Quick Read: Expert Evidence – New Developments in “Gatekeeping”

Our firm has provided expert evidence in over 50 trials. In virtually every case, our findings have been challenged by opposing counsel, including challenges to our credentials, expertise and independence.

We understand that these challenges are intended to suggest that our evidence should be considered carefully and critically by the Court.

In no single case, however, were we ever excluded from being permitted to provide our opinion evidence as experts.

In a recent Ontario case, however, an opposing financial expert was precluded from being permitted by the Court to provide his opinion regarding the value of a business in 1990 (the marriage date), and in 2017 (the separation date).

This individual was about to testify when a mid-trial “voir dire” occurred, resulting in the individual not being permitted to provide his evidence in Court.

The Court had several comments regarding this individual as outlined in its 11 page decision released on September 25, 2023 (source: https://canlii.ca/t/k09pc), as follows:

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• “16. A court must have confidence in a proposed expert’s qualifications and objectivity. This court does not have confidence in… [the individual]. He is not qualified to provide expert opinion evidence about the value of Ierullo’s business interests.”

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• “17. ?Even should this court’s disqualification of [the individual] be in error, he would be disqualified in the exercise of this court’s gatekeeping discretion.”

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• “17.…business valuation… “is a highly specialized area of the accounting profession” and a trial is not an audition”

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In our experience spanning over 30 years, we have never observed a financial expert not being able to testify at a trial. It appears, however, that this issue may become more prevalent in the future.

In the United States, Federal Rule of Evidence 702 pertaining to expert witnesses has been modified with certain significant changes becoming effective as of December 1, 2023. The new proposed wording of this rule is as follows (new changes are underlined):

“A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the court that it is more likely than not that:

a)??? the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

b)??? the testimony is based on sufficient facts or data;

c)??? the testimony is the product of reliable principles and methods; and

d)??? the expert has reliably applied expert’s opinion reflects a reliable application of the principles and methods to the facts of the case.”*

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These rule changes suggest that the ability of an individual to provide expert evidence in the United States is becoming increasingly challenging. In light of the recent Canadian case, and the changing rules in the United States, it will be important for financial experts like ourselves and instructing counsel to be increasingly sensitive to the areas of expertise and the credentials of the intended experts well in advance of trial.

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We hope that these recent developments are interesting to you and your practices. If you or your colleagues require assistance in the areas of business valuation, damages quantification or family law matters, it would be our pleasure to assist you.

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For more information, please do not hesitate to contact Wayne B. Rudson, CPA, CA·IFA/CBV, ASA, CFE ([email protected]), Vincent Lam, CBV, MAcc ([email protected]), or Ben Rosenhek ([email protected]) at 416-598-4500.

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* Source: https://businesslawtoday.org/2022/09/rule-702-amendment-process-progression-potential-ramifications/