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[2017] FCA 1045
Federal Court of Australia
2017-07-19
Mr P, Kerr J
Original judgment source is linked above.
THE APPLICANT'S SUBMISSIONS 62 In response, counsel for the Applicant, Mr Pearce SC, submitted that the Court should not proceed on the basis that the proceedings were analogous to a building case; that Jadwan had contracted with Mr Selby-Hele to build a new nursing home facility for the price contained in the quote and that the dispute before the Court relates to unpaid amounts. Mr Pearce submitted: This case, I need to remind your Honour, is a case of professional negligence against solicitors who, it [is] said, failed to give the proper advice and [it is] said that that caused certain loss. 63 Mr Pearce developed that argument (at P 833 to 834 of the transcript) by reminding the Court that, in respect of the task before it, there were vast numbers of past hypothetical facts that the Court would need to make findings about, and that all parties accepted that to be so. The Court must decide, he submitted, whether Jadwan might have applied for an injunction, what might have been the outcome of that application, and then, assuming Jadwan would have obtained an injunction, consider what Jadwan might have done. Mr Pearce submitted that the High Court had held, on at least two occasions that, in the realm of past hypothetical fact, there may be no alternative but to speculate and engage in conjecture. He submitted the evidence contained in Jadwan's business records was properly available to be relied upon as the basis of that necessary speculation and conjecture, relevant to what it would have cost Jadwan to relocate. 64 Mr Pearce submitted that the Court should not be under the impression that the evidence in question was relevant to Jadwan's claim for $7 million in lost profits. He submitted that, contrary to what the Court might have understood on the basis of the Respondents' submissions, the Applicant's primary submission was that Jadwan would have continued to operate Derwent Court Nursing Home from the Fitzroy Place premises. That was its primary claim. It was only if the Court was to reject that premise that the cost of moving to a specified site would become relevant. 65 Mr Pearce submitted (at P 834, line 4 of the transcript): …when we move to scenario B however, which is what these matters go to, Mr Selby-Hele's quote, Mr Calder's estimate of the time it would have taken, these matters go to what additional costs would have been [incurred] in the relocation option. 66 That is, he submitted, the use the Applicant intended for the evidence to the proper measure of the reduction of the $7 million in profits it had claimed under scenario A. The evidence that Mr Ferrier would have a foundation to opine about, if permitted to have regard to the representations in the three documents, was that it would have cost Jadwan in the order of $2.445 million to relocate. That would significantly reduce the loss claimed under scenario B to about $3 million. Mr Pearce explained the Applicant intended to use the material to provide an evidentiary basis for the Court to engage in the necessary speculation and conjecture regarding the cost of relocating, had Jadwan pursued that option, so as to operate Derwent Court from alternative premises. 67 Mr Pearce submitted that the Respondents had been aware of the existence of the three letters since March 2016. He submitted that the Respondents had been on notice of their intended use since at least November 2016, particularly with respect to the reduction of damages calculations in its 'Scenario B'. They had had ample time and opportunity to provide any contrary evidence of what it might have cost Jadwan to relocate. They had made the choice not to do so. 68 He submitted that the Respondents had not taken any steps to dispute the reasonableness of the assumptions upon which Mr Ferrier had been asked to prepare his expert evidence. In taking no steps other than attempting to exclude the evidence which would establish the basis for those assumptions, the Respondents had made a deliberate forensic decision. Their objections to its admissibility having been rejected, the Respondents could not be heard to say its reception would be unfair. They were bound by the consequences of their own forensic decisions.
CONSIDERATION 69 With respect to the exercise of the discretion to exclude or limit the use of otherwise admissible evidence the correct position is that articulated by Wood CJ at common law in R v Suteski (2002) 56 NSWLR 182 at paragraphs [126] to [127] each case turns on its particular facts, having regard to the character of the evidence involved and the nature of the strength of the potential prejudice. 70 The general discretion to exclude evidence pursuant to s 135 arises only if the probative value of the otherwise admissible evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party, be misleading or confusing, or result in an undue waste of time. 71 Only the first of those factors warrants appears to require detailed consideration in these proceedings. 72 A submission that evidence should be rejected as misleading or confusing will generally carry little weight in the case of a trial conducted by a judge alone. In any event no such submission was made by the Respondents. 73 Nor in this instance has any submission been made that the reception of evidence will cause or result in undue waste of time. Indeed, by comparison with the process to what Mr Gunson submitted should properly have been undertaken by the Applicant to establish a foundation for the premises upon which Mr Ferrier might opine, it will shorten the process. 74 I therefore turn to the question of whether the probative value of the otherwise admissible evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the Respondents. 75 I must be cautious about how I express my views about the probative value of the evidence. There may be later dispute as to what weight should be accorded to that evidence and whether it may need to be qualified by reason of a whole range of considerations, not the least that as a matter of common knowledge quotes provided by builders often underestimate actual final costs and projects take longer than expected. I do not wish to prejudge any submissions the Respondents may advance if the evidence is permitted to be adduced. 76 But as the matter currently stands I discern nothing (a) in the manner in which the representations that are contained in each of the three documents have been expressed; or (b) regarding the circumstances of the two persons who might reasonably be supposed to have had personal knowledge of the asserted facts who have made those statements to suggest a want of probative value. Each of the letters containing their respective representations appears to have been sent in the course of arms-length business dealings between Jadwan, represented by Mr Alexander, and persons with authority to speak on behalf of commercial construction companies interested in securing the work of building, or supervising the building of, a new 51-bed premise for Jadwan on a greenfield site, if Jadwan ultimately was to proceed in that manner. 77 It is true that the methodology recommended by Mr Gunson to be the more appropriate way for the Applicant to have established a foundation for Mr Ferrier to opine could have been adopted by it. But, equally, once the Respondents became aware of the intended use of the representations I have decided to admit into evidence and had apprehended that their use for that purpose would involve a significant undervalue or underestimate of the cost of constructing, or the time it would have taken to construct, a new 51-bed nursing home in the late 1990s it would have been equally available to them to have adduced similarly premised evidence to controvert that proposition. 78 However the Respondents did not adopt that course. 79 In respect of the unfair prejudice the Respondents submit they will thereby suffer I accept Mr Pearce's submission that I am entitled to conclude it was a forensic decision by the Respondents to proceed in reliance on the Court rejecting the tender of these documents. I do not thereby mean to suggest that that was an improper course on their behalf. It was entirely open to the Respondents not to advance an alternative and to simply put the Applicant to proof. However, without expressing any criticism of it, I am satisfied that the course that was undertaken involved a deliberate choice. 80 Responding to Mr Pearce's submission that the Respondents had been aware of the Applicant's intention to tender this evidence and to rely upon it as a foundation for Mr Ferrier's opinions, since November 2016, Mr McElwaine, (P 840) submitted: Well, the answer to that is so what? The applicant carries the onus. If we take the view that the applicant has produced insufficient evidence, that is the position which we are entitled to take in adversarial proceedings. 81 Any party is entitled in adversarial proceedings to take such a position when the onus of proof lies on the other side but equally every forensic choice carries with it certain consequences. The consequence of making that decision in these proceedings is that the Respondents have no contrary evidence to adduce. 82 In those circumstances I am entirely unpersuaded that the probative value of the otherwise admissible evidence is substantially outweighed by a danger that its admission would be unfairly prejudicial to the Respondents. In that context I give little weight to the asserted loss of opportunity to cross-examine: the more so given that had the makers of the documents been called the Respondents would have maintained the same objection (P 816 lines 4-14). 83 Nor do I accept there is a proper basis to limit the use of that evidence so as to exclude it from being adduced to establish the fact of what had been earlier put by the Applicant to its expert witness Mr Ferrier as an assumption in relation to his expression of opinion regarding the loss suffered by Jadwan. 84 For the reasons I have set out at [69]-[83] above I am satisfied that there is no valid foundation for the Respondents' submission that there is a danger that its use for that purpose would be unfairly prejudicial to them. 85 Additionally, (assuming, hypothetically, that the Applicant may otherwise succeed on liability) in the context of what inevitably must be a speculative and conjectural exercise of assessing the 'what if's in relation to damages it occurs to me to be a significant likelihood that any contemporaneous representations made on an arm's length commercial basis could be a more reliable basis for an assumption than a conclusion formed after an entirely hypothetical contest between experts briefed to opine as to what it might have cost, or how long it would have taken, to build a new 51 bed nursing home on a greenfield site in Tasmania over 18 years ago. 86 For that and the preceding reasons I reject the Respondents objections to the tender of the three documents. They will be admitted into evidence for all purposes. 87 If the Respondents are advised to seek an adjournment to enable them to adduce responsive evidence to make good their circumstances in that regard, the Court would of course be open to hear any such application. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kerr.
SCHEDULE OF PARTIES TAD 39 of 2016 Respondents Fourth Respondent: JANET KAY HOGAN AS THE EXECUTRIX OF THE ESTATE OF THE LATE JOHN MICHAEL HOGAN Fifth Respondent: WORSLEY DARCEY & ASSOCIATES (A FIRM)
Jadwan Pty Ltd
Rae & Partners
Documents are business records 23 Counsel for the Fifth Respondent Mr McElwaine SC addressed the court on behalf of all Respondents on this point. Mr McElwaine conceded that he could not press a submission that the documents were not business records. 24 For completeness however, I should indicate that I have given attention to whether a statement in a letter from Business A found in the files or records of Business B can be considered, for the purposes of the Act, to form part of Business B's business records. I am satisfied it can. The breadth of the business records exception to the hearsay rule has been the subject of much judicial commentary, including that of Vickery J in Hodgson v Amcor Ltd; Amcor Ltd v Barnes & Ors (No 5) [2011] VSC 295. There is no reason to give the provision a narrow reading. 25 The more specific issue was considered by Perram J in Australian Competition and Consumer Commission v Air New Zealand and Another (No. 1) (2012) 207 FCR 448 (Air New Zealand). His Honour held, at paragraphs [47] to [50] that it was consistent with the scheme of the Act that a statement from Business A found in the records of Business B can be accepted to form part of Business B's records. I should follow that decision unless I regard it as clearly wrong. I do not regard his Honour to have been in error and I respectfully adopt both his Honour's reasoning and his conclusion.
objections 26 The Respondents' objections were pressed on the basis that the documents in question included, either expressly or by necessary implication, opinions. 27 A 'fact that it can reasonably be supposed that a person intends to assert' by a representation, in my view is capable, as a matter of ordinary grammar, of including both (a) that a particular opinion was held by the maker of the representations and (b) an opinion by the maker of the representation as to the existence of a fact. There appears to be no decision binding on me to that effect but there is a highly persuasive line of single judge authority including the decision of Hely J in Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 (Ringrow) for the proposition that an 'asserted fact' within the meaning of s 59(2) and s 69 of the Act may include the expression of an opinion. In that matter his Honour concluded at [18] that 's 69 of the Act is capable of operation even if the asserted fact is an opinion in relation to a matter of fact.' 28 Whether what was said by the High Court in Lithgow City Council v Jackson (2011) 244 CLR 352 (Lithgow) might cast doubt on that line of authority was considered by Perram J in Air New Zealand. His Honour held that Lithgow had not overruled the line of authority represented by the reasoning of Hely J. His Honour's reasoning appears at [63] - [65]: [63] A considerable body of first instance decisions have concluded that an opinion as to the existence of a fact falls within the scope of the term 'asserted fact' in s 69: ASIC v Rich (2005) 191 FLR 385 at 433-434; [2005] NSWSC 417 at [206]-2[207] per Austin J; Connex Group Australia Pty Ltd v Butt [2004] NSWSC 379 at [3] per White J; Land Enviro Corp Pty Limited v HTT Huntley Heritage Pty Limited [2012] NSWSC 177 at [95] per Stevenson J; Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 at 573 per Hely J; Supetina Pty Ltd v Lombok Pty Ltd (1984) 5 FCR 439 at 442 per Spender J; Investmentsource v Knox Street Apartments [2007] NSWSC 1128 at [19]-[21] per McDougall J; Street v Luna Park Sydney Pty Limited [2007] NSWSC 688 at [5] per Brereton J; SPAR Licensing Pty Ltd v MIS QLD Pty Ltd (No 2) [2012] FCA 1116 at [238] per Griffiths J. [64] I should not depart from this view of s 69 unless persuaded that it us plainly wrong. I am not of that view. It is true that French CJ, Heydon and Bell JJ described this approach to the construction of s 69 as a 'little strained' in Lithgow City Council v Jackson (2011) 244 CLR 352 at 362 [11], but I reject the submission that the statement should be characterised as considered dicta of the High Court binding on me. I take that course because in the same paragraph their Honours also said: However, it was not argued in this Court that the authorities which state that "asserted fact" includes an opinion in relation to a matter of fact are wrong. It is not necessary further to deal with this point, which the parties did not debate at any stage. [65] I would not, in any event, accept that there mere fact that an interpretation is 'strained' means inevitably it is wrong. Here the legislation was always intended as a beneficial reform. If 'asserted fact' does not extend at least to lay opinion as defined in s 78 then an important, reliable and common form of business record will be inadmissible. For example, a building site log recording that the site is 'slippery due to rain'; a hotel incident report that a patron was 'drunk'; a police pocket note that a person was 'angry' and so on. 29 Unless I were to be satisfied that Perram J was clearly wrong, then I should also not depart from that view of s 69 of the Act. While the alternative premise may be arguable I am unpersuaded that his Honour was clearly wrong. 30 Yet as Perram J recognised at [69] it is necessary to reconcile that broad conclusion with what was held by the High Court in Lithgow. 31 Lithgow is clear authority for two propositions: first that the operation of ss 76 to 79A of the Act is not confined to evidence of opinions given by a witness in a court; and, second that a statement of opinion in a business record must comply with those provisions as a precondition of it being admissible as evidence. 32 Accordingly, acceptance of the proposition confirmed in Air New Zealand that an asserted fact may be an opinion in relation to a matter of fact does not respond to the more specific objection put by counsel for the Fifth Respondent that Lithgow requires the exclusion of any hearsay lay opinion expressed in a business record if it conflicts with the rules contained in ss 76 - 79 of the Act.
If I am in error 37 On the assumption that I am in error, Lithgow requires such representations as contain lay opinion not to be admitted as evidence in these proceedings, unless otherwise authorised by the rules relating to expert evidence set out in ss 76 - 79 of the Act. 38 However, in a like manner as s 60 of the Act provides that the hearsay rule does not apply to evidence of a previous representation that is admissible because it is relevant for a non-hearsay purpose, s 77 of the Act provides that the opinion rule does not apply to evidence of an opinion that is admissible because it is relevant for a purpose other than the proof of an existence of a fact about which the opinion is expressed. 39 In Lithgow, the statement of lay opinion which was ultimately held inadmissible by the High Court notwithstanding it was contained in a business record was relevant only to establish the fact in respect of which it had been expressed. 40 That is made clear at [9] of the plurality judgment of French CJ, Heydon and Bell JJ, in which their Honours explained the background as follows: [9] The trial judge did not refer to the impugned representation. That is probably because she had ruled, after admitting into evidence (without objection) the records of the Ambulance Service in which it appeared, that the impugned representation not be used as evidence of the truth of its contents. Since there was no relevant use of the impugned representation other than as evidence of the truth of its contents, the trial judge's ruling amounted to a rejection of it. 41 By contrast, in these proceedings, the representations in each of the three documents are also relevant for a distinct purpose other than the proof of the existence of a fact about which the opinion is expressed. 42 Each of those representations are also relevant to prove that Jadwan was, at the various times those letters had been written, actively pursuing the possibility of constructing a purpose-built nursing home on a greenfield site. That is a separate and distinct matter upon which Jadwan was put to proof. 43 Lithgow requires only that the admissibility of a representation in a business record be tested against the provisions of ss 76 to 79A of the Act. Section 77 is within that scope. 44 Accordingly, even if I am in error Lithgow does not compel, in these proceedings, the conclusion that evidence of the lay opinions of their authors should not be admitted into evidence. As noted in Seven Network Limited v News Limited (No 8) [2005] FCA 1384 (Seven Network) at [11]- [12] in which the like circumstances arose, s 77 of the Act expressly disapplies the opinion rule in respect of evidence admissible for a purpose other than the proof of a fact about which the opinion has been expressed. 45 I discern no reason not to apply the jurisprudence relating to s 60 analogously to the like provision in s 77 of the Act. Once evidence is so admitted it becomes evidence for all purposes. 46 For those reasons, but subject to the power of the Court to exclude or limit their use on discretionary grounds, I am satisfied that the representations in the three documents to which objection has been made are admissible evidence in these proceedings.
DISCRETIONARY POWER TO EXCLUDE OR LIMIT THE USE OF THE EVIDENCE 47 There are two discretionary bases upon which the court might not permit such evidence to be adduced. 48 First, s 135 confers a general discretion on the Court to exclude evidence which may be unfairly prejudicial. Second, s 136 confers a general discretion on the Court to limit the use of particular evidence. 49 Thus, returning to the example of Seven Network where a business record containing an expression of lay opinion would have been otherwise admissible for all purposes having regard to section 77 of the Act, Sackville J utilised s 136 to limit the use of that evidence to avoid unfairness to a party. In like circumstances Sperling J took a similar course in Roach v Page (No. 11) [2003] NSWSC 907 (Roach). 50 The starting point when a court is asked to exercise those discretions must be the terms of the statutory provisions.. 51 Section 135 of the Act, which confers a power to exclude otherwise admissible evidence entirely, reads as follows: General discretion to exclude evidence The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party; or (b) be misleading or confusing; or (c) cause or result in undue waste of time. 52 Section 136, which permits a Court to limit the use of otherwise admissible evidence, is in the following terms: General discretion to limit use of evidence The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might: (a) be unfairly prejudicial to a party; or (b) be misleading or confusing. 53 Before turning to the Respondents' submissions I should mention three propositions that I take to be well settled and not in dispute. 54 First, that evidence is not unfairly prejudicial to a party merely because it tends to damage the case of a party or to support the case of an opponent. 55 Second, as Sperling J held in Roach, normally in trials other than before a jury there will be only rare instances where evidence will not be admitted on the basis that it would unfairly influence the mind of the decision maker to admit it. His Honour cited at [52] the following passage from Odgers, Uniform Evidence Law, 3rd Edition at p 443: …it will be an unusual judge or magistrate who is prepared to concede that a danger exists that he or she might be 'unfairly prejudiced' by evidence. 56 Third, notwithstanding that in Papakosmas v R (1999) CLR 297, McHugh J doubted (at [93]) that ss 135 and 136 allows a court to exclude evidence on the ground that its admission might be unfair merely because it presented procedural difficulties for an opposing party, for example, in cross-examination, the course of authority since that time has favoured the view that such disadvantage is open to be advanced as a relevant consideration. I will proceed on that basis. However, as was observed by Gleeson CJ and Hayne J in the same case at [39], I should do so bearing in mind that the court should reject any 'unacceptable attempt to constrain the legislative policy underlying the statute by reference to common law rules, and distinctions, which the legislature has discarded.' Accordingly, the absence of an opportunity to cross-examine is not, per se, a sufficient basis to reject the tender of evidence admissible pursuant to either ss 60 or 77 of the Act. 57 With those foundational considerations noted, I turn to what has been submitted by the Respondents to give rise to the discretion in the Court to exclude or limit the otherwise admissible evidence.
(2012) 207 FCR 448
(2005) 191 FLR 385
(2011) 244 CLR 352
(2002) 56 NSWLR 182
(2003) 130 FCR 569
(1984) 5 FCR 439