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Opinions as assumptions – Court rejects expert evidence of $170M claim

Jennifer ExnerFailure to prove assumptions renders expert evidence inadmissible

Expert witness evidence is often based upon assumptions including, in certain cases, the opinions of other experts.  

The "proof of assumption rule" provides that expert evidence is not admissible unless the assumptions relied upon by the expert are proved by admissible evidence.  Failure to prove assumptions, including the opinions of other experts, can be fatal to expert evidence.

In Land Enviro Corp Pty Ltd & Ors v HTT Huntley Heritage Pty Ltd & Ors [2012] NSWSC 177 the Court rejected two reports from an expert accountant in support of a damages claim for $170 million because the reports were based upon opinions contained in other reports, which had not been proved.

Key facts

The Plaintiffs sought to rely on two reports from an expert accountant as to the present value of future cash flows to be earned from a future property development.  

In performing his cash flow calculation, the expert assumed the correctness of estimates of (i) the constructions costs for the project; and (ii) revenue to be derived from the project (the Estimates) contained in reports by planning and business consultants respectively and prepared in support of planning applications by the Defendant developer.

The Plaintiffs sought to prove the Estimates by tendering the consultants' reports.  However, they failed to call the authors of those reports as witnesses and led no evidence as to their expertise (if any) in relation to the subject matter of the Estimates.  
His Honour held that:

  • The Estimates in the earlier reports were opinions, not statements of fact, and must be properly proved as expert opinions in accordance with sections 76 and 79 of the Evidence Act 1995;
  • There was no evidence as to (i) the expertise of the authors of the earlier reports; (ii) which individual(s) had made the estimates;  nor  (iii) the basis upon which the opinions were formed; and
  • The Estimates were not admissible because it had not been established that the opinions were properly formed by a person with expertise in the relevant subject matter
  • As a consequence of the above, the expert accountant’s reports were inadmissible.


The decision is a timely reminder for lawyers that they must take care to ensure that every material assumption relied upon by an expert witness is independently proved by admissible evidence.  In doing this, lawyers will need to identify and manage those significant assumptions which the expert witness has been instructed to make during the course of their assignment so that further evidence or material can be commissioned, as necessary and on a timely basis.

It is also necessary for lawyers to appreciate that an expert witness cannot attest to the reliability of an opinion of an expert in another field; they can only state that their own opinion is subject to the veracity of the other expert’s report. In some professions, such as accounting, if an expert witness considers that the adoption of a significant assumption is likely to mislead, he/she is bound to make that disclosure in their report.

For expert witnesses, the case reinforces the importance of ensuring that he/she only makes assumptions which are necessary and that any instructed assumptions can be, or are being, independently established. In circumstances where an expert witness is relying on the advice of a third party, it is prudent (if not required2) to disclose the name and qualifications of the third party and the area in which the third party’s report has been relied upon.

Expert witnesses should also ensure that any significant instructed assumptions are clearly set out in his/her report, together with those assumptions that the expert has chosen to make (and the reason/s for that choice). Where a significant assumption is likely to mislead, further disclosures may be needed in the report.

Ideally, expert witnesses and lawyers will work together to ensure that any assumptions relied upon can be proved and that supporting evidence is available to do so. An expert witness can contribute to this process by highlighting to the lawyer which assumptions (whether instructed or otherwise) are being relied upon and the significance of each assumption to his/her concluded opinions. To this end, it is often useful to undertake a sensitivity analysis to highlight how the expert’s conclusions will change for a given change in the key underlying assumptions. This can help the lawyer understand which are the key factors that contribute to the robustness of the expert’s opinions and direct their efforts in gathering additional evidence.

In the LEC case, the Plaintiffs could have called the authors of the Estimates and led evidence to establish them as expert witnesses or, alternatively, adduced evidence from suitable experts such as a quantity surveyor and/or real estate agents as to the estimated costs and revenue of the project.


Jen Exner |  Partner Forensic
Mark Easton | Senior Associate Middletons

1. Refer APES 215 Forensic Accounting Services, paragraph 5.6.
2. Refer APES 215 Forensic Accounting Services, paragraph 3.13.

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