Notaras & Anor v Hugh & Ors [2003] NSWSC 167 | Case summary

76 The opinion rule (1) Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. … 79 Exception: opinions based on specialised knowledge If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge. 135 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. 3 In Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [85], Heydon JA stated the requirements of admissibility relation to expert opinion evidence under the Evidence Act to be as follows: In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. 4 In the same vein, Einstein J said in Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123 at [83]: It seems plain that for example where there is a failure to demonstrate a relevant reasoning process then the Court simply cannot follow the opinion or be satisfied as to how the opinion was reached and in particular as to whether or not the witness has demonstrated that the opinion is wholly or substantially based on any specialised knowledge said to be a held. 5 However, Einstein J also said at [197]: There is a narrow line … between on the one hand, a holding that an opinion is inadmissible as being seen to lack the necessary scientific rigour and/or by reason of being riddled with lack of transparency and/or by reason of lack of identification of the premises considered by the expert, and on the other hand, a view that the very subject matter/comparison under consideration and in respect of which opinions are sought to be expressed may be so subjective or so lacking of precision or definition as to make a court especially cautious not to peremptorily dismiss a bona fide attempt by a person with specialised knowledge … from being held to be qualified under section 79 to be able to express opinions …. 6 Makita presents a strict approach to the admissibility of expert evidence. It arises by implication from the terms of s79 and the antecedent common law One has then to bear in mind, however, that all statements of principle are to be received in the context of the case before the court: Quinn v Leathem [1901] AC 495, 506. 7 The Full Court of the Federal Court has held that many of the matters referred to by Heydon JA in Makita "involve questions of degree, requiring the exercise of judgment" and that, in trials by a judge alone they should commonly be regarded as going to weight rather than admissibility: Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 at [16] and [87]. 8 I would take the statements I have quoted from Makita and Idoport to be statements of general principle, to be applied insofar as they are apt to ensure compliance with the conditions specified in s79 in the circumstances of the case. 9 There is a body of common law relating to the admissibility of valuation and similar evidence. It relates to relaxation of the rule against hearsay concerning the proof of matters on which valuation evidence is based. Necessarily, demonstration of the process of reasoning which leads to the opinion, insofar as it is grounded upon such matters is also relaxed. 10 The practical necessity of the approach was recognised long ago. In De Berenger (1814) 3 M&S 67; (1814) 105 ER 536, a witness had been employed "to take the prices of the day at the Stock Exchange". Explaining how he came by such prices, he said, "I take them from different persons who are in the market." Objection was taken on the ground that this was hearsay. Ellenborough LCJ said: It is all hearsay; but it is the only evidence we can have; it is the only evidence we have of the price of sales of any description. I do not receive it as the precise thing, but as what is in the ordinary transaction of mankind received as proper information; and I suppose there is hardly a gentleman living who would not act on this paper. 11 In Arnotts Ltd v Trade Practices Commission (1985) 24 FCR 313, 350, the Full Court of the Federal Court cited with approval the following passage from Eggleston, Evidence, Proof & Probability (2nd ed) at 148: As to the material on which the expert opinion can be based, just as the non-expert who is allowed to express an opinion does so on the basis of experience, so can the expert base his opinion on his experience, without having to prove by admissible evidence all the facts on which the opinion is based. Accordingly, a valuer can base his opinion on comparable sales of property, without having to call witnesses to prove the facts relating to the sales. An experienced valuer will in the course of a lifetime accumulate a mass of material about sales, from his own practice, from journals, from newspaper reports, and from discussion with his fellow practitioners, much of which he will be unable to recall, but which enables him to express an opinion more accurately than one who has examined only the facts regarding the sales in the area. But if he wishes to cite a particular instance to the Court, for example, where there is an adjoining property that has recently been sold, evidence must be given by someone who can swear to the facts relating to the sale. 12 To the same effect, Megarry J said in English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415 at 420-2: [T] wo of the heads under which the valuers' evidence may be ranged are opinion evidence and factual evidence. 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. Textbooks, 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. Doubtless much, or most, of this will be accurate, though some will not; and even what is accurate so far as it goes may be incomplete, in that nothing may have been said of some special element which affects values. Nevertheless, 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. Even if some of the extraneous information which he acquires in this way is inaccurate or incomplete, the errors and omissions will often tend to cancel each other out; and the valuer, after all, is an expert in this field, so that the less reliable the knowledge that he has about the details of some reported transaction, the more his experience will tell him that he should be ready to make some discount from the weight that he gives it in contributing to his overall sense of values. Some aberrant transactions may stand so far out of line that he will give them little or no weight. No question of giving hearsay evidence arises in such cases; the witness states his opinion from his general experience. On the other hand, quite apart from merely expressing his opinion, the expert often is able to give factual evidence as well. If he has firsthand knowledge of a transaction, he can speak of that. He may himself have measured the premises and conducted the negotiations which led to a letting of them at £x, which comes to £y per square foot; and he himself may have read the lease and seen that it contains no provisions, other than some particular clause, which would have any material effect on the valuation; and then he may express his opinion on the value. So far as the expert gives factual evidence, he is doing what any other witness of fact may do, namely, speaking of that which he has perceived for himself. No doubt in many valuation cases the requirement of first-hand evidence is not pressed to an extreme: if the witness has not himself measured the premises, but it has been done by his assistant under his supervision, the expert's figures are often accepted without requiring the assistant to be called to give evidence. Again, it may be that it would be possible for a valuer to fill a gap in his first-hand knowledge of a transaction by some method such as stating in his evidence that he has made diligent enquiries of some person who took part in the transaction in question, but despite receiving full answers to his enquiries, he discovered nothing which suggested to him that the transaction had any unusual features which would affect the value as a comparable. But basically, the expert's factual evidence on matters of fact is in the same position as the factual evidence of any other witness. Further, factual evidence that he cannot give himself is sometimes adduced in some other way. as by the testimony of some other witness who was himself concerned in the transaction in question, or by proving some document which carried the transaction through, or recorded it; and to the transaction thus established, like the transactions which the expert himself has proved, the expert may apply his experience and opinions, as tending to support or qualify his views. That being so, it seems to me quite another matter when it is asserted that a valuer may give factual evidence of transactions of which he has no direct knowledge, whether per se or whether in the guise of giving reasons for his opinion as to value. It is one thing to say "From my general experience of recent transactions comparable with this one, I think the proper rent should be £x": it is another thing to say "Because I have been told by someone else that the premises next door have an area of £x square feet and were recently let on such-and-such terms for £y a year, I say the rent of these premises should be £z a year." What he has been told about the premises next door may be inaccurate or misleading as to the area, the rent, the terms and much else besides. It makes it no better when the witness expresses his confidence in the reliability of his source of information: a transparently honest and careful witness cannot make information reliable if, instead of speaking of what he has seen and heard for himself. he is merely retailing what others have told him. The other party to the litigation is entitled to have a witness whom he can cross-examine on oath as to the reliability of the facts deposed to, and not merely as to the witness's opinion as to the reliability of information which was given to him not on oath, and possibly in circumstances tending to inaccuracies and slips. Further, it is often difficult enough for the courts to ascertain the true facts from witnesses giving direct evidence, without the added complication of attempts to evaluate a witness's opinion of the reliability, care and thoroughness of some informant who has supplied the witness with the facts that he is seeking to recount. It therefore seems to me that details of comparable transactions upon which a valuer intends to rely in his evidence must, if they are to be put before the court. be confined to those details which have been, or will be, proved by admissible evidence, given either by the valuer himself or in some other way. I know of no special rule giving expert valuation witnesses the right to give hearsay evidence of facts: and notwithstanding many pleasant days spent in the Lands Tribunal while I was at the Bar, I can see no compelling reasons of policy why they should be able to do this. 13 A distinction is drawn by these authorities between, on the one hand, the expert witness basing his or her opinion on knowledge built up from unspecified pieces of information for which strict proof would be impossible and, on the other hand, the witness using a particular instance or transaction as a basis for the opinion (with or without other information). In the latter case, strict proof of the assumption is required. 14 In Makita, Heydon J (at [3]) referred to Davie v Lord Provost, Magistrates and Councillors of the City of Edinburgh [1953] SC 34 as authority for the need to demonstrate the nexus between expertise and opinion. He went on to say, at [62] - [63]: Despite these authorities, it might be argued that the approach adopted in Davie's case is erroneous. The competing view, which has had some currency in the profession, is that all an expert need do is establish that there is a relevant field of specialised knowledge; that he or she has expertise in a relevant aspect of it; and that he or she holds opinions relevant to the establishing of one or more of the facts in issue in the litigation. It has sometimes been said, for example, that all a valuer need do is establish valuation expertise, prove that that which is to be valued has been examined by the valuer, and give an opinion on what the value is. The opposing party would then have two choices. The first is to cross-examine in the dark, with the perils which usually face journeys into darkness, to establish the factual assumptions underlying the valuation, and the relationship between the valuer's conclusion and the valuer's expertise as applied to those assumptions. The second is not to cross-examine, and run the risk of the court attaching weight to the opinion, ill-substantiated though it may be on its face. Whether or not the method of giving expert evidence just described has ever been widespread or has attracted the approval of trial courts is hard to say. Bramwell B in Sheen v Bumpstead (1862) 1 H & C 358 at 365; 158 ER 924 at 926-7, said: The mistake, as I think it, seems to me the same as where, on the question what is the fair price of a piece of land, an inquiry is proposed as to the price at which a piece of neighbouring land similarly circumstanced sold, or where the question is, what is the fair price of wheat on such a day, and it is asked at what price A then sold such wheat to B. The proper question in each case to the expert is, what is the fair or market price. On cross-examination he may give, as his reason, because such a piece of land was sold at such a price, and because A sold wheat at such a price to B, and any other reasons; but he cannot be asked those particular questions on the examination in chief. In English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415 at 423 Megarry J said: "this ... was an obiter remark in a dissenting judgment ... and for many years now such evidence has not been rejected in chief when the witness has been speaking from his own first-hand knowledge." The correctness of Bramwell B's view even at the time is questionable: see R v Murphy (1837) 8 C & P 297 at 306-307; 173 ER 502 at 507. According to Phipson on Evidence (15th ed, 2000) paras 37-09 and 37-48: It became usual for experts to detail the results of an examination before being asked as to their opinions founded thereon ... . ... In general an expert may give evidence in chief as to the grounds on which he has reached his opinion, and it may be said that, without the grounds, the opinion is valueless. Indeed, it is clear that the practice of giving only the conclusion in chief is not only not customary, but is opposed to a line of authority which, while not citing Davie's case, has arrived at conclusions consistent with and supportive of it. 15 So a valuer, as expert witness, may not merely state his qualifications and give his opinion as to value. It does not follow, however, that it is impermissible for such a witness to base his or her opinion upon knowledge of a state of affairs built up from pieces of unspecified information for which there is no direct evidence. 16 The defendants in the present proceedings placed reliance upon Pt 36 r 13CA and Schedule K of the Supreme Court Rules, and in particular upon the provision in the Schedule K that the report of an expert witness must specify the person's qualifications, the facts, matters and assumptions on which the report is based and the reasons for the opinion. However, neither the rule nor the schedule purport to affect the rules of evidence. Schedule K is a code to which a prospective expert witness must subscribe. The object of the process is to inform the prospective expert witness of what is expected of him or her as such a witness. Non-compliance with the standards set by the code does not make the expert's evidence inadmissible. 17 This discussion has wider implications. For example, a medical practitioner, as an expert witness, might proffer an opinion based on the premise that a particular illness takes a certain time to develop or to resolve, or that the sequelae of a particular injury are usually one thing and not another, and so on. The basis for the premise may be unrecalled learning, experience without recollection of particular instances, conversation with colleagues and so on. Similar examples could be given in relation to other disciplines. 18 The key to any apparent tension between the strict statements of principle in Makita and the line of authority to which I have referred may be this. Where an expert has built up knowledge from pieces of information of the kind under discussion, that knowledge may be part of the witness' expertise, that is, part of the witness' "special knowledge … based on experience" in the terms of s79. Evidence of such knowledge would then not be classified as assumption evidence of the kind which requires strict proof. If that is an uneasy rationale, it may nonetheless be a rationale born of necessity. 19 In making the rulings I made in relation to Mr Marsh's evidence, I proceeded on the basis that strict proof is not required in relation to knowledge on which the opinion is based which has been built up in such a way that it is not capable of strict proof. I have distinguished that sort of knowledge from information concerning specific instances or transactions which must be strictly proved in the same way as assumptions must generally be proved in relation to expert evidence.

Notaras & Anor v Hugh & Ors

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