held that due to additional complexities which arose in the trial, including Cooper failing to annex an affidavit specifying his assumptions, it could not be definitively concluded that the Magistrate erred in accepting the evidence. However, in the court’s view the evidence was of little weight. The court granted leave to appeal on this issue.
Lessons Learned
This case demonstrates the extreme importance of proving the assumptions which underpin an expert’s report. While there is no explicit ruling by which expert evidence which fails to prove such assumptions is rendered inadmissible, as this case demonstrates, where there is such a failure, the weight of the evidence is significantly diminished. Legal counsel should pay special attention when reviewing an expert’s report to ensure that the report clearly sets out the factual assumptions and provides sufficient proof of such assumptions. The importance of such information should also be stressed to expert witnesses in their initial briefings.
[1] (2001) 52 NSWLR 705; [2001] NSWCA 305 at [64] per Heydon JA
[2] Ibid.
[3] (2011) 243 CLR 588
[4] Section 79 sets out the exception to the prohibition of opinion testimony where the witness providing the opinion testimony is an expert on the topic on which they are giving evidence.
[5] Capitol Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753 at 79 citing Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at 102.
[6] Capitol Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753 at 80 citing Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 at 90.
[7] Capitol Carpets Pty Ltd v Schwartz Family Co Pty Ltd [2016] NSWSC 1753 at 81