References (& adoptions) in court proceedings
Disputes frequently concern highly complex and technical subject matters, necessitating the engagement of specialised and appropriately qualified experts. The cost burden in obtaining reports from these experts can be significant. The complexity of technical issues, and the disparity between opinions proffered by opposing parties, also has a direct correlation to the length (and cost) of expert conclaves and the ultimate resolution of the dispute.
Reference to an appropriately qualified referee on specific technical matters may, in some circumstances, provide a way to cut through the technical issues and in turn, reduce costs and narrow the issues in dispute.
The procedural mechanism for references in the Federal Court and advantages and disadvantages associated with the reference path are outlined below.
Section 54A of the Federal Court of Australia Act 1976 (Cth) provides the Federal Court with the power to refer a proceeding or questions arising in a proceeding to an independent referee for determination.
Additionally, Division 28.6 of the Federal Court Rules 2011 (Cth) provides rules for the conduct of a referral to a referee more broadly.
Similar mechanisms can also be found in the state Supreme Courts, for example, in NSW: Part 20, Division 3 of the Uniform Civil Procedure Rules 2005 (NSW) and Victoria: Order 50 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
The potential benefits to adopting a reference process include:
- The evidence phase of a proceeding can be more efficient than the traditional process of each party exchanging expert reports and potentially convening in conclave.
- There can be cost savings as a result of the parties sharing equally in the costs of the referee process.
- The playing field between a plaintiff can be levelled vis-à-vis a defendant with internal access to knowledge, for example, a defendant with a large internal engineering department.
- A reference may also encourage earlier settlement or at a minimum, narrowing of issues in dispute in advance of trial.
These potential advantages need to be balanced against risks inherent in adopting a reference process, including as follows:
- The parties will need to grapple, and ensure that they are comfortable, with the risk that the referee may submit a report which makes findings against their interests (although this is a risk the opposing party will also face).
- The Court may appoint a referee who does not have the appropriate skills to coordinate a reference process or to draft an expert report that is admissible or appropriate for use.
- The Court may appoint an expert with an intrinsic bias towards one party’s viewpoint.
- The referee may not have the appropriate expertise to finally determine any referred questions and may not appropriately exercise their power to retain experts possessing other fields of expertise.
- The cost savings amassed by a shared referee may be undermined in circumstances where a party engages a ‘dirty’ or non-independent expert to facilitate the reference process.
Once a report is obtained through a reference, there will need to be an assessment as to whether the Court ought to adopt the report.
The Court has broad discretion to deal with the report as it thinks fit. The Court may choose, amongst other courses, to adopt, vary or reject the report; to require an explanation by way of further report from the referee; or to remit any issue back to the referee for further consideration.
The principles that inform the exercise of the Court’s discretion are well established. They were collected and summarised by McDougall J in Chocolate Factory Apartments v Westpoint Finance  NSWSC 784 at .
Having regard to the broad power afforded to the Court through this process, in addition to the issues identified above, the parties will need to be comfortable relinquishing a large degree of control over the expert process and potential outcomes. For many litigators accustomed to more traditional expert processes, this can be a challenge.
How Crichton & Co Legal can assist
Crichton & Co Legal is a boutique law firm with specialist expertise in complex commercial disputes and transactions. The C&C team has extensive experience with expert processes, including matters where issues of liability have been referred to a referee.
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