Supreme Court of WA|2007-10-23|Before: Mr J, Heenan J

CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 2] [2007] WASC 244 (23 October 2007)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 2] [2007] WASC 244

Consolidated with CIV 2093 of 2003 by order dated 24 June 2004

BETWEEN : OWSTON NOMINEES NO 2 PTY LTD (ACN 001 769 099)

Practice and procedure - Case management - Expert evidence - Confining issues - Directions that certain evidence may be admitted on a prima facie basis upon affidavit from expert based on information and belief with sources identified - Variation of time limits for complying with directions - Liberty to apply

Directions that certain expert evidence may be admitted based on information and belief verified by expert's affidavit

Consolidated with CIV 2093 of 2003 by order dated 24 June 2004

1 EM HEENAN J: These consolidated actions were formerly managed in the Long Causes List. They are now managed by me in the Commercial and Managed Cases List. There is a long history of contested interlocutory applications dealing with proposed expert evidence sought to be adduced by the parties to the litigation. In particular, it concerns attempts to resolve or limit the issues between the parties, both on the pleadings and arising from the reports of expert witnesses which have previously been exchanged. This history of interlocutory applications includes repeated reviews of the progress of the actions by case management registrars and referrals to mediation. Some progress has been achieved in this history of case management, but the parties remain divided about the use which can be made of the proposed expert evidence and how to resolve objections which have been raised about the proposed expert evidence. Further directions have been given in an attempt to limit these disputes and to ensure that any eventual trial is conducted on an efficient and productive basis. However, progress in this regard is disappointingly slow and unduly restricted by positions taken by one or more of the parties.

2 The issues joined in the two actions are quite complicated and it is unnecessary to state them fully for present purposes. It is enough to say that Clambake Pty Ltd (Clambake), the plaintiff in CIV 1707 of 2003 and the first defendant in CIV 2093 of 2003, let premises (warehouse and showroom) in Stirling Highway, Claremont to Tipperary Projects Pty Ltd (Tipperary), the first defendant in CIV 1707 of 2003 and the second plaintiff in CIV 2093 of 2003, for the purposes of the storage of collections of paintings, antique furniture, valuable carpets and various other works of art and artefacts which were the property of Tipperary, or of its principal shareholder and director, Mr Warren Perry Anderson (Mr Anderson), the second defendant in CIV 1707 of 2003, or of Owston Nominees No 2 Pty Ltd (Owston), the first plaintiff in CIV 2093 of 2003. On 22 December 2002 the premises were almost entirely destroyed by fire, along with most of the contents.

3 It is convenient to refer to Tipperary, Mr Anderson and Owston as the 'Anderson parties' and to Clambake and Ivor Frederick Cohen (Mr Cohen), the third defendant in CIV 2093 of 2003, as the 'Clambake parties'. Land Capital Pty Ltd (Land Capital), the second defendant in CIV 2093 of 2003, is separately represented. Its role was as managing agent of the premises where the various goods were stored.

4 Clambake has since brought an action against Tipperary for rent and other moneys alleged to be due and unpaid under the lease or letting arrangement guaranteed by Mr Anderson. To this claim the Anderson parties respond by denying liability. However, more significantly, they have set up a cross-claim for damages which they seek to set off against any liability for moneys due under the letting arrangements. Subject to minor issues, which do not need to be explored on this occasion, it is predominantly the cross-claim for damages by the Anderson parties which is the real focus of the litigation.

5 The cross-claim by the Anderson parties alleges breach of contract, negligence, misleading and deceptive conduct and other causes of action against Clambake and others. The common thread or allegation underlying each of these causes of action is that the warehouse premises were not adequately protected against the risk of fire; that certain installations in the premises did not comply with fire-rating standards alleged to be applicable; and, that there was no, or no adequate, sprinkler system or other fire-suppressing safeguards installed as, so it is alleged, should have been and as had been so represented. For present purposes, one material aspect of the Anderson parties' allegations is that one internal wall within the warehouse was not adequately fire rated and that the steel roller doors which covered two access doorways in that wall were not compliant with the alleged applicable fire-rating standards.

6 For these reasons the Anderson parties claim damages for the destruction of their property, being the various artworks, valuable furniture, precious carpets and other objects of art which were destroyed by the fire. A large area of controversy, which has been the subject of much of the interlocutory process to date, concerns the attempt to reduce or limit the controversies over the value of these art objects at the date of destruction. The contrasting issues revolve around significant differences of opinion about the valuations of the various categories of property destroyed. Some, but only some, of these controversies and the expert evidence concerning estimates of valuation include:

(a) the identity of the artist of certain of the artworks;

(b) the reliability of sales evidence published in art sources and literature about prices fetched for those artists' work at auctions or other art sales;

(c) whether reported prices for the sale of a particular artist's work are for works produced by this artist or by his father, another prominent artist (whom the Clambake parties contend produced work fetching significantly higher prices);

(d) the type and provenance of certain oriental carpets and the reliability of comparative sales evidence identified by the expert valuers;

(e) whether the internal dividing wall within the warehouse needed to comply with certain regulations relating to fire-rating standards or not;

(f) whether the roller doors which formed part of the internal dividing wall complied with the applicable fire-rating standards or not; and

(g) whether the fire doors reported upon by the Anderson parties' expert dealing with fire-rating standards were in fact the fire doors which were located on the premises at the date of the fire.

This is only a small sample of the issues which are dividing the parties and in respect of which expert evidence has been exchanged pursuant to previous orders for directions made in the management of this case.

7 At this stage of the action where, although the claims are well advanced, no final decisions or directions have been given about how or to what extent the trial of all the issues will be conducted, it is obviously desirable to take such steps as are proper to keep these bourgeoning issues in control and to attempt to facilitate proof, or at least to avoid controversy, in relation to issues which may not require a full adjudicative process. Particularly is this so where there is scope for resolution of controversies affecting valuation between the experienced experts retained by the various parties. With these objectives in mind I have, on several prior occasions, made a series of directions and rulings designed to narrow these issues and to facilitate proof of items of damage which one could reasonably expect to be within the scope of negotiation or agreement between one valuer and other experts.

8 There has been a long history of interlocutory applications dealing with pleadings - including contested applications for leave to amend pleadings; to extend time for filing a pleading; for complying with various orders; to issue interrogatories; as to the adequacies of answers to particulars; and, to issue a subpoena or subpoenas. I exclude all those applications from this present survey which is confined to applications dealing with attempts to facilitate proof or to confine issues in relation to expert evidence or other evidence to prove damages claimed.

9 This part of the narrative commences with a chamber summons issued on 23 October 2006 by the Anderson parties seeking orders facilitating proof pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 29 r 2(1)(c) and (d). By that summons, the Anderson parties sought the following orders:

All facts relied on by the parties' expert witnesses and referred to in the expert reports listed in the schedule to this summons be deemed proved for the purposes of the actions unless a party (the Objector) notifies the party who intends to rely on the particular report the disputed fact is referred to in that the Objector requires formal proof of the identified disputed fact or facts within 21 days of the earlier of completion of the mediation in these actions or the mediation in these actions being adjourned sine die.
If notice is given pursuant to Order 1, an affidavit must be filed by a person who is expected to give evidence at the trial of the actions on behalf of the Objector, deposing to the Objector having reasons to believe the disputed fact is inaccurate and to the reasons for that belief.

There be liberty to apply for orders in terms of Orders 1 - 3 above in relation to any further, supplementary or responsive expert reports.

The schedule to this summons identified seven separate expert reports to be relied upon by the Anderson parties relating to items destroyed in the fire and a further two expert reports relating to the condition and fire-rating features of the building. It also listed 14 separate expert reports relied upon by the Clambake parties in one or other of the actions relating to items destroyed in the fire; a further four expert reports in relation to the condition and fire rating of the building; and, a further two expert reports in relation to the origin of the fire itself. Accordingly, there were, by late October 2006, some 29 separate expert reports dealing with various aspects of the issues in controversy which had been filed and exchanged pursuant to earlier directions given in the proceedings.

10 Unquestionably, this is a case where, in addition to many other complex issues of fact and law, expert evidence on matters of valuation, causation, fire rating and associated issues is very extensive and can be expected to occupy considerable time and effort at a trial. This is further reinforcement, if it be needed, of the desirability of attempting to reduce these controversies on matters of expert evidence to within manageable limits, where it is proper to do so.

11 On 12 January 2007, at a special appointment, I heard the applications by the Anderson parties for orders to facilitate proof together with other applications dealing with other issues in the case; namely, interrogatories and pleadings. I declined, however, to determine the application for orders facilitating proof until the completion of mediation hearings then being conducted, in stages, by a registrar. My purpose in doing so was to encourage the completion of the mediation process without unnecessary further controversy and to allow for the potential that some or all of the issues might be resolved by that process. I adjourned the application for orders to facilitate proof to a date to be fixed and made a series of other orders dealing with interrogatories, pleadings and the like.

12 The application by the Anderson parties for orders to facilitate proof was relisted for hearing at another special appointment before me on 24 April 2007. After hearing the parties on that occasion, I made the following order:

On 22 May 2007 each party who contests any facts set out in the contents of an expert report served by an opposing party shall serve on each other party a table which separately identifies each alleged fact and which expert report the alleged fact is referred to in and that party's reasons for disputing the alleged fact.
Each allegation of fact relied upon in the contents of an expert report served by any party which is not so challenged shall be taken at trial as being prima facie evidence of that fact.
There be liberty to apply.

13 In oral reasons given at the time of making those orders, I indicated to the parties that the process by which these orders were then required to be carried out should have the desirable effect of identifying which of the allegations of fact contained in any of the expert reports were actually contested, by whom, and on what grounds. This was designed to ascertain whether there were sufficient grounds to have any particular allegation of fact put into contest, having regard to the reasons advanced for challenging it, and in view of the potential significance of that particular alleged fact in the litigation as a whole. Furthermore, by this process, the various allegations challenged should become capable of better evaluation as result of this enhanced perspective.

14 The next step in the process, if it ever became necessary to take it, would have been to consider whether any further special orders or directions were required under RSC O 29 r 2(1) so as 'to lead to [the] efficient and timely disposal [of the proceedings] as [the court] may consider just and expedient', including whether any order should be made under O 29 r 2(1)(d) which provides for an 'order that evidence of any particular fact, to be specified in the order, shall be given at the trial by statement on oath or information and belief, or by production of documents or entries in books or by copies of documents or entries or otherwise as the Court may direct'.

15 Those orders having been made, the parties then went about preparing and exchanging tables identifying facts in some of the various expert reports which were to be challenged and stating the reasons for the challenge. So far as is presently material, the tables containing a recitation of those challenged facts and the reasons for challenging them are to be found, but for one exception (returned to later in these reasons), in an affidavit sworn by Michael Andreas Stork on 18 September 2007 on behalf of the Anderson parties. This affidavit refers to six annexures (running to some 159 pages) comprising the tables of the challenged facts and the reasons for disputing each such allegation of fact.

16 The first of these is a 23-page report prepared by the Anderson parties listing 81 separate disputed allegations of fact contained in the various expert reports filed by the Clambake parties. These reports deal with:

(a) alleged valuations of the Cayley watercolours and, in particular, alleged comparable sales prices;

(b) the asserted descriptions, sizes and features of the antique, Persian or Eastern carpets destroyed in the fire;

(c) the film projectors said to derive from the residence known as 'Boomerang' in Sydney, disputing their provenance and value;

(d) descriptions of the dimensions, characteristics and age of the premises and its interior, including the alleged basis for it to require a particular fire rating - especially, whether or not a special fire rating was required by particular by-laws;

(e) whether the steel roller doors examined by the experts were the actual doors situated within the interior dividing wall at the time of the fire; and

(f) whether the cause of the fire was associated with a fault in the air-conditioning system.

17 The objections to and the reasons for disputing the alleged facts are too numerous for individual resolution at this early stage of the action. This does not exclude the possibility that later, or at trial, it might be necessary to assess each disputed fact, one by one, in light of the admissible evidence sought to be adduced, so as to advance or refute the allegation of fact which is in issue. However, the predominant focus at this stage, in my view, is to determine how these issues can most expediently and justly be resolved, having regard to the need to manage the litigation comprehensively.

18 Nevertheless, it is possible to recognise certain common threads in the challenges to the allegations of fact and in the reasons stated for doing so. The first thread or feature is that the alleged fact is contested because it is said to rely on hearsay or upon indirect information supplied to the particular expert which he or she may not personally be in a position to confirm. That being the case, it would not be admissible, so it is submitted, without independent admissible evidence verifying the source and authenticity of the alleged fact. A second common feature is that the party making the objection has not confirmed, or in some cases has not been able to confirm, the authenticity of the alleged fact and, in the absence of personal confirmation, is not disposed to accept the accuracy of the fact which has been put forward but not verified. A third common feature is that the objecting party appears to be in possession of information from another source, or sources (in many cases such information is clearly hearsay), advancing a different version of the event or fact referred to by the expert to whose report objection is taken on this ground. The mere existence of an alternative, even if unsourced, version of the fact or event is relied upon by the objector as the basis for the challenge and, therefore, to require strict proof of the fact or event advanced by that expert.

19 There are variations, refinements and derivations from these three main features. However, the overall effect of the objections is that the objecting party is seeking strict proof of each of the particular facts or events which has been itemised in the table of objections. The question, therefore, is whether or not that objecting party is able, or should be permitted, to require strict proof of all of these matters, most of which are relatively minor details on subordinate and derivative aspects of expert opinion evidence concerning valuation, causation and compliance with alleged applicable fire-rating regulations.

20 The second table of disputed facts, put forward by the solicitors for the Clambake parties, is a 27-page document relating to alleged facts contained in expert reports filed on behalf of the Anderson parties concerning the condition, provenance and value of the Cayley watercolours. These are objections to certain alleged facts contained in further expert reports filed by the Anderson parties. They appear to me to contain mostly matters germane to the weight or the reliability of the evidence contained in the various reports. Many of them appear to be trifling, semantic or quarrelsome regarding the significance attached to the particular fact or facts relied upon by the expert concerned. Many of the objections also rely on alleged inability to verify the alleged fact or facts and assert a desire to cross-examine the expert concerned (presumably on a speculative footing).

21 The third table of disputed facts has been prepared by the solicitors for the Clambake parties and it relates to the oriental and antique carpets. This is a document running to 26 pages. It challenges facts contained in two reports relied upon by the Anderson parties. Common features of the reasons for disputing the alleged facts set out in this table are that a catalogue documenting a sale of a carpet, or comparable carpet, at a major public auction house (for example, Christie's) has not been provided; or that a particular carpet has not been viewed; or that opportunity to cross-examine is required; or that a particular carpet was made in north-western Iran, rather than in north-eastern Iran, without the source for asserting that difference being disclosed. Significantly, this table of objections, as with many of the others, fails to disclose the existence of any positive or affirmative case or fact by the objecting party to support an alternate view of valuation. Consequently, I was left with the clear impression that, in the absence of a countervailing case to support a different view or opinion about the significance and value of a particular item, a series of negative points was being taken for no better reason than to frustrate proof and to require and justify a speculative cross-examination.

22 The fourth table of disputed facts, again prepared by the solicitors for the Clambake parties, relates to the opinion evidence filed by the Anderson parties concerning certain film projectors said to have come from the 'Boomerang' residence in Sydney. This 5-page report is directed to facts contained in two reports prepared for the Anderson parties by Mr Martyn Cook. Again, the reasons for disputing the alleged facts are devoted chiefly to a desire for the production of supporting or corroborative evidence, a reliance upon the inability of the expert or the contesting expert to view the projectors, and non-production of a catalogue report containing information relied upon by the expert. Once again, there is no disclosure of a clear affirmative contrary case. The common feature of the objections is a refusal to accept the asserted facts without independent verification and/or an opportunity to cross-examine. Most of the objections, in my view, go only to matters of weight.

23 The fifth table of objections is a list prepared by the solicitors for Land Capital relating to various features, characteristics, dimensions or classifications of the warehouse premises, its interior subdivisions and its structures. This comprises 56 pages of content and challenges alleged facts relied upon in the expert opinions of Mr Richard Welsh. These objections fail to disclose the existence of any positive contrary case in relation to any of the alleged facts which the objector desires to advance. Repeatedly, the objection is stated, '[n]o evidence has been produced to prove the fact'. Otherwise, the objections go largely to matters of weight and, again, exemplify a desire to put the Anderson parties to strict proof on subsidiary matters which appear to be only peripheral to the essential opinion and conclusions of the expert.

24 In a number of instances there are objections to inferences or conclusions drawn by the expert about whether or not a particular feature of the building complied with an applicable fire precaution or fire-rating standard in local regulations. However, it emerges that the real issue in each of those respects is whether or not the particular regulations were in force at that date and applied to this building. Those will be questions of law requiring decision by the trial judge. Consequently, the opinion of an expert as to whether or not the regulations applied should be treated as no more than an indication that, in the opinion of the expert, if the regulations did apply, this particular feature was non-conforming because of the particular factual features described.

25 The sixth and final report of challenged facts, contained in the affidavit of Mr Stork, has been prepared by the Anderson parties. It again relates to the Cayley watercolours and the oriental and antique carpets. It runs to 23 pages and challenges 138 separate allegations of fact in the expert reports relied upon by the Clambake parties. This report raises issues substantially similar to the first report described and does not require separate analysis or discussion.

26 One further table of objections to facts contained in expert reports has been delivered by Land Capital. This is annexed to the affidavit of Mr Jonathan Eric Wyatt, sworn 24 September 2007. It is a 4-page table disputing six alleged facts in the list of facts prepared by the Anderson parties relating to certain aspects of the premises and the cause of the fire.

27 The alleged facts which have been disputed, and which are the subject of the tables containing the reasons for the challenges to the alleged facts, come within the compass of the Anderson parties' present application. Those alleged facts, in respect of which the Anderson parties are seeking orders for the facilitation of proof as described, are itemised and detailed in the minute of proposed orders prepared by the solicitors for the Anderson parties and dated 18 September 2007. They are confined to parts of the contents of the reports dealing with the Cayley watercolours, the oriental and antique carpets, the 'Boomerang' film projectors and Mr Welsh's expert evidence.

28 After receiving written submissions and hearing the parties at a special appointment on 27 September 2007, I made orders upon the renewed application by the Anderson parties for orders to facilitate proof. The relevant orders which I made are as follows:

The expert reports relied upon by the Applicants [the Anderson parties] stand as prima facie evidence of the facts relied upon in the expert reports as listed in paragraphs 1.1 to 1.4 of the Applicant's minute of proposed orders of 18 September 2007, but restricted to those issues of fact identified in the table annexed to the affidavit of Michael Andreas Stork of 18 September 2007; subject to the authors for various reports filing within 4 weeks and serving affidavits as to their belief in the various facts contained in the paragraphs identified and providing the best particulars which they are able to give as to the source and basis for that information and belief. Upon filing those affidavits, the Applicants are at liberty to adduce that evidence at trial.
In the event that any of the defendants in CIV 2093 of 2003 [the Clambake parties and Land Capital] wish to adduce supplementary expert or other evidence on the issues in respect of which order 1 has been made, then statements of that evidence or any supplementary expert reports must be served within 6 weeks after the filing of the affidavits referred to in order 1, and after that response the defendants in CIV 2093 of 2003 shall have a further four weeks to apply for leave to adduce such supplementary evidence, and if so to what extent, notwithstanding that the time limits for exchanging expert reports have already expired.
There be liberty to apply generally.

The second of these orders was to deal with the situation where the Clambake parties' expert reports had, in many instances, failed, as I have described, to advance any positive case to propound a materially different version of the facts to which objection had been taken, confining the objection, instead, to the sufficiency of proof, and demanding strict proof or a right to cross-examination. By failing to take the opportunity to put forward a contrasting positive case as to the facts in contest, the Clambake parties appear to have failed to take advantage of the opportunity which was presented to them by this process of identifying and rationalising the extent to which proof of subsidiary matters might be facilitated.

29 Having not taken the opportunity of advancing a contrary case, and the time for filing expert reports having long since expired, it appeared to me to be obvious that those parties would then later seek leave to file supplementary expert evidence belatedly, might be given leave, and that an entire round of further expert responses and, perhaps, even further mediation might be rendered necessary. Anticipating such a development and being disposed to avoid further delays, I specified the timetable set out in the second order in which the Clambake parties and Land Capital might apply for leave to adduce any additional expert evidence; to disclose the evidence upon which they relied; and, to allow the Anderson parties an opportunity to consider that before hearing a contested application in this regard. I am conscious that this order does involve a degree of anticipation and a forecast, at least, of the possibility that supplementary expert evidence might be permitted. However, this course seemed to me to be preferable, and more expeditious, than making no provision for what seems to be a very likely eventuality. The order is not meant to forecast or to encourage the grant of leave to permit supplementary expert evidence but, rather, to design a mechanism where, if such an application is to be made, it can be made in an orderly fashion and as soon as practicable.

30 I should further add that none of the parties to this application submitted that each individual alleged fact and response should immediately be separately scrutinised and ruled upon. Indeed, that would not have been practicable at a hearing of the nature of the one before me. If, for any reason, it were to be decided that that were necessary, the only practicable course would be to remit that matter for investigation and report by a registrar. In this way, rulings would take place more expeditiously and, therefore, at less cost, than proceedings before a judge. Again, none of the parties submitted that it would be necessary or desirable to do that in the present case. This is because it seemed to be accepted by the parties, and it was certainly my own view, that the present application raised broader questions of principle which called for decision which, once determined, would allow individual contests to be dealt with by the parties by adducing evidence at the trial.

31 While this conclusion may not immediately be self-evident, it becomes more apparent when one appreciates the underlying common feature of the objections to the reception of the expert evidence dealing with these alleged facts. That common feature being either the alleged hearsay nature of the expert evidence or the assertion of a right to demand strict proof, accompanied by a right to cross-examine a witness or witnesses. The second aspect arises despite the objecting party having no contrary alternative fact or facts to advance - but simply demanding strict proof without being able to point to any possible alternative version.

32 The Clambake parties and Land Capital also applied on summons before me on 25 September 2007 to adjourn the renewed hearing of the Anderson parties' application for orders to facilitate proof on the grounds that there had been inadequate prior consultation between the parties as required by RSC O 59 r 9. They relied upon an affidavit sworn by Mr Jonathan Eric Wyatt on 21 September 2007 and the annexures of correspondence between the solicitors for their submission that there had been inadequate prior consultation. I dismissed that application and proceeded to hear and determine the application on the merits as described.

33 The six tables of disputed facts, which were exchanged in compliance with my order of 24 April 2007, were dated from May up until September 2007. It is true that there was a call by the solicitors for Clambake and Land Capital for an opportunity to meet to confer and discuss the tabulated disputed facts item by item. However, I am satisfied that the necessary opportunity for consultation between the parties had previously been given and that there had been more than a sufficient opportunity for supplementary consultation had there been any real reason to believe that that might have been productive.

34 This application for orders to facilitate proof has been pending since October 2006. It was deferred at my direction in January 2007 and the orders which I made in April 2007 required the filing of tables by 22 May 2007. The objections which were taken, pursuant to those orders, and reasons for them, plainly disclose the considered positions of the objecting parties and, with all respect, it appears to me to be specious for those objectors to complain that there has been no further consultation to provide them with the opportunity to withdraw or to reduce the objections which they have advanced.

35 The hearing of this application is part of a continuing process to deal with applications to facilitate proof. While consultation between the parties is necessary and desirable, once the issues have been drawn it is unnecessary, in my view, to insist that that occur at the next sequential step in the process - especially when to do so would necessitate considerable extra delay in a situation where all the indications are that there is no reason to expect a change in the objector's position from that clearly stated in the specified tables. I could not help concluding that this attempt at reliance on an asserted failure to comply with O 59 r 9 was adventitious and opportunistic. It did not, in my view, manifest any serious potential for narrowing of the issues which had been joined.

36 It is necessary to examine the legal principles applicable to orders which might facilitate proof, made under RSC O 29 r 2(1), and the extent, if any, of the limitations on a party to insist upon strict proof of some fact or feature of evidence, even if it is supporting opinion evidence received through an expert. To this extent it is necessary to address, if ever so briefly, authorities bearing upon the admissibility of expert evidence which involves self-reliance by the expert on subsidiary facts or features either within or outside the area of expertise. There were helpful submissions from the parties in this regard and I turn to them.

37 The position put by the Anderson parties in their written submissions starts with the proposition, which I am satisfied should be accepted, that this litigation raises two areas in which all parties rely on a substantial amount of expert evidence. The first area relates to the valuation of the destroyed antiquities and artwork. The second to compliance or non-compliance of the building with certain regulatory requirements. The expert evidence is based on numerous underlying facts which are not central to the dispute between the parties, but are in various respects nevertheless relied upon by the experts for the opinions which have been prepared and exchanged.

38 The parties accept that, under the common law rule of which Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 is an example, each party relying on expert evidence is required to prove those underlying facts the expert relies upon. See, also Ramsay v Watson [1961] HCA 65; (1961) 108 CLR 642; Paric v John Holland (Constructions) Pty Ltd [1985] HCA 58; (1985) 62 ALR 85; Steffen v Ruban (1966) 2 NSWR 622. Even so, that proposition is not without limits and exceptions. It is well accepted that an expert may rely upon notice of notorious facts, even arcane facts, which are known and accepted within his or her particular discipline, or which can be ascertained from reputable and accepted sources of reference within that or other disciplines. For example, a medical specialist may give an opinion which relies upon the characteristic structures of DNA, or epidemiological theories about the aetiology of a disease, even though that individual expert may not have carried out the studies to demonstrate the theories or conclusions arrived at, or personally conducted or supervised the research which led to the conclusions. Another example may be that a specialist in Egyptian antiquities may very well, and could be expected to, examine the literature in various libraries and other museums and repositories about the state of knowledge concerning a particular dynasty before offering an opinion that some particular relic or fragment was, or probably was, an example of the work of a particular period.

39 Part of the special qualifications of any expert must also be regarded as including the knowledge and experience of that expert to identify and select suitable sources of reference which can be treated as reliably contributing to, or underpinning, the opinion offered by the individual. So, for example, if an expert is engaged to express an opinion about the identity of an artist of a particular work, it could be expected that that expert would consult and acknowledge reliable sources which contained examples of, or analysis of, known works of such an artist or his contemporaries. The expert might also undertake research into the materials available at the period when the artist lived and examine other sources which the expert may accept as trustworthy in allowing him or her to form an opinion as to the authenticity or otherwise of the individual work. Part of the expertise of an individual specialist is to know where to look and to know how much reliability can be given to various sources of reference and, on occasion, when to reject or to question information coming from those sources.

40 It is, perhaps, unnecessary to elaborate on this point, other than to illustrate how the rules in Pownall v Conlan Management Pty Ltd and the other supporting authorities are capable of being misapplied. In that case, Anderson J, with the apparent agreement of Ipp J, referred (at 387 - 388) with evident approval to an article by Dr Rosemary Pattenden 'Expert Opinion Evidence Based on Hearsay' [1982] Criminal Law Review 85. This article makes the obvious point that 'when an expert gives evidence of opinion in the strict sense of the term the opinion must be his own, but he need not have first hand knowledge of all the facts (85)'. See also Wigmore JH, A Treatise on the Anglo-American System of Evidence (3rd ed, 1940) [1917]. Dr Pattenden continues:

While the essential legal position is straightforward, complications, which are only too rarely mentioned in reported English judgments, can arise. A string of recent Canadian cases have examined inter alia the question whether an expert can relate to the court information derived at second-hand which underpins his opinion. The answer which can be culled from these cases and also certain Australian references to the subject is that this is both unobjectionable and desirable. It is unobjectionable because when the expert relates the basis of his opinion to the court he does so in order to explain why he formed a particular opinion - not to prove that which he was told out of court. It is desirable because without knowing on what information the expert drew in forming his opinion the weight to be placed on his opinion cannot begin to be assessed. Further, the fact that the opinion rests on facts learnt at second-hand may be an important factor in deciding how much weight to attach to the opinion (86 - 87). (footnotes omitted)

41 The learned author then proceeds to examine a number of cases in which second-hand information or hearsay is legitimately accepted as part of an expert's opinion if it comes within certain tests and how, in English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415, Megarrry J said, in relation to evidence of an expert valuer:

As an expert witness, the valuer is entitled to express his opinion about matters within his field of competence. In building up his opinions about values, he will no doubt have learned much from transactions in which he has himself been engaged, and of which he could give first-hand evidence. But he will also have learned much from many other sources, including much of which he could give no first-hand evidence. Text books, journals, reports of auctions and other dealings, and information obtained from his professional brethren and others, some related to particular transactions and some more general and indefinite, will all have contributed their share ... the opinion that the expert expresses is none the worse because it is in part derived from the matters of which he could give no direct evidence (420).

42 For an Australian example, there is the decision of Eagles v Orth [1976] Qd R 313, where Dunn J said in the Court of Criminal Appeal:

If a subject is demonstrated to be a proper subject for expert evidence, and it is a subject in which theoretical rather than empirical knowledge is important, or one in which theoretical as well as empirical knowledge is important, it appears to me that an expert may express an opinion on the subject, based solely upon his study and evaluation of well-regarded publications (321).

43 Ultimately, Dr Pattenden expresses the conclusion:

There are two common law hearsay exceptions peculiar to experts. The first relates to technical data widely used by members of the expert's profession, not confined in relevance to the facts of the case about which he is testifying and regarded as reliable. The second relates to knowledge which the expert can be assumed to have and on which he draws to formulate his opinion and to express working truths but which he has not learnt through personal experience. To some extent these exceptions overlap (95).

44 It therefore follows that in a case such as the present, the rule in Pownall v Conlan Management Pty Ltd, though unquestionably correct, must be applied with discrimination, lest it be unwittingly extended to situations which it did not specifically address and situations where, as is well accepted, indirect evidence coming within these acknowledged exceptions may be admissible.

45 The present applicants submit that a requirement to prove every underlying fact relied upon by their various experts, so as to satisfy the rule in Pownall v Conlan Management Pty Ltd, could only result in a disproportionate use of court time and a waste of costs, both in preparation for trial and at trial. They seek to dispense with the need for a party relying on expert evidence to prove those facts which are not central to the real dispute. It follows, from this examination of the rule in Pownall v Conlan Management Pty Ltd, that I consider that the Clambake parties have overstated the obligations of proof which rest upon the Anderson parties or upon any other party calling expert evidence. Many of the reasons for disputing facts, in the tables already described, go no further than making objections to reliance upon secondary evidence, such as catalogues, sales transactions and reports of the source and valuations of various items, which experts qualified in those particular fields may quite legitimately consult and rely upon without the need to prove directly every underlying fact to which reference was made.

46 That aside, however, the Anderson parties' submission goes on to assert that in suitable cases the court may make orders which in effect dispense with the requirements for formal proof of facts or matters peripheral to major issues in the case. This submission raises different issues.

47 There can be no doubt that modern principles of case management have advanced significantly, certainly under the civil procedure rules introduced in England and Wales. A court there may now control the evidence in a case to which its rules apply by giving directions as to the issues on which it requires evidence, the nature of the evidence which it requires to decide those issues, the way in which evidence is to be placed before the court, and so as to exclude otherwise admissible evidence. All this is regarded as legitimate and occasionally necessary to advance the objectives of enabling a court to deal with cases justly - that is, fairly, efficiently and in a proportionate manner to the amount of money involved, the importance of the case, the complexity of the position and the need for fair and expeditious resolution: see Halsbury's Laws of England (4th ed reissue, vol 17(1), 2000) [427].

48 The question is whether the powers available to this court under RSC O 29 r 2(1), and within its statutory and inherent jurisdiction, permit orders facilitating proof, such as have been described in this present case. The applicants submit that they do, particularly having regard to the provisions of RSC O 1 r 4A and r 4B. I am inclined to agree with these submissions, at least at a general level, although the extent of the powers of the court in this regard no doubt remain to be worked out and any particular limits identified by the usual evolutionary process of principled decisions and the doctrine of precedent.

49 The applicants submit that the resources of courts are limited and they should only be called upon by the parties to resolve matters which are clearly in dispute. In this regard, in Labocus Precious Metals Pty Ltd v Thomas (No 3) [2007] FCA 1346, Allsop J observed:

I do think, however, that both sides lost sight of the proper way to run litigation. The courts are a scarce and expensive public resource. Litigation is necessarily expensive for the parties. It involves skilled, experienced members of a profession. The professionals and their clients have a duty not to call upon court resources to resolve matters other than truly in dispute: Ashmore v Corporation of Lloyds [1992] 1 WLR 446 at 453. This duty, which the courts can enforce, reaches down to the method or conduct of cases. Issues should be examined realistically and cases should be run with a minimum (not a maximum) of discovery and interlocutory skirmishing. Parties should be frank with each other in order that the real issues are litigated without confusion or surprise: see in particular Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116 at 117 [1], 128 [28], and 131 [39].

...

It should not be thought that I have forgotten the difficulties of practice. It is easy to be wise after the event. Practitioners and clients must, however, approach civil litigation (even hard fought commercial litigation) with the recognition of the need for civility and reasonableness so as to avoid unnecessary time and energy being expended (at cost to the client) in dealing with incivility and unreasonableness. The professionals here were civil to each other; but their positions were sometimes unnecessarily intransigent. There is a balance to be struck between reasonable informality to cut through procedures and resistance to unnecessary demands. That balance is one for practitioners whose fees represent their skill and experience, including their skill in identifying the real issues for trial and bringing them to trial efficiently, in a cost-effective way and with a minimum of unnecessary activity and expense [15], [17]. (original emphasis)

50 There are certain examples of this court ordering that, in suitable instances, formal proof be dispensed with, both in reliance upon general case management principles and under s 167(1)(g) and s 167(1)(o) of the Supreme Court Act 1935 (WA) - see per Wheeler JA in Deputy Commissioner of Taxation (Cth) v Robinswood Pty Ltd [2001] WASC 191; (2001) 24 WAR 284, where her Honour said:

It appears to me that s 167(1)(o) of the Supreme Court Act 1935 (WA) authorises the making of rules which permit departure from the rules of evidence in the circumstances there nominated. I would respectfully adopt in that regard the observations of Owen and Steytler JJ in Bristile Holdings Ltd v Giacci Brothers Pty Ltd [2000] WASCA 48 at [20]. Section 167(1)(g) may also have that effect. The question appears to be whether O 29, r 2(1)(c), or perhaps the general power contained in the opening words of r 2(1) is intended to authorise the making of an order of the type sought here. The question is not one of power, but of construction of the rule. In that respect also, I would adopt the observations of Owen and Steytler JJ in Bristile Holdings v Giacci (at [19]).

It is my view that there is much to be said for the reasoning of Dixon AJ in Murine Eye Remedy Co v Eldred [1926] VLR 425. In a case where the rule-making power would in his Honour's view have authorised a rule permitting a departure from the rules of evidence, his Honour thought that it was appropriate that a rule made pursuant to that power should receive the construction which the words naturally required, rather than some more limited construction. Particularly having regard to the purpose of the case flow management rules, it appears to me that it is appropriate to give O 29, r 2(1) a broader, rather than a narrower construction [25] - [26].

51 To these considerations may be added the undoubted power of the court to control its own processes: Labocus Precious Metals Pty Ltd v Thomas (No 3) [15] - [17]; Tobin v Dodd [2004] WASCA 288 [6]; Ashmore v Corporation of Lloyd's [1992] 2 All ER 486, 488 (Lord Roskill), 483 (Lord Templeman); Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116 [22] - [29].

52 By contrast, the respondents to this application, both the Clambake parties and Land Capital, submit that unless a matter is peripheral to a central issue in the litigation it will not usually attract the operation of O 29 r 2(1) and that in Bristile Holdings Ltd v Giacci Brothers Pty Ltd [2000] WASCA 48 and Deputy Commissioner of Taxation (Cth) v Robinswood Pty Ltd, the alternative proposed modes of proof and the specific evidence were clearly identified. They submit that the Anderson parties in the present litigation are seeking orders which would not only permit inadmissible evidence, but would dispense with proof altogether on vital issues in the case.

53 In response, the Anderson parties submit that the proposed orders to facilitate proof would relate only to those statements of fact in the expert reports where the respondents' reasons for disputing the facts are, in substance, an insistence upon strict proof where no positive contrary allegation of fact is being advanced. Furthermore, they submit that these various facts are simply indications of how and why various experts reached their opinions and are not central. This submission echoes the propositions advanced by Dr Pattenden in her article, which I have already examined, and appears to me to go to the reasons for the opinion rather than necessitating proof of the individual facts.

54 The major proposition of the applicants is that the orders sought have been drawn in such a way as to ensure that only the statements of those facts which are not central to the case are taken as prima facie evidence of the facts. An example is given; namely, that the respondents repeatedly dispute sales' evidence on the sole basis that the sale is not comparable with the work valued, without putting up a contrary fact or opinion based on evidence said to be comparable. The applicants argue that the orders sought reserve the respondents' ability to contend at the trial that the opinion of the expert, based on such a sale, should not be accepted because the sale is not comparable, or should otherwise be afforded little weight. The applicants submit that the orders sought have the effect only that the fact of the sale, its occasion and price should be the subject of prima facie evidence, not that the sale is a sound basis on which an expert may form an opinion. Those examples do not cover every aspect of the facts to which objection has been taken, but they exemplify the characteristics of the objections which are now under scrutiny.

55 In a case of this magnitude, I am satisfied that the court can, and should, exercise control over the scope of the issues and the method of proving them to ensure that the trial is conducted expeditiously, efficiently and fairly and with regard to all considerations, including those of costs, time and the use of scarce public resources. It seems to me that while a court must examine essential issues in the case as presented by the parties on the basis of admissible evidence, peripheral issues do not require or justify this degree of scrutiny. Consistently with the principles underlined in RSC O 29 and efficient case management, there comes a point where the question must be asked whether or not the parties should be permitted to put a particular fact in issue and demand strict proof and full cross-examination. Those are important and traditional rights associated with the trial of issues, but they assume, and have always assumed, that there are reasons justifying the putting of such allegations in issue.

56 In a criminal trial, where it has long been accepted that an accused person has an undiluted right to put the prosecution to proof of all the essential issues of the case, the explanation is obvious - namely, since the liberty and reputation of the individual subject is at stake, this is sufficient in itself to justify the requirement of strict proof. By contrast, in actions for defamation, proof of a publication of a particular kind - for example, suggesting the commission of a criminal offence - will be presumed to have been malicious and to have caused damage unless the defendant proves otherwise. This allocation of the burden of proof on those issues is designed to reflect the inferences which come from long experience and to justify putting the burden of proof exceptionally upon a defendant as representing the appropriate allocation of responsibility on contested issues.

57 In civil litigation of this kind, if a court is to be asked to decide a particular issue and to require its proof by the party having the burden of proof to discharge that by a traditional means, it is, in my view, a perfectly justifiable approach to enquire whether there is sufficient cause to put that allegation in issue. If there is not, there is a high degree of risk of incurring unnecessary expense and delay. Of course, if the objecting party disputes the allegation of fact because it contends, on reasonably arguable grounds, that it is either not true or that the real state of affairs which that party itself seeks to advance is materially different, there will probably be the need to require formal proof. If, however, the objecting party does not seek to advance some different fact or circumstance, and has no cogent reason to question the fact which has been alleged (on this hypothesis, from an apparently respectable source who is prepared to go on affidavit as to his or her belief in the particular fact), there seems to be little if any justification for requiring strict proof of that proposition.

58 Take the example of a suitably qualified expert physician giving a report that a patient whom he or she attended and diagnosed was suffering from malaria. In the absence of an arguable case that the patient did not have malaria or that his or her reported symptoms were more probably those of a different disease, supported by an opinion of another suitably qualified expert in the field, I do not see why, in the absence of other considerations, the doctor who made the diagnosis of malaria could not give that opinion without collateral strict proof of the results of every diagnostic test considered and the criteria relied upon over a professional lifetime for making such a diagnosis. To require proof to that degree, merely on speculation and in the absence of any sufficiently expressed reason to doubt the opinion of the expert would, in my view, lead to delay, inefficiency, a multiplicity of issues and intolerable costs. Proportionality of the reason for seeking to put a fact or facts in issue, having regard to the litigation as a whole, must be part of the assessment of suitable case management.

59 Having regard to these considerations, I decided that the expedient adopted by Dixon AJ in Murine Eye Remedy Co v Eldred [1926] VLR 425, which was based on laws and rules of court not dissimilar to those presently under consideration, and which justified evidence of opinion being given on the basis of information and belief, was a sufficient and proportionate safeguard. For this reason, in respect of the particular allegations of fact to which objection had been raised essentially on the basis that the Clambake parties and Land Capital desired to put the applicants to strict proof, or to cross-examine their witness, without putting forward an alternative substantive allegation, I made the orders referred to in [28].

60 The result of these orders should be that the Anderson parties will be at liberty to rely upon the expert evidence as prima facie evidence of the fact or facts alleged, upon the author or authors of the particular reports making and filing an affidavit as to his or her belief in respect of that particular fact or facts, and giving the best particulars he or she is able to give as to the source of his or her information and belief for that particular fact or facts. Subject to obtaining leave to adduce further expert evidence, that would not prevent the Clambake parties or Land Capital from adducing evidence to reject or which is designed to reject or refute that alleged fact. However, it would mean that, in the absence of such other evidence, the alleged fact will be admissible as prima facie evidence and may be given such, if any, weight as may be considered proper after all other evidence in the case is heard.

CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 2] [2007] WASC 244 (23 October 2007)

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Judgment (95 paragraphs)

CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 2] [2007] WASC 244 (23 October 2007)

Legislation Cited (1)

Cases Cited (5)