The recent decision in New Aim Pty Ltd v Leung  FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.
Provided that lawyers do not seek to influence (or give the appearance of influencing) an expert’s opinion, it is permissible for lawyers to:
The rules of Court state that an expert witness is not an advocate for a party. The expert has a paramount duty, overriding any duty to the party to the proceedings or other person retaining the expert witness, to assist the Court impartially on matters relevant to the area of expertise of the witness.
However, in many cases, each party will retain their own expert, which raises an obvious tension between the expert’s paramount duty and the party who pays their bills.
As such, parties and Courts approach expert evidence with caution. Anything that calls into question the expert’s independence can be fatal.
In this context, the process of briefing an expert is a delicate one.
It has become common litigation practice for lawyers to brief experts initially without a formal letter of instruction. Under this practice, a letter of instruction is not provided to the expert until after a draft report has been prepared and shortly before the report is finalised. Instead, there are usually verbal discussions between the instructing lawyer and expert as to the appropriate questions to be determined in the expert report before the letter of instruction is finalised.
The primary reasons for this practice are:
Reducing disclosure of communications between lawyer and expert.
The need to ask the right questions.
This practice was the subject of the recent appeal in New Aim.
In New Aim, the primary judge rejected the plaintiff’s expert report in its entirety because the judge could not be satisfied that the opinions expressed in the report truly represented the expert’s honest and independent opinions.
One of the issues raised by the primary judge was that the letter of instruction was provided to the expert the day before the report was finalised, and was drafted in a way that suggested the entire report was prepared within 24 hours. This practice of “inverting” the process of preparing a letter of instruction after consultation with an expert was criticised in BrisConnections Finance Pty Limited v Arup Pty Limited  FCA 1268 at  where Lee J stated:
“The point of a letter of instruction being annexed to a report is not to act out a stylised ritual, but to provide to the Court with a transparent indication of what has been provided to the expert and the questions that the expert was actually asked to address. It should be able to be read literally without being silly. As is (at the very least) implicit in FCR 23, the work of the expert is to attend to the questions “the expert was asked to address”, not to invert the process by using the expert’s specialised knowledge in order to identify the questions that should have been asked and the assumptions that should have been given. The true instruction to Mr Veitch was oral and only emerged in the evidence on the voir dire. The integrity of the expert evidence process and the independence of experts is best facilitated by transparency in what is being asked of experts prior to, or at the time, they are forming their opinions and, if the questions need to change because they are misdirected, a record being made by way of supplementary instructions as to what has changed.”
The Full Court of the Federal Court in New Aim did not agree with the approach suggested in BrisConnections and stated that laboriously following such a process would likely result in increased costs and delay for the parties and ultimately a waste of the Court’s time.
Furthermore, the Court in New Aim stated that Rule 23 of the Federal Court Rules does not require every single question asked of the expert during the course of the expert’s retainer to be identified in their report. It only requires the report to identify the question the expert was asked to address in his or her report.
The Court in New Aim went on to provide the following guidance in respect of letters of instruction:
The primary judge in New Aim had criticised the involvement of the plaintiff’s lawyers in the process of drafting the expert’s report. The primary judge stated:
“What occurred in this case went far beyond the permissible scope of involvement of lawyers who retain an independent expert in order to give evidence in a proceeding. I reject the submission of counsel for the applicant that I should accept Ms Chen as an independent expert witness and that “the process by which her evidence was prepared is unremarkable.” For the reasons I have given, it most certainly was not. Even if in some circumstances it is proper for lawyers to draft an independent expert witness statement for consideration by the putative expert, that fact must be disclosed in the expert report conformably with the obligations that the expert assumes in accordance with the Expert Evidence Practice Note of this Court and the Harmonised Expert Witness Code of Conduct. And then, all correspondence relating to the manner of preparation of the report should be disclosed and, to the extent that oral advice is conveyed to the expert, the substance should be documented and disclosed. What occurred in this case should not be repeated.”
The Full Court of the Federal Court disagreed with several propositions in the above paragraph, as follows:
In this light, the following are some notable instances where Courts have found lawyers to have improperly influenced the preparation of expert evidence.
In Universal Music Australia Pty Ltd v Sharman License Holdings Ltd  FCA 1242, a solicitor suggested an amendment to a sentence in an expert’s draft report. In response to the suggestion, the expert stated: “I was not aware of this, even after our testing. But if you say it is so then fine by me.“ The Court concluded based on this comment and other evidence that the expert was prepared seriously to compromise his independence and intellectual integrity and that it might be unsafe to rely upon the expert in relation to any controversial matter.
In Phosphate-Operative Company of Australia Ltd v Shears  VR 665, a company engaged a prospective expert to prepare an independent accounting report as to whether a proposed scheme of arrangement was fair to its members: The prospective expert was engaged before any expert questions were identified for their opinion and was involved in discussions with the company’s officers and its legal advisers: A number of draft reports were prepared and changed after discussions with company officers and legal advisers, before a final report labelled as an independent expert report was provided to the members: . The Court ultimately found at  that the expert report did not express an opinion genuinely held and was the result of an exercise carried out for the purpose of arriving at a desired result. At , the Court warned against independent experts from becoming too close with the people who brief them for danger of being regarded and regarding themselves as part of a “team”. Furthermore, the Court stated that it was undesirable for a prospective independent expert to disclose to their prospective employer their probable general approach.
It is not necessary to provide a letter of instruction to an expert when they are first briefed.
A letter of instruction to an expert may be provided contemporaneously with their report, after review of a draft report and discussion with the expert.
The involvement of lawyers in the preparation of expert evidence is a delicate but flexible exercise.
The overarching rule is that the lawyers must not seek to influence (or give the appearance of influencing) an expert’s opinion.
The need (and permissibility) for a lawyer’s involvement will depend on the type of expert evidence and the challenges of a particular report.
As a best practice, lawyers should not have any involvement in the preparation of parts of a report dealing with an expert’s opinion, so as to not give the impression that the opinion has been influenced.
However, a lawyer may assist to ensure the report is in admissible form, and to prepare factual aspects of a report on instructions from the expert.
 Jango v Northern Territory of Australia (No 3)  FCA 1029 at ; Harrington-Smith on Behalf of the Wongatha People v Western Australia (No 7) (2003) 13 FCR 424;  FCA 893 at - .
 Clause 2 of the Harmonised Expert Witness Code of Conduct (Annexure A to the Federal Court of Australia’s Expert Evidence Practice Note). A similar provision can be found in Schedule 7 to the Uniform Civil Procedure Rules.
 ASIC v Southcorp Ltd (2003) 46 ACSR 438;  FCA 804 at ; Prince Removal & Storage Pty Ltd v Roads Corporation  VSC 245.
  NSWSC 261 at  and .
 At .
In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract. Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed. Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph , Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)." Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter. Judgment At paragraph , Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship. Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph : "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the dictionary.com definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest. What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.
The recent decision in Metal Manufactures Pty Limited v Morton  HCA 1 has confirmed that set-off cannot be used as a defence to a liquidator’s unfair preference claim under s. 553C of the Corporations Act 2001 (Cth) (the "Corporations Act"). This decision has effectively narrowed the scope of available defences to such claims and balances the result in Bryant v Badenoch Integrated Logging Pty Ltd  HCA 2 discussed in a separate article which was a less "liquidator friendly result". Background MJ Woodman Electrical Contractors Pty Ltd ("MJ Woodman") provided goods on credit to Metal Manufactures Pty Limited ("Metal Manufactures"). In the six-month period prior to its winding up, known as the “relation-back period”, Metal Manufactures made payments to MJ Woodman of $50,000 and $140,000. The liquidator of MJ Woodman subsequently sought to recover both payments from Metal Manufactures on the basis that those payments constituted unfair preferences. Section 588FF of the Corporations Act provides for certain orders that the courts may make with respect to voidable transactions. Among the rights conferred upon liquidators is the ability to apply for an order declaring a transaction voidable on the basis of unfair preference and to recover the amount specified in such an order. In short terms, an unfair preference arises when a company makes payments to an unsecured creditor higher than the creditor would receive in the winding up. In light of the existence of a separate and distinct debt owed by MJ Woodman to Metal Manufactures in the amount of $194,727.23 ("Separate Debt"), Metal Manufactures sought to rely on s. 553C of the Corporations Act to set off its potential liability to repay the alleged unfair preferences against the Separate Debt owed to Metal Manufactures. What is statutory set-off? Section 553C of the Corporations Act provides for a statutory set-off of mutual credits, mutual debts, or other mutual dealings between an insolvent company being wound up and a person seeking to have a debt or claim admitted against the company. However, a person is not entitled to make a claim for set-off if they had notice of the company’s insolvency. The High Court’s Decision The High Court held that there was nothing to set off between Metal Manufactures and MJ Woodman immediately prior to the winding up. This was because although MJ Woodman owed money to Metal Manufactures due to the Separate Debt, Metal Manufactures owed nothing to MJ Woodman. Further, Metal Manufactures was unable to identify any relevant mutuality of dealings as required. The alleged liability under the unfair preference claim was an amount due to the liquidator of MJ Woodman in his capacity as an officer of the company while the Separate Debt was a debt owed by the company itself. There was therefore an absence of the requirements for set off under s. 553C of the Corporations Act. Key Takeaways The recent decision by the High Court has implications for creditors defending against a liquidator’s unfair preference claim. Liquidators will now have more certainty and confidence when making unfair preference claims due in the absence of a set off defence. Conversely, it important that creditors are cautious and take appropriate precautions when dealing with companies that may be in financial difficulties as unfair preference claims cannot be defended on the basis that the insolvent company owes you money.