Supreme Court of WA|2013-12-18|Before: Mr J, Edelman J

AGRICULTURAL LAND MANAGEMENT LTD -v- JACKSON [2013] WASC 464 (18 December 2013)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : AGRICULTURAL LAND MANAGEMENT LTD -v- JACKSON [2013] WASC 464

Evidence - s 79C(2a) Evidence Act 1906 (WA) - Meaning of 'business records' - Two limbs of business records concerning 'preparation' and 'use' - Limitation upon the 'use' limb that it be contemplated that there will be some further or ongoing recording of information by or on behalf of the business - The same limitation does not apply to the 'preparation' limb

Practice and procedure - Construction of pleadings - Extent of admission made by defendants - Whether leave should be given to plaintiff to reopen

(i) The statements in exhibit 34 are admissible under s 79C(2a) as evidence of those facts

(ii) The statements in exhibit 41 are not admissible as evidence of those facts under s 79C(2a)

(iii) The plaintiff has leave to reopen its case for the limited purpose of calling Mr Catlin to verify his 2002 report

1 The legal issue at the heart of these reasons concerns the operation of s 79C(2a) of the Evidence Act 1906 (WA). This issue arose in an unfortunate manner which has slightly delayed the progression of this trial.

2 On 16 December 2013, after closing submissions from counsel for the plaintiff (Agricultural), issues arose concerning the admissibility of three exhibits. Prior to trial, on 19 November 2013, my associate had emailed the legal representatives of the parties and explained that prior to the trial counsel must confer on all objections to documents in the trial bundle. If any objection were not resolved the plaintiff would be required to file a note outlining the objection, the response and the reply. No note of any objections to documents in the trial bundle was filed. At trial, Agricultural tendered documents as part of its case without any objection expressed by opposing counsel.[1] However, it appears that the legal representatives of the parties were aware that the purpose of the admissibility of some of the documents was in dispute.

3 At the conclusion of Agricultural's opening, senior counsel for the defendants explained that the defendants' consent to the admission of Agricultural's documents was only[2]

on the basis that there's no admission as to proof of contents. That is for my friend to explain why they can be used as proof of contents or proof of the opinions and conclusions stated. It's no doubt going to be a matter that will need to be addressed in closing.

4 I directed that the parties file a list of objections to documents and the response to those objections. Three objections remained. They concern exhibits 34, 41 and 43.

5 Oral submissions were made on Monday concerning those objections. These are the reasons for the rulings I made in relation to those objections. Consequent upon my ruling in relation to the objection to exhibit 43, counsel for Agricultural sought leave to reopen his case. That leave was granted. The reasons why I granted leave are also explained below.

6 In these reasons, I first explain my conclusions in relation to the construction and operation of s 79C(2a) of the Evidence Act. I next explain how the application of that construction leads to the rulings that I made on the admissibility of exhibits 34 and 41. I conclude by explaining the confusion which arose concerning the scope of an admission made by the defendants and why Agricultural should have leave to reopen its case for the limited purpose of calling the expert who produced exhibit 43 to verify that exhibit.

The operation of s 79C(2a) Evidence Act 1906 (WA)

7 The central issue of admissibility in relation to exhibits 34 and 41 concerns whether they are admissible for proof of the truth of their contents. Counsel for Agricultural submitted that they were admissible for this purpose. He relied upon s 79C(2a) of the Evidence Act.

8 Section 79C(2a) provides:

[I]n any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if -

(a) the statement is, or directly or indirectly reproduces, or is derived from, a business record; and

(b) the court is satisfied that the business record is a genuine business record.

9 The term 'business record' is defined in s 79B to mean, 'a book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business'.

10 The issue in dispute between the parties is whether exhibits 34 and 41 are documents which are 'prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business'.

11 In Donohoe v The Director of Public Prosecutions (WA),[3] Buss JA (with whom Murphy JA and Hall J agreed) explained that the presence of the alternatives, 'prepared or used', means that two questions arise when considering whether a document is a business record:

(a) was the document 'prepared' in the ordinary course of a business for the purpose of recording any matter relating to the business; or

(b) was the document 'used' in the ordinary course of a business for the purpose of recording any matter relating to the business?

12 In McKay v Commissioner of Main Roads,[4] Beech J considered these two alternatives. His Honour took a restrictive approach to the 'use' limb of the definition. The restriction imposed upon this limb was that there must be some further or ongoing recording of information by or on behalf of the business:[5]

[I]f a business uses an externally generated document as a record of information relating to its business, it does not thereby use the document 'for the purpose of recording any matter relating to the business' within the meaning of the definition of business record. To my mind, a document is used for the purpose of recording matters relating to the business only if there is or it is contemplated that there will be some further or ongoing recording of information by or on behalf of the business. (Emphasis added).

His Honour was only concerned in this passage with the 'use' limb of s 79C(2a). He was not concerned with the 'preparation' limb.

13 His Honour gave two primary reasons which support the restrictive approach that he took to the 'use' limb. These two reasons do not apply to documents prepared in the ordinary course of a business for the purpose of recording any matter relating to the business.

14 First, his Honour considered that the requirement that there be contemplation of some further or ongoing recording of information by or on behalf of the business derived from the purpose and effect of s 79C(2a). He suggested that if a limitation concerning further or ongoing recording of information were not implied into the concept of a 'business record', the provision would be extremely broad, extending admissibility for the truth of the contents of all second-hand hearsay contained in every externally generated document which is received, retained and used as a record of the information by the business.

15 Secondly, his Honour considered decisions in other jurisdictions which had reached similar conclusions in relation to similarly worded Commonwealth legislation and similarly worded New South Wales legislation. In one case it was held that 'a statement of fact in a letter from A to B found in the files of B is not admissible as a business record of B simply because it was filed and kept by B'.[6] In another it was said that a report retained on an insurer's files from a loss assessor engaged by the insurer was not a record of the insurer's business.[7] In a third it was held that written complaints to a business from its customers were not part of the business records of the business.[8]

16 To these two reasons can be added a third, implicit in the passage quoted at [12] above, which again only applies to the 'use' limb of the definition.

17 Thirdly, as a matter of textual construction where a document is merely received from an external source it is difficult to construe the mere receipt and retention of the document as amounting to a 'use' for the 'purpose of recording any matter relating to the business'. Except perhaps in an exceptional case in which the business is itself concerned with the recording of that information, something more than mere receipt and retention will be required. For instance, as I explain below, that 'something more' might be the receipt by a banker of documents by a banker which are used as record for the purpose of the bankers running account. Or it might be the receipt of documents which are used as a record for the purposes of preparation of audited accounts of the business.

18 In Soia v Bennett (No 4),[9] Commissioner Sleight mentioned two South Australian decisions concerning s 45A of the Evidence Act 1929 (SA) to which Beech J was not referred.

19 Section 45A(4)(a) of the South Australian Evidence Act defines 'business record' in terms similar to those of the Western Australian legislation: namely, as 'any book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business'.

20 The learned Commissioner doubted the correctness of the two South Australian cases on the basis that they might be inconsistent with the restrictive approach of Beech J. But the learned Commissioner did not need to decide the point.[10] With respect, I do not consider that either decision is inconsistent with the approach taken by Beech J.

21 The first of the two cases was Nicholson v The Queen.[11] In that case, King CJ (Walters and Mohr JJ agreeing) held that two telex messages were admissible under s 45A of the Evidence Act (SA). The first telex involved a request for the payment of money in a telex from a Hong Kong bank to the National Australia Bank in Adelaide. The request for payment was made by the Hong Kong bank at the request of Mr Nicholson. It sought payment of $20,000 from a National Australia Bank account to an account in Mr Nicholson's name with the Hong Kong bank. The second telex message was a refusal of that request.

22 The Chief Justice held that the telex messages were used in the ordinary course of the business for the purpose of recording any matter relating to the business as 'the Adelaide Bank's record, in the form of the retained message, of the communication from the Hong Kong bank'.[12]

23 Putting aside the fact that the restriction which was recognised in McKay does not appear to have been the subject of argument in Nicholson, the reason why this decision is not inconsistent with the approach of Beech J in McKay is that although the telex to the National Australia Bank was externally generated, it concerned a running account of a customer with whom the bank apparently had an ongoing relationship.

24 The second case referred to by Commissioner Sleight was Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 10).[13] In that case, proceedings had been brought against a firm of accountants for negligence. The question was the admissibility of working papers prepared by a firm of accountants. Bleby J said that[14]

Whether the document is a document 'prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business' will depend on the nature of the record, its apparent author (if known), to whom it was sent, its content and other matters to be inferred from the document itself. Sometimes, it may depend on where the document was located. Because it is located (in this case) in the files of the defendant may well mean that it becomes a business record of the defendant. It does not mean that it ceases to be a business record of the plaintiff or a copy thereof (admissible also under s 45A). As I have said, s 45A does not require that a business record be limited to a record of the business from whose custody it is produced, nor is it limited to proof of the fact pertaining to that business.

25 I do not consider that this decision is inconsistent with the approach of Beech J. The approach of Bleby J merely emphasises that an externally generated document might be admissible for either or both of (i) the 'use' limb and/or (ii) the 'preparation' limb.

26 The application before Beech J in McKay concerned the admissibility of a mail-out questionnaire survey conducted by the Department of Planning and Infrastructure on conditionally approved subdivisions. The purpose of the survey was expressed to be the collection of evidence of the supply of forthcoming lots and the extent and types of delay experienced by land developers.

27 The defendants submitted that the Survey Report, and the individual 'Survey Responses' which the Survey Report considered, were admissible under s 79C(2a) of the Evidence Act as evidence of the truth of the responses and of the contents generally. Beech J rejected both submissions.

28 As to the Survey Responses, Beech J accepted the defendants' submission that the subject matter of the survey was related to planning issues in Western Australia and, consequently, was part of the business of the State, through the Department of Planning. However, his Honour held that the Survey Responses were neither

(i) 'prepared in the ordinary course of [the State's] business for the purpose of recording any matter relating to [the State's] business'; nor

(ii) 'used in the ordinary course of [the State's] business for the purpose of recording matters relating to [the State's] business'.

29 The Survey Responses were not prepared in the ordinary course of the State's business because, in substance, each was prepared by the respondent developer who completed it, not by the officer of the State who prepared the pro forma document for completion by recipients. The representative of the developer who completed each survey was not acting in the ordinary course of the State's business.

30 Nor were the Survey Responses used 'for the purpose of recording any matter relating to the business' because although the State used the Survey Responses as information or as a record of information relating to the State's business, it was not sufficient that a business had received the externally generated document as a record of information relating to its business.

31 As to the Survey Report, his Honour accepted that it was prepared in the ordinary course of the business of the State. However, even assuming that it was sufficient that the purpose be only a 'substantial' purpose, his Honour held that there was little evidence about the purpose and no evidence about the use of the Survey Report.

32 Senior counsel for the defendants submitted that the limitation imposed by Beech J in relation to the 'use' limb of s 78B was intended to, and should, also apply to the 'preparation' limb, so that the 'preparation' limb also requires a further and ongoing recording of information by the business. This requirement of further and ongoing recording is in addition to the textual requirement that the document be 'prepared' in the ordinary course of a business for the purpose of recording any matter relating to the business. Neither principle, nor a proper understanding of the reasons of Beech J, suggests this conclusion. I reject this submission for four reasons.

33 First, for the reasons expressed above, nothing in the reasons given by Beech J in McKay supports the submission of senior counsel for the defendants in this case that the same limitation should apply to the 'preparation' limb of s 78B. This additional limitation is also inconsistent with the endorsement by Beech J, without reference to the limitation, of two New South Wales decisions in which it was held that business records included internal (ie internally prepared and not externally generated) documents kept by a company in respect of its business:[15]

While the statutory provisions differ, the following observations by New South Wales' courts about the term 'record of a business' seem to me to provide some guidance about the general character of business records. In a passage cited with approval in RW Miller,[16] Wood J said in Atra v Farmers & Graziers Co-op Co Ltd:[17]

... the term 'record of a business' denotes documents which truly might be regarded as the internal records kept by or for that company in respect of its business such as its books of account, ledgers, employment records, stock records, postage books, its own correspondence, internal memoranda, and so on.

34 Secondly, the limitation is not needed for any of the three reasons explained above concerning why it applies to the 'use' limb.

35 Thirdly, the limitation is not required as a matter of textual analysis of the provision.

36 Fourthly, the limitation would not be consistent with the purpose of the legislation. For instance, if the limitation were applied to the 'preparation' limb, then none of company stock records, postage books, correspondence or internal memoranda would generally be admissible under the 'preparation' limb. In Donohoe,[18] Buss JA approved the remarks of JD Heydon in Cross on Evidence, that:

The business records legislation is remedial legislation intended to remove the difficulty or, in some instances, impossibility of proving certain business facts by admitting material which in common experience is likely to be accurate, and should be construed liberally and not pedantically.

37 In the second reading speech of the Acts Amendment (Evidence) Act 2000 (WA) the proponent explained that the purpose of this provision was to 'reduce the length and cost of the trial and aid in the jury's comprehension of the issues'.

38 Against all of these matters, senior counsel for the defendants relied upon the presence of a single word in two paragraphs of Beech J's conclusions. The paragraphs upon which senior counsel placed emphasis were as follows:[19]

I would infer from that material that the Survey Report was prepared for the purpose of publication and not to record the results of the survey for the ongoing purposes of the Department of Planning.

Consequently, I am not satisfied that the Survey Report was 'prepared or used for the purpose of recording matters relating to the business' of the state. (Emphasis added).

39 Senior counsel submitted that it would be necessary for me to follow the decision of Beech J imposing the restriction on the preparation limb of s 78B unless I were to conclude that the decision was plainly wrong.

40 I do not accept the premise of this submission. Understood in the whole of his Honour's reasons, the reference to 'ongoing' purposes could not have been intended to impose, en passant, the same restriction on the preparation limb of s 78B as the restriction imposed on the use limb.

41 Properly understood, in light of all the matters discussed above, the two quoted paragraphs of his Honour's reasons, set out at [38] above, must have been dealing with both the 'preparation' limb and the 'use' limb of s 78B. In other words, his Honour was explaining that (i) the Survey Report was prepared for the purposes of publication and not for the purposes of recording any matter related to the business, and (ii) the Survey Report was not used for the purpose of recording any matter relating to the business as part of the contemplated further or ongoing recording of information concerning the purposes of the business. This also explains why his Honour's conclusion in the second paragraph quoted above was expressed in terms of both preparation and use, and why his discussion was introduced by references to both preparation and use in paragraphs [54] and [56].

42 Exhibit 34 is a document, on plain paper without letterhead, entitled 'Kalgoorlie Chambers Pty Ltd Allocation of Transfer Costs as at 8 April 2002'. Kalgoorlie Chambers is the former name of the third defendant, Bunbury Centro.

43 The document contains costs in five categories, each of which is broken into sub-categories. The five main categories, and the total, are:

(iii) Construction and Design Preliminaries $821,190

44 Section 79C(5)(a) provides that, for the purposes of s 79C, a court may, for the purpose of deciding whether or not a statement is admissible as evidence, draw any reasonable inference from the form of contents (rather than the substance of the contents) of the document in which the statement is contained, or from any other circumstances.

45 The defendants submit that exhibit 34, on its face, was prepared or used for the purpose of determining certain costs as at a particular time; it was not prepared or used to record those results for the ongoing purposes of Bunbury Centro (as Kalgoorlie Chambers is now named).

46 As I have explained above, it is not necessary under s 79C(2a) for exhibit 34 to have been prepared for the ongoing purposes of recording information relating to the contemplated future transfer from Bunbury Centro, although it appears likely that it was prepared for these ongoing purposes. It is sufficient that exhibit 34 was prepared, as it appears on its face to have been, to record costs incurred by Bunbury Centro at a particular time for the purposes of a transfer.

47 I am satisfied that exhibit 34 is a document which was prepared by Bunbury Centro in the ordinary course of its business for the purpose of recording a matter relating to its business.

48 The statements in exhibit 34 are admissible under s 79C(2a) as evidence of those facts.

49 It was common ground during the hearing that exhibit 34 was also admissible to draw an inference, which is open, that it was known to the defendants and that the matters to which it refers were known to the defendants. Whether that inference is drawn will depend upon a consideration of all of the relevant facts. That consideration may in turn be affected by the consequences of the reopening of Agricultural's case, to which I refer in greater detail below.

50 The relevant part of exhibit 41 is a handwritten memorandum from 'Paul' to 'Ray', and a response. It reads as follows:

Ray,

Could you please consider the special conditions. Are you comfortable that the sale of land and the licence in condition 7 constitute a supply of a business.

I want to express clause 7 as a licence to try to keep it away from being a sale of goodwill that would attract goodwill at conveyance rates.

The licence in clause 7 should attract duty at mortgage rates (40c/$100)

Regards,

Paul

Paul,

I am comfortable that the arrangement outlined should be accepted as the sale of a going concern.

There could be an argument that the 'business' of the vendor was the 'acquisition of land, the construction of strata titled units and the sale of those units (this was the initial intent)' or alternatively the development of the land and the sale of the development in whatever form the company decided. If so, it could be argued that KAHS is not acquiring 'that' business but rather it is acquiring the land and everything else to finish construction and retain.

This could be construed as 2 different businesses (sic) and that KAHS did not contract to purchase the company's business or enterprise.

Despite this possible argument, I believe that the going concern approach is appropriate and the clauses as drafted are acceptable.

Ray

51 There then follows a copy of the contract of sale for the land in Davidson Street, Kalgoorlie which is the subject of this litigation. The contract of sale has a marking made to one of the special conditions as follows:

The Vendor grants to the Purchaser a licence to use all of the things in the possession of the Vendor at settlement necessary for the continued project development of the Property as the Broadwater Resort Apartments Kalgoorlie (which property development is called the 'Business') including, without limitation, development approvals issued by the City of KalgoorlieBoulder, architect's plans, subdivisional approvals of the Western Australian Planning Commission, finance applications, marketing and prospectus documentation, project feasibilities, draft building contracts, tenders received from builders, reports from quantity surveyors and other consultants, project costings, liquor licence applications, and original site plans and demolition approvals.

That removal as marked above, together with several other alterations, does not appear in the concluded contract of sale for the Davidson Street property.

52 I draw the following reasonable inferences, which were not controversial, from both the form of contents of the document in which the statement is contained and other circumstances:

(i) 'Ray' is a reference to Ray Anderson who was a director of Agricultural appointed on 4 April 2002.[20]

(ii) 'Paul' is a reference to Paul Turner who, from other exhibits, appears to be an officer or employee within the Kareelya Group.[21] Counsel for Agricultural referred to Mr Turner, without demur, as the inhouse lawyer.

53 I accept the submission by counsel for Agricultural that exhibit 41 'is not a record of a discussion but constitutes, in essence, the discussion itself'.[22] In other words, the document was prepared for the purposes of a discussion or exchange. It was not prepared for the purpose, or even a substantial purpose, of recording a matter relating to the business. For instance, there is no evidence or basis for any inference that there was any reason why exhibit 41 would need to be maintained in the files of Bunbury Centro as a record of a matter relating to the business.

54 I do not accept that exhibit 41 is a document which was prepared by Bunbury Centro in the ordinary course of its business for the purpose of recording a matter relating to its business. Nor is there any evidence that it was 'used' in the ordinary course of the business of Agricultural or Bunbury Centro for the purpose of recording any matter relating to the business of either party. Still less is there a basis to conclude that it was contemplated that there would be some further or ongoing recording of information by or on behalf of the business of either Bunbury Centro or Agricultural.

55 The statements in exhibit 41 are not admissible as evidence of those facts under s 79C(2a).

56 It was common ground during the hearing that exhibit 41 was admissible to draw an inference that the matters referred to therein were known to the defendants. Whether that inference is open, and whether it is drawn, will depend upon a consideration of all of the relevant facts, which may in turn be affected by the reopening of Agricultural's case.

Exhibit 43 (Mr Catlin's 2002 valuation): admissibility and reopening

57 On 29 April 2002, Mr Catlin, of Ray White & Co, undertook a valuation of the Kalgoorlie Property.

58 In Agricultural's statement of claim, the following is pleaded in par 22:

On 19 April 2002 Mr G M Catlin of Ray White & Co provided a valuation of the Property (Valuation) under instructions from the plaintiff which:

22.1 valued the fair market value of the Kalgoorlie Property as at 29 April 2002 at $2,250,000, on the basis of its open marketability as a redevelopment site in accordance with the approvals as obtained and pending and including the costs associated with obtaining such approvals including fees incurred for working drawings, engineering costs and other preliminaries;

22.2 recorded that [Bunbury Centro] purchased the Kalgoorlie Property in July 1999 for $750,000;

22.3 valued the Kalgoorlie Property on an 'as if complete' basis after the construction of a proposed 92 apartment tourist oriented hotel development to be constructed on the Kalgoorlie Property (Resort) at $19,500,000, on a capitalisation of forecast net profits basis; and

22.4 recorded that the value of the Kalgoorlie Property of $2,250,000 had been determined on the basis of a hypothetical development calculation methodology which had assumed that the total development costs for the resort would approximate $15,600,000 (inclusive of the value of the Kalgoorlie Property of $2,250,000) which would result in a 20% developer's margin on total construction costs after providing for selling costs of 4%.

59 Agricultural's pleading then asserts that Mr Catlin's projections in the 'as if complete' valuation for occupancy and room rates were excessive,[23] and that the 'as if complete' figure was unreliable having regard to the lack of comparable developments and fluctuations in Kalgoorlie's economy.[24]

60 The defendants responded to par 22 above with the following admission:[25]

35A As to paragraph 22 of the statement of claim, the defendants say that the Valuation is dated 29 April 2002 not 19 April 2002 and otherwise:

(a) as to para 22.1, that reference was in the context of calculating stamp duty for a hypothetical development assessment (see pages 49 & 50 of the Valuation) and that the Valuation stated it was feasible that a higher price would be paid for the Kalgoorlie Property given the proposed managed investment structure for the development (page 50 of the Valuation). The defendants will refer to the Valuation at trial for its full terms, meaning and effect;

(b) as to para 22.2, in fact the 3rd defendant purchased the Kalgoorlie Property in November 1999 for $1,200,000; and

(2) do not admit the allegations pleaded in para 22.4.

61 The admission in par 35A, on its literal terms, might be construed as an admission simply that Mr Catlin had performed a valuation which valued the fair market value of the Kalgoorlie Property as at 29 April 2002 at $2,250,000 in the terms described. Senior counsel for the defendants asserted at trial that this was all that had been admitted.

62 This apparently limited admission is not meaningless. The mere fact that the valuation had been performed, if known by Messrs Jackson and Goff, is a relevant matter. This was common ground. It is relevant to the pleaded issue of whether proper consideration by Messrs Jackson and Goff would have led them to the conclusion that[26]

there was a significant risk that the value of the Kalgoorlie Property would be considerably less than $2,250,000 given that it was likely that the total development costs would significantly exceed the costs relied upon in the hypothetical development calculation utilised in the Valuation to determine the Kalgoorlie Property's value of $2,250,000 as pleaded in paragraph 22.4.

63 The defendants deny that Messrs Jackson and Goff should have reached that conclusion.[27] But any knowledge by them of the full terms of the 2002 valuation is a relevant matter to the conclusion they ought to have reached if they had engaged in a proper consideration of the transaction before them.

64 There is a second way in which Agricultural relies on the 2002 Catlin valuation in its pleading. Paragraph 37 of the reamended statement of claim also relies on the par 22.1 pleading of the 2002 Catlin valuation, as well as the admission in par 35A of the defence, to assert that Agricultural had suffered damage by reason of its entry into the Contract and paying at least $1,763,260 more than the Kalgoorlie Property and Licence were worth. Paragraph 37 relies on the accuracy of the content of the 2002 Catlin valuation as a matter relevant to the proof of damage. It goes beyond merely relying upon the 2002 Catlin valuation for the allegation that it contained matters, accurate or not, which were known to the defendants and relevant to breach.

65 In their seventh amended defence dated 19 November 2013, the defendants expressly deny the allegations in par 37 of the reamended statement of claim.

66 The background against which the alleged admission by the defendants falls to be considered is as follows:

(i) On 31 October 2013, Agricultural's solicitors wrote to the defendants' solicitors. Agricultural's solicitors explained that Agricultural would object to the defendants' tender of a market demand study upon which part of the 2002 Catlin report was based unless the defendants called the author of that study, Mr Ray Bird. This foreshadowed objection was a reversal of Agricultural's previous position in which Agricultural itself had proposed to tender the market demand study.

(ii) On 5 November 2013, the defendants' solicitors replied explaining that they accepted that without calling Mr Ray Bird the report could not be tendered as proof of the truth of its contents. They also explained that unless the authors of any 'contemporaneous reports of an expert nature' were called, then '[n]one are to be tendered as truth of their contents or the opinions expressed'.[28]

(iii) On 11 November 2013, at a directions hearing two weeks before the trial commenced, there was argument about whether the trial dates should be vacated due to the unavailability of Mr Ray Bird. I refused to vacate the trial dates.

67 At the 11 November 2013 directions hearing, senior counsel for the defendants said that the defendants wished to rely on Mr Catlin's expert reports in their entirety.[29] I do not accept the submission by senior counsel for the defendants that anything said at this hearing bears directly on whether the defendants would object to the admissibility of the 2002 Catlin report. This is for the obvious reason that as at 11 November 2013 the defendants were proposing to call Mr Catlin. It could hardly be supposed that they would object to the evidence of their own witness.

68 However, senior counsel for the defendants explained that he could not understand how Agricultural could contend that it was ready for trial, since Agricultural had no expert evidence on the value of the subject matter of the contract. He said that 'if we [are] going to proceed with this trial in two and a half weeks' time, then serious consideration would be given to not calling Mr Catlin at all, because what's left of his report may be of little overall moment'. But he said that he wanted an adjournment because 'quite simply the defendants would prefer to proceed with it'.[30]

69 As to the admissibility of the 2002 Catlin report, senior counsel for the defendants said this:[31]

Now, [it's] going to be admissible not necessarily just as expert reports, but as something that the defendants had in their possession at the time. Of course, to that extent they can't be made use of in terms of they're not evidence of the opinions or conclusions expressed. (Emphasis added).

70 In circumstances in which the defendants were still proposing to call Mr Catlin, counsel for Agricultural understood this statement to refer to the two bases upon which the 2002 Catlin report was going to be tendered by the defendants. Counsel for Agricultural, after outlining his objections, explained that what was 'left' of the 2002 Catlin report was Mr Catlin's valuation of the Kalgoorlie Property based upon direct comparison.[32]

71 Counsel for Agricultural explained the Catlin valuation was relevant in the two respects I have described above. The first respect was that Mr Catlin's direct comparison value of the Kalgoorlie Property of $2,250,000 is a matter relevant to proof of loss. The second way in which the valuation was relevant stems from the knowledge of the terms of the valuation by Messrs Jackson and Goff. As to this second aspect of relevance, counsel for Agricultural said that:[33]

[F]actually what's made plain is they had in their hand the 2002 Catlin report and entered into a related party transaction in circumstances where ... the report said the value of the land inclusive of all development approvals, building licences and permits is $2.25 million and they entered into a transaction to pay $2.25 million to a related entity, plus another $1.65 million for the things that were inclusive in the 2.[2]5.

72 Counsel for Agricultural also postulated the claim by Agricultural being put on a basis independent of financial loss, referring to 'the distinction between the plaintiff proving damage and the plaintiff seeking compensation'.[34]

73 As I have explained, it was not until closing submissions that the dispute concerning the admissibility of the 2002 Catlin report became clear. In written closing submissions, senior counsel for the defendants objected to the admission of the report on the basis that it was unverified and that it could not establish the fact of the opinions or the conclusions stated.[35]

74 In closing submissions, counsel for Agricultural made an application to call Mr Catlin to verify his opinions. That application was renewed at the end of counsel's closing submissions when it became clear that there was doubt about the scope of the admission by the defendants and, hence, the basis assumed by counsel for Agricultural for the admissibility of the 2002 Catlin report.

75 At the hearing of this objection on Monday I ruled that the defendants' pleading did not involve an admission that Mr Catlin's report was his honestly held opinion for the purposes of proof of facts concerning the value of the Davidson Street property. I made this ruling for three reasons:

(i) The lack of admission on this basis is consistent with the denial by the defendants of par 37 of the statement of claim.

(ii) It has been clear since the defendants' application to adjourn the trial that the defendants did not consider that Agricultural would be able to prove its case on value and that Agricultural would be put to strict proof of that case.

(iii) A reasonable conclusion from the correspondence between the parties prior to trial is that there was an expectation that any expert who was to be called would need to verify any report and would be made available for crossexamination.

76 However, I also ruled that Agricultural should be given leave to call Mr Catlin for the purpose of verifying his 2002 report and confirming that it was his honestly held opinion. This ruling was made for six cumulative reasons.

77 First, although the defendants had indicated in correspondence to the plaintiff's solicitors prior to trial that unless the authors of any '"contemporaneous" reports of an expert nature' were called, then 'none are to be tendered as truth of their contents or the opinions expressed' this might reasonably have been construed by Agricultural as extending to evidence which Agricultural would call and not extending to evidence which the defendants themselves would call. It would be nonsensical to suggest that the defendants were imposing a requirement on themselves to call their own witness if no crossexamination were required.

78 I was also not shown any correspondence prior to trial in which Agricultural had suggested that it would take any objection to admissibility of Mr Catlin's valuation evidence other than limited objections to the parts based on the Ray Bird study. To the contrary, during the adjournment application, counsel for Agricultural indicated that he wanted the direct comparison valuation evidence from Mr Catlin to be admissible.[36]

79 Secondly, until almost immediately before trial, the defendants had indicated to Agricultural that they would be calling Mr Catlin. Although senior counsel for the defendants said that they would give serious consideration to not calling Mr Catlin, on 11 November 2013 he also said that 'quite simply the defendants would prefer to proceed with it'. The defendants only notified the Court, and it seems also Agricultural, that they would not be calling any expert witnesses around 5.00 pm on 25 November 2013, which was one working day prior to the trial.

80 Thirdly, as late as a directions hearing on 13 November 2013, counsel for the plaintiff was proceeding on the basis that the admission in par 35A of the defence meant that 'the aspect of the [2002 Catlin report], which we rely upon, is an admitted fact'.[37] Senior counsel for the defendants submitted that he disabused counsel for Agricultural of this assumption at the same hearing by saying:[38]

There's only one other point, your Honour, and that is my friends say that we admit on the pleading the value. We don't admit value on the pleading. The plea is that the valuation said certain things. We say, yes, the valuation says that. That's not an admission of value.

81 But the response by senior counsel for the defendants might understandably have been construed as a denial that the defendants admitted the conclusion which Agricultural said could be drawn from the valuation, rather than any denial that the valuation was an honestly held opinion of Mr Catlin.

82 Fourthly, on 13 November 2013, as the defendants were aware, counsel for Agricultural was expressly relying on the statement in the defence that the defendants 'will refer to the valuation at trial for its full terms, meaning and effect'.[39] That pleaded assertion was never amended. Senior counsel for the defendants submitted that this is merely a plea that the 'full terms, meaning and effect' are relied upon in relation to what matters from the report were known to the defendants. But nowhere in the defendants' pleading is this made clear.

83 Fifthly, although senior counsel for the defendants initially suggested that there might be some limitation deriving from authority for a party to call the expert witness of its opponent, there is no such limitation in this case. There is no prohibition against one party calling an expert witness who has provided a report or was proposed to be called by the other party where to do so would not cause any unfairness arising from legal professional privilege to the other party. In this case, Agricultural proposed to call Mr Catlin simply to ask him to confirm that his opinion was honestly held.

84 In R v P[40] Hodgson JA referred with approval to the remarks of Lord Nicholls (dissenting) in Re L (A Minor) (Police Investigation: Privilege):[41]

The fact that an expert or other potential witness has been approached by one party, and given a statement to that party, does not excuse him from giving evidence at the hearing at the behest of another party. If necessary his attendance can be compelled by service of a subpoena. He cannot be required to disclose the contents of communications between himself and the first party's legal adviser. But his evidence on the issue before the court, which is all that is material, can be compelled.

85 Hodgson JA noted, however, that one complication is that the expert opinion is based in part on privileged communications. But he was of the view that the opinions of the experts would have been admissible, without disclosure of communications on which they were based, unless a case were made out that it would be unfair to admit them because the opinions could not be explored or tested without going into privileged communications.[42] However, this was only a 'tentative view', and the matter did not require final determination.[43]

86 Lord Nicholls' remarks were also cited with approval in Sendy v Commonwealth.[44] In that case the plaintiff sought to call Dr Phillips, a psychiatrist, who saw the plaintiff on behalf of the defendant. Dr Phillips prepared two reports for the defendant's solicitor. Neither of the reports was served on the plaintiff. Dunford J held that the plaintiff could call Dr Phillips and that the plaintiff could ask Dr Phillips about his opinion based on nonprivileged material obtained from the plaintiff or otherwise provided to Dr Phillips.[45]

87 Sixthly, in light of the matters explained above, the principles concerning the reopening of a plaintiff's case favour a grant of leave in this case for the limited purpose of calling Mr Catlin in order for him to verify the opinion expressed in his 2002 report.

88 There are broadly three, overlapping, classes of case in which leave to reopen can be granted. These are: (i) fresh evidence; (ii) inadvertent error; (iii) mistaken apprehension of the facts or the law.[46]

89 In Osborne v Landpower Developments Pty Ltd (in liq)[47] McLure J (with whom EM Heenan J agreed on this point) said that '[t]here is some uncertainty as to the test to be applied to the exercise of the Court's discretion to permit the re-opening of a matter before orders are made'. Her Honour applied the liberal approach deriving from the decision in Smith v New South Wales Bar Associatio****n.[48] In that case, a joint judgment of Brennan, Dawson, Toohey and Gaudron JJ suggested that where the decision not to call new or additional evidence was made in error, and an application is then made for leave to reopen prior to delivery of reasons and orders, it is 'difficult to see why ... the primary consideration should not be that of embarrassment and prejudice to the other side'.[49] The considerations of embarrassment and prejudice include the general principles of case management.

90 In light of the discussion above, and my ruling concerning the scope of the defendants' admission, I am satisfied that counsel for Agricultural was proceeding on the basis of either an inadvertent error or a mistaken apprehension of the admission made. The mistake is understandable. It was only after considerable reflection that I reached the view that the defendants' admission did not extend to an admission that would permit the tender of exhibit 43 for the fact of the opinion, honestly held.

91 The prejudice to the defendants by allowing Agricultural to reopen can be removed by appropriate rulings concerning responsive evidence and cross-examination of Mr Catlin. Further, considerations of case management do not weigh against allowing Agricultural to reopen on the limited basis sought. As senior counsel for the defendants properly conceded, if Agricultural had made an application to call Mr Catlin on the first day of trial then this would not have been opposed. It is true that time has been spent on opening submissions and preparation of written closing submissions in the meantime. But little of that time will have been wasted. Almost all of the time since Agricultural's opening concerned issues and facts upon which submissions would have been made in any event.

92 For these reasons, I granted leave to Agricultural to reopen. The reopening will occur tomorrow.

93 Finally, and simply for convenience, I record that I also dismissed Agricultural's 'faintly pressed' submission that Mr Catlin's report was admissible as statements by a qualified person under s 79C(1)(a). Section 79C(2)(g) of the Evidence Act provides:

Where a statement referred to in subsection (1) is made by a qualified person or reproduces or is derived from information in a statement made by a qualified person, that person must be called as a witness unless -

...

having regard to all the circumstances of the case, undue delay, inconvenience or expense would be caused by calling him as a witness.

94 For the reasons I have expressed above, I am not satisfied that undue delay would be caused to this trial if Mr Catlin were called as a witness. There is no further evidence of any inconvenience or expense.

95 Many of the reasons above were ventilated in oral exchanges with counsel although they are now recorded for clarity. These reasons were the foundation for my orders that:

(i) the statements in exhibit 34 are admissible under s 79C(2a) as evidence of those facts;

(ii) the statements in exhibit 41 are not admissible as evidence of those facts under s 79C(2a); and

(iii) the plaintiff has leave to reopen its case for the limited purpose of calling Mr Catlin to verify his 2002 report.

[3] Donohoe v The Director of Public Prosecutions (WA) [2011] WASCA 239 [124].

[4] McKay v Commissioner of Main Roads [No 2] [2010] WASC 153.

[5] McKay v Commissioner of Main Roads [No 2] [2010] WASC 153 [32].

[6] Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647, 659 (Franki J).

[7] RW Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152, 159 (Giles J).

[8] Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560, 564 565 (Heerey J).

[9] Soia v Bennett [No 4] [2012] WASC 292.

[10] Soia v Bennett [No 4] [2012] WASC 292 [18].

[11] Nicholson v The Queen (1984) 12 A Crim R 231.

[12] Nicholson v The Queen (1984) 12 A Crim R 231, 238 239 (King CJ).

[13] Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 10) [2002] SASC 128; (2002) 82 SASR 53.

[14] Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 10) [2002] SASC 128; (2002) 82 SASR 53, 61.

[15] McKay v Commissioner of Main Roads [No 2] [2010] WASC 153 [61].

[16] RW Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152, 159.

[17] Atra v Farmers & Graziers Co-op Co Ltd (1986) 5 NSWLR 281, 288.

[18] Donohoe v The Director of Public Prosecutions (WA) [2011] WASCA 239.

[19] McKay v Commissioner of Main Roads [No 2] [2010] WASC 153 [59].

[20] Exhibit 19, trial bundle page 335.

[22] Agricultural's written submissions dated 13 December 2013 [18].

[23] Re-amended substituted statement of claim [23].

[24] Re-amended substituted statement of claim [24].

[26] Re-amended substituted statement of claim [30.3], [35.3.1].

[27] Seventh amended defence [38A], [45].

[35] Defendants' closing written submissions dated 2 December 2013 [9].

[40] R v P [2001] NSWCA 473; (2001) 53 NSWLR 664, 682 [57].

[41] Re L (A Minor) (Police Investigation: Privilege) [1997] AC 16, 34.

[42] R v P [2001] NSWCA 473; (2001) 53 NSWLR 664, 682 [56].

[43] R v P [2001] NSWCA 473; (2001) 53 NSWLR 664, 682 683 [59].

[44] Sendy v Commonwealth [2002] NSWSC 1109 [17] [18] (Dunford J). See also Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd [2005] WASC 255 [150] [151] (Johnson J).

[45] Sendy v Commonwealth [2002] NSWSC 1109 [21].

[46] Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 [24] (Kenny J).

[47] Osborne v Landpower Developments Pty Ltd (in liq) [2003] WASCA 117 [12].

[48] Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256.

[49] Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256, 266 267.

Amendment (Evidence) Act 2000

AGRICULTURAL LAND MANAGEMENT LTD -v- JACKSON [2013] WASC 464 (18 December 2013)

At a glance

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Judgment (180 paragraphs)

AGRICULTURAL LAND MANAGEMENT LTD -v- JACKSON [2013] WASC 464 (18 December 2013)

Legislation Cited (1)

Cases Cited (7)