Mr Prior
39 Mr Prior was an accounting expert retained by the applicants. He had prepared various reports which were annexed to his affidavits, which were exhibit 14, filed on 7 April 2006; exhibit 16, filed on 8 September 2006 and exhibit 16, filed on 11 September 2006. The September affidavits responded to reports of the expert retained by the respondents, which had also been filed in the proceedings.
40 Mr Prior's evidence was not dealt with in the November 2006 jurisdictional judgment, nor had he yet been called for cross examination on his evidence. The motion of 12 June sought leave to rely on a further affidavit and report filed on 7 June 2007. A further motion of 24 July sought leave to rely on three further reports and affidavits sworn by Mr Prior and filed on 4 and 18 July 2007. Not only were there difficulties and delays with service of some of this material, again, neither motion explained why it was that this leave was being sought, even though the applicants were obliged to provide grounds and reasons for their application, in the motions. The motions asserted that the grounds and reasons for the application were set out in various of Mr Prior's affidavits and in affidavits sworn by the applicants' instructing solicitor, Mr Healey. Again, none of these affidavits in fact gave any such explanation.
41 The real reasons were finally revealed after extensive cross examination of Mr Prior and Mr Healey.
42 The cross examination of Mr Prior showed that after his earlier reports had been filed in 2006, Mr Prior continued to give consideration to his evidence. He was uneasy about the reliability of the Excelsior College records and had the view that a conference of experts would be useful. By February 2007, he had come to the realisation that he could no longer stand by what he had said in his earlier reports and, with the assistance of Mrs Brash and Mr Brash, he had commenced further investigations, which depended on him being provided with other information, including the College's 2001 price list. He explained that in March 2007 he was given access to an affidavit sworn by Mr Traynor which annexed his working papers. Mr Traynor had conducted a due diligence on the College during the sale process. Mr Prior had expressed opinions in his 2006 reports on what Mr Traynor had done. As a result of his consideration of this further material, Mr Prior had come to the conclusion that the Excelsior College records were completely unreliable. That conclusion led to further investigations, which led to the 2007 affidavits and reports. Mr Prior was also later instructed to prepare even a further report, as to his valuation of the College. This report was annexed to one of his 18 July affidavits.
43 It is unnecessary to outline Mr Prior's evidence given in cross examination, about various of the views expressed in his 2007 affidavits, when and how he came to those views, the deficiencies in the information with which he had earlier been provided and his views as to how the proceedings should have been conducted. In part, Mr Prior's views reflected adversely on the applicants, the applicants' legal advisers and their conduct of the case.
44 What was revealed by the cross examination of Mr Prior was that in March 2007, access to Mr Traynor's affidavit confirmed him in certain views which he had already reached in February, which departed from the views earlier expressed in his 2006 reports. The upshot of Mr Prior's further investigation, was a number of further reports, which came to quite different conclusions to those which he had reached in 2006.
45 As it emerged, the upshot of these developments was that, in truth, while not revealed in the motions themselves, the applicants no longer wished to rely on the opinions expressed in Mr Prior's 2006 affidavits and reports in support of their claims, but wished to now advance their claims by reference to the opinions expressed in Mr Prior's 2007 affidavits, reports and valuations. The respondents, of course, had had no opportunity to have their expert consider, or respond to those new approaches.
46 Mr Healey's affidavit evidence and the answers which he gave in cross examination, showed that mistakes had been made in the information with which Mr Prior had been provided in 2006. Relevant annexures to Mr Pak's affidavit were not supplied, nor was Mr Prior given access to relevant documents, even though they had been produced in 2006, in answer to a summons issued for the applicants, at Mr Prior's request. So it was, that not until 2007, that Mr Prior had the opportunity to consider those documents, when he saw them as annexures to Mr Traynor's affidavit.
47 Mr Healey was not able to explain how this situation had come to arise, or even when it had first been appreciated, even in the affidavit which he swore on 2 August, on the day before he was cross examined. Indeed, why Mr Healey was called to explain these matters was not readily apparent, given his evidence that he was not the solicitor on the record and did not have carriage of the matter. Nevertheless, that this situation emerged as it did, only through the answers which he gave in cross examination, was most regrettable. Had it been revealed in the applicants' motions, as it should have been, considerable time would have been saved in unnecessary cross examination of Mr Healey and Mr Prior.
48 Again, the approach of the High Court in JL Holdings Pty Ltd was relied upon for the applicants, it being submitted that given what had transpired, to refuse the applicants leave to rely on Mr Prior's 2007 affidavits and reports, would be devastating to their case and that a costs order could properly balance any injustice to the respondents.
49 For the respondents, it was argued that the applicants had not been frank in their motions, because the real reasons for the further reports and affidavits which came forward in 2007 from Mr Prior had not been revealed, even in Mr Healey's affidavits. It was only in cross examination that the true position had emerged. It was relevant that the applications came forward after Professor Kennett's cross examination had concluded and when Mr Pak's cross examination was also substantially advanced. To grant the leave sought in those circumstances, even with a costs order against the applicants, would leave the respondents with real forensic difficulties, which the respondents should not have to confront, at this stage of the proceedings.
50 The problems with Mr Prior's further reports were also analysed, it being submitted that they could not provide a foundation for the orders sought, being made against the respondents. As to the valuation report, it was submitted that no explanation at all had been given as to the circumstances in which it had emerged so late in the proceedings and that it was, in any event, irrelevant, not being connected with any relief sought by the applicants in the proceedings.
51 I announced at the conclusion of the hearing that I proposed to grant the applicants' leave to rely on Mr Prior's further reports, other than in relation to the fourth affidavit, annexing the valuation report.
52 This valuation emerged from further instructions given to Mr Prior in July 2007. Why those instructions were given was not revealed. Indeed, there was no explanation given at all for the late production of that evidence. On the evidence, that report had no connection with the parties' transaction. Nor was the report connected with any of the relief sought in the applicants' second further amended summonses. The applicants' summonses did not seek a variation of the parties' arrangements to provide for such a valuation, and no money orders were sought by reference to such a concept. Nor had Mr Pak or Professor Kennett mentioned the idea of such a valuation in any of their evidence, as a basis for their claims.
53 It followed that the applicants had demonstrated no basis for the admission of that new evidence and so the leave sought to introduce that further evidence was refused.
54 As to Mr Prior's three other reports, I concluded that the leave sought had to be granted. The difference between this application and that made in relation to Mr Pak's further evidence, was that it was not simply a late attempt to bolster the case being advanced, by revisiting evidence already given, which was always available to have been called and which had been dealt with in the jurisdictional judgment.
55 The 2007 reports were entirely different to Mr Prior's 2006 reports, being based, at least in part, upon information which Mr Prior did not have in 2006. Those reports flowed from the conclusions which Mr Prior reached in 2007, as to the unreliability of the records which the applicants had maintained at Excelsior College. Those conclusions led him to a position where he no longer adhered to the views which he had expressed in his 2006 reports. The result was that Mr Prior's 2007 reports put the applicants' cases on quite a different basis to that which they had earlier advanced.
56 I accepted that proper criticism could be directed to the applicants, for this late and marked change in course, given the stage the proceedings had reached, when this development came forward.
57 On Mr Prior's evidence in cross examination, it seemed that there was no reason why the conclusions which he reached in 2007, could not have been reached in 2005 and 2006, when the applicants were obliged to put on their evidence. Mr Prior always had access to the applicants, Mr Rogers, Mr Brash and Mrs Brash. Had Mr Prior been provided with the information which he required at the proper time, there is no reason to think the exercise he undertook in 2007, could not have been undertaken before he provided his first report in April 2006. These proceedings were commenced in 2003. Provision of the relevant documents, such as a 2001 price list and Mr Traynor's working papers, depended on the applicants providing them, or obtaining access to them, in so far as that material was not in their hands.
58 Providing Mr Prior with the information which he required, in order to provide a report about the adequacy of the due diligence exercise conducted by Mr Traynor in 2002 and the profitability or otherwise of the College in that year, did not depend on any conference of experts, to which Mr Prior repeatedly referred in his evidence.
59 It appeared that the necessary information was forthcoming in 2007, in part from Professor Kennett, Mrs Brash and Mr Brash and in part from the documents attached to Mr Traynor's affidavits. Those documents had already been produced to the Court in 2006, in answer to a summons issued for the applicants. The failure to provide those documents to Mr Prior earlier, plainly did not rest with the respondents.
60 Mr Prior's final opinions rested on the view which he reached in 2007, as to the unreliability of the records maintained by the applicants, prior to the sale of the College. On the evidence, there was no reason to think that the information on which that opinion finally rested, could not have been provided earlier, prior to Mr Prior preparing his 2006 reports, if the matter had been given proper attention by the applicants and their advisers at the necessary time.
61 In those circumstances, the question of whether any discretion should be exercised in favour of the applicants, to permit them to recast their case, at this late stage of the proceedings was not an easy one, particularly given the time already directed to aspects of the basis of the opinions expressed by Mr Prior in 2006, during the cross examination of Professor Kennett and Mr Pak in April and June. This was particularly so, because it appeared that this cross examination occurred at a time when, on Mr Prior's evidence, he had long held the view that he could not adhere to his 2006 opinions, but that had not been revealed to the respondents, as it should have been, once it was appreciated.
62 What could not be overlooked however, it seemed to me, was that Mr Prior's evidence was relevant both to the claimed unfairness of the parties' contracts and arrangements and the money orders sought. On the evidence as it stood at the conclusion of Mr Prior's cross examination, it was quite apparent that if the leave sought were not granted, the applicants' cases would in all likelihood fail, because Mr Prior had resiled from his 2006 opinions, thereby removing what appeared to be an important plank in the applicants' case. I accept Dr Berwick's submission that in those circumstances, to refuse the leave would have been devastating for the applicants' cases.
63 In all of the circumstances, I concluded that this was a situation where a discretion had to be exercised in favour of the applicants and, as was conceded for them, a costs order made against them, in relation to all of the costs thrown away in the respondents meeting Mr Prior's 2006 evidence. This includes any time spent in cross examining Professor Kennett and Mr Pak about matters relevant to those reports, which are no longer relevant to the claims advanced, given the receipt of Mr Prior's 2007 reports.
64 I accept, as the respondents explained, that the granting of this leave may present difficult forensic challenges for the respondents, which will have to be met. Nevertheless, I came to the conclusion that I am bound by the observations of the High Court, that an applicant ought not to be shut out from litigating an issue which is fairly arguable. I am satisfied that would be the practical effect of now precluding receipt of Mr Prior's 2007 reports, he having resiled from his 2006 opinions. The errors seemingly made by the applicants' advisers, put this situation into a category of the kind discussed by Kirby J in JL Holdings Pty Ltd at [169] - [180]. Undoubtedly, the new evidence is of considerable importance to the applicants; the evidence suggested that the new evidence has come forward as the result of fault on the part of the applicants' advisers and human error; there is sufficient time for the respondents' expert to reply to these reports and a costs order may be made, to rebalance the parties' competing claims as to justice.
Mr Rogers, Mrs Brash, Mr Brash