Owners of Strata Plan 58577 v Banmor Developments Finance Pty Limited and Others

CATCHWORDS: PRACTICE AND PROCEDURE - Discretion exercised in first instance to disallow further expert report under Uniform Civil Procedure Rules 2005 (NSW) - re-exercise of discretion where first expert disclaims competence, in particular specialised area - Allowance of further report on basis of justice to parties to the dispute despite tension with need for expeditious resolution of disputes.

LEGISLATION CITED: Supreme Court Rules 1970 (NSW): Pt 39 r1, r6, Uniform Civil Procedure Rules 2005 (NSW) r 31.33

CASES CITED: Jackamarra v Krakouer (1998) 195 CLR 516 State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146

OWNERS OF STRATA PLAN 58577 (Appellant) PARTIES: BANMOR DEVELOPMENTS FINANCE PTY LIMITED (ACN 094 969 141) (First Respondent) PLUIM CONSTRUCTIONS PTY LIMITED (ACN 001 029 198) (Second Respondent) RYDE CITY COUNCIL (Third Respondent)

G SEGAL (Appellant) COUNSEL: J M IRELAND, QC (First and Third Respondents) G W McGRATH (Second Respondent)

Charles G Roth (Appellant) SOLICITORS: Toltz La Hood Lawyers (First Respondent) Tesoriero Henderson Cotter (Second Respondent) Pike Pike & Fenwick (Third Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40301/06 SC 4882/02

BEAZLEY JA SANTOW JA BASTEN JA

23 NOVEMBER 2006 OWNERS OF STRATA PLAN 58577 v BANMOR DEVELOPMENTS FINANCE PTY LTD & ORS Judgment 1 BEAZLEY JA: I have had the opportunity of reading in draft the reasons of Basten JA. I adopt his Honour's statement of the background to this matter. 2 This application raises for consideration the balance that needs to be drawn between competing factors in the judicial system. The first factor relates to case management principles and the need for the courts to provide, so far as is possible, expeditious resolution of disputes. The second relates to ensuring, again so far as is proper and possible, that the disputes are resolved so as to provide justice according to law to the parties to the dispute. These factors, although competing, are not disconnected. 3 As Basten JA has explained, this matter is one where a court expert has been appointed. The expert had been appointed on 13 February 2004 pursuant to Supreme Court Rules 1970 (NSW): Pt 39 r 1. Pursuant to Pt 39 r 6 the parties were not entitled to adduce evidence of any other expert except with the leave of the Court.

4 The claimant obtained leave and obtained and filed a further expert's report. The expert so retained, Associate Professor Cordery, stated in his report that the subject matter of the disputes between the parties required the opinion of an expert in hydraulics and he was not such an expert. Nonetheless, the claimant's legal advisers filed Associate Professor Cordery's report. 5 The claimant made a further application for leave to file a further report from an expert in hydraulics. At the time of making that application, no such report had been obtained. Indeed, there was no identification of an expert, only of an area of expertise. That application was heard by Campbell J, who refused the application. 6 The next application was that heard and determined by Gzell J. In that application, the claimant sought leave to "rely upon the report of Stephen Wyllie", an expert in hydraulics. The basis of the application was that this was to be a second report to be relied upon by the claimant in the proceedings. 7 In the meantime, in accordance with directions made by Campbell J, Dr Robinson filed a report in reply to Associate Professor Cordery. 8 As a result, the claimant is currently in a position where it appears not to have the evidence that it needs to prove its claim against the opponent. Counsel for the claimant acknowledged that if Dr Robinson's evidence is accepted by the Court, then his client's claim will fail, or is likely to fail. 9 It will be open for the claimant to cross-examine Dr Robinson so as to establish that he is not an expert in hydraulics so that his view on that aspect of the case should not be accepted. That will not assist the claimant however, if, as has been said, the claimant needs evidence on the "hydraulics issue" to prove its case. Disproof of the opposite party's case does not amount to proof of the other party's case. 10 In State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, Dawson, Gaudron and McHugh JJ said at 155 that in the exercise of discretion to refuse a late amendment to a defence (but before the hearing had commenced), "[j]ustice is the paramount consideration". Their Honours explained at 155: "Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties." 11 In Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 Kirby J noted at 541-542 that: "In the cyclical way of these tendencies, the close of the century has seen something of a revival of insistence upon a stricter adherence to rules and practices. The source of the strictness is a larger judicial concern to ensure the efficient despatch of court business. Such an objective was never completely overlooked by the courts … Court lists are typically more congested today. This fact and a growing awareness about the needs for efficiency in judicial administration help to explain a somewhat diminished inclination, recently, to extend procedural indulgences. Yet even today, rules and efficient case management must not be seen as ends in themselves. The ultimate obligation of a court is the attainment of justice as the law requires." 12 This case does not involve the same issues that arose in either J L Holdings or Jackamarra. Nonetheless, the question arises whether his Honour erred in the exercise of his discretion by placing too much weight on the delay in the matter. His Honour recognised the force in the submission made by counsel for the claimant that it appeared that Dr Robinson's report was deficient. He said at [9]: "There is some force in the submission made by Mr Segal on behalf of the plaintiff that the doubt having been raised by Mr Cordery [sic], and now confirmed by Mr Wyllie, the court should have the further report before it for otherwise it might be dealing with an erroneous position." 13 His Honour appears to have considered, however, that the deficiency could be addressed, as Mr Wyllie's report could assist in the cross-examination of Dr Robinson. His Honour continued at [11]-[12]: "The primary consideration under the Civil Procedure Act 2005, s 56(1) and the rules of court, including, of course, the rule to which I have referred, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The Uniform Civil Procedure Rules 2005, r 31.33 is couched in a way that indicates that prima facie once a court expert has been appointed, other expert reports ought not to be tendered. The position differs from that which existed under the old Supreme Court Rules 1970, Pt 39 r 6(a) in operation until 1 March 2000. It allowed a party to adduce evidence from one further expert after a court appointed expert had made a report.

There will no doubt, be circumstances in which it is appropriate to grant leave. But in a case that has taken so long, and is still not in a position to be set down for trial, where Dr Robinson has been given leave to file a response to Dr Cordery's report, to grant leave to put on yet another expert's report is, in my view, unjustified." 14 In my opinion, in reaching his conclusion, his Honour did not give sufficient weight to the requirement that the Court is required to give a 'just' result to the parties. As his Honour observed, the matter had not yet been set down for trial. The claimant, by the time it made this application, had the 'second report' available. Had the application succeeded, further delay would have been encountered, as the opponent would have needed the opportunity to consider whether it wanted to obtain its own hydraulics expert. However, I consider that that delay would have had a minimal impact on the Court being able to deal with this matter so as to give justice to both parties. 15 By contrast, the consequence of dismissing the application was that the claimant appears most likely to have been deprived of making out its case at trial. As I have already indicated, Dr Robinson's report in relation to the hydraulics issue is against the claimant. Mr Wyllie's report is in favour of the claimant on that issue. As I have also indicated above, it will not advance the claimant's case to merely undermine the evidence of Dr Robinson. It requires affirmative evidence of its case. In circumstances where Associate Professor Cordery has denied his expertise (as opposed to having an 'informed opinion') on this issue, it is unlikely that his evidence will be accepted, even if Dr Robinson's evidence is successfully challenged. 16 It follows that in my opinion, his Honour's discretion miscarried. I would therefore propose that leave to appeal be granted and the appeal be allowed. 17 Having regard to the manner in which the claimant's case was conducted before Gzell J, the grant of leave should be subject to conditions as to costs and as to the withdrawal of Associate Professor Cordery's report. The conditions as to costs that I consider ought to be imposed include the costs of Dr Robinson's report in reply to Associate Professor Cordery's report. Those costs have been unnecessarily incurred because of the manner in which the claimant's proceedings have been conducted to date. Further, should the claimant eventually be successful in its claim, it should not have the costs of Associate Professor Cordery's report, as that has also become redundant. 18 It is also appropriate to give directions in respect of the filing of a response to Mr Wyllie's report. Accordingly, the formal orders I would propose are as follows:

Direct the claimant to file a Notice of Appeal and the pay the filing fee thereof within seven days of the date of this judgment;

Set aside the order made by Gzell J on 27 April 2006 save as to the order for costs;

Grant leave to the claimant to file a further expert report of Stephen Wyllie, project engineer, dated 3 April 2006, subject to the following conditions: (i) the claimant withdraw the report of Associate Professor Cordery dated 7 February 2006; (ii) the claimant pay the costs of and incidental to the report of Dr Robinson prepared in response to the report of Associate Professor Cordery; (iii) the claimant to bear its own costs of and incidental to the report of Associate Professor Cordery regardless of the outcome of the proceedings;

The claimant is to pay the costs of the Summons for Leave to Appeal and of the appeal;

Direct the opponent to file and serve any response by Dr Robinson to Mr Wyllie's report within 21 days of the date of this judgment. 19 SANTOW JA: I agree with Beazley JA. 20 BASTEN JA: These proceedings involve a claim, primarily in nuisance, in relation to development of land at a higher elevation than the land of the Claimant. Briefly put, the complaint is that the development has resulted in a hazardous situation, with the possibility that water will be released from the higher land now developed in greater volumes and at a greater velocity than before the development, with the risk of consequential damage on the property of the Claimant. The proceedings were commenced on 26 September 2002. 21 The establishment of this claim patently depends upon expert evidence. On 13 February 2004 Dr Robinson, a civil engineer with expertise in hydrology was appointed by the Court under Part 39 of the Supreme Court Rules 1970 (NSW). Dr Robinson provided a report on 20 September 2004. 22 When it was introduced, Part 39 of the Supreme Court Rules, mirrored the revised Rules of the Supreme Court (UK). Where a court expert had made a report on any question, they permitted a party to adduce the evidence of one other expert on that question. 23 Part 39 was replaced on 1 March 2000, from which date r 6 provided: 6 Other expert evidence Where an expert has been appointed pursuant to this Part in relation to a question arising in the proceedings, the Court may limit the number of other experts whose evidence may be adduced on that question.

On 23 May 2003, the rule was amended to have the same effect as the current r 31.33 of the Uniform Civil Procedure Rules 2005 (NSW). That rule provides: 31.33 Except by leave of the court, a party to proceedings may not adduce evidence of any expert on any question arising in proceedings if an expert has been appointed under this Division in relation to that question.

The structure of the rule differs from that introduced as Part 39, r 6, on 23 May 2003, but the substance does not. Accordingly, there has been no change in the effect of the relevant rule since the appointment of Dr Robinson as a Court expert. 24 On 12 November 2004, the Claimant obtained leave, pursuant to Part 39, r 6, permitting it to file and serve an expert report in response to Dr Robinson's report. Technically, the leave sought should have been to adduce evidence from an expert, but because the rules also require the service of an expert's report, prior to its tender at trial, the intention of the application was clear. 25 The Claimant did not avail itself of the leave obtained as no report was served within the period allowed. 26 On 25 November 2005, the grant of leave was effectively extended to 15 February 2006. 27 On 7 February 2006, the Claimant obtained a report from Dr Ian Cordery. On 9 March 2006 the Claimant went before Campbell J, in the duty judge list, and sought, as his Honour noted in the first paragraph of his ex tempore judgment, "the opportunity to file a further expert's report": Owners Strata Plan 58577 v Banmor Developments Finance Pty Ltd [2006] NSWSC 174 at [1]. His Honour granted the Claimant leave to file the report of Dr Cordery: at [12]. He then directed that Dr Robinson file a report, if he deemed it appropriate, in response to the report of Dr Cordery, by 12 May 2006. 28 There was a difficulty with Dr Cordery's report, which was patent to even a lay reader. Dr Cordery stated that he relied on his "long experience as an engineering hydrologist": at par 1. He continued, noting at par 3, that "a hydrologist is expert on estimating rates of flow resulting from storms. A hydraulics expert is needed to indicate just how water will flow over a man-made structure, such as how it will disperse over the car park after crossing the property boundary at the 6m wide grating". 29 At paragraph 6, he continued: "I am not expert on flow hydraulics… ."

At paragraph 8, he stated: "I am not expert on hydraulics. However as an educated layman I would suggest the concentration of flow increases potential dangers to pedestrians and vehicles in the vicinity of the flow exit grating at the property boundary."

At paragraph 10 he reiterated that "the nature of risk from concentrated flow on the surface is not strictly within my area of expertise" and proffered the view that he was "not aware" if it was within Dr Robinson's expertise. 30 Why the Claimant sought to rely upon Dr Cordery as an expert in these circumstances is not immediately apparent. However, before Campbell J, it sought both leave to rely upon Dr Cordery and the opportunity to file a further report from an as yet unidentified hydraulics expert: at [8]. His Honour noted that, although Dr Cordery had drawn attention to the distinction between hydrology and hydraulics as separate areas of expertise (at [7]) the curriculum vitae of Dr Robinson, annexed to his report had also referred to the distinction between "hydrology and hydraulics": at [9]. Dr Robinson described himself as having done work which involved "provision of hydrologic & hydraulic advice on stormwater management issues". At [11], Campbell J concluded: "In these circumstances I am not persuaded, by Dr Cordery's doubts about Dr Robinson's experience, that a sufficient case has been made out in relation to the grant of leave under Part 31, r 33. This case has been going for a very long time, and the reference of questions to a court appointed expert is something which aims at reducing the number of expert witnesses, who are heard in a case, not increasing them - although sometimes that result will not be achieved." 31 There was no application for leave to appeal from this decision. Rather, the Claimant then sought a report from a Mr Wyllie which was apparently obtained on 3 April 2006. It then made application on 12 April 2006, by notice of motion, seeking an order that it "be permitted to rely upon the report of Stephen Wyllie dated 3 April 2006". There was no suggestion that Mr Wyllie be treated as the expert in place of Dr Cordery and before Gzell J, counsel for the Claimant affirmed on more than one occasion that he sought leave to rely upon the report of a further or second expert: Tcpt, 27 April 2006, p 1(30)-(45), p 2(15), p 3(30)-(35). 32 In an ex tempore judgment, Gzell J noted the application which had been made to Campbell J and the manner in which his Honour had disposed of it. The only thing which appeared to have changed was the obtaining of the report from Mr Wyllie. At [9] his Honour stated: "There is some force in the submission made by Mr Segal on behalf of the plaintiff that the doubt having been raised by Mr Cordery, and now confirmed by Mr Wyllie, the court should have the further report before it for otherwise it might be dealing with an erroneous position."

His Honour considered as countervailing factors that "there is before the court Dr Cordery's report and Mr Segal is armed with Mr Wyllie's report and Dr Robinson will be available for cross-examination": at [10]. He also stated at [12]: "There will, no doubt, be circumstances in which it is appropriate to grant leave. But in a case that has taken so long, and is still not in a position to be set down for trial, where Dr Robinson has been given leave to file a response to Dr Cordery's report, to grant leave to put on yet another expert's report is, in my view, unjustified."

The motion was dismissed. It is from this decision that leave to appeal is sought. 33 It is clear, both from reading the transcript of the hearing before Gzell J and from his Honour's judgment that the Claimant was not disclaiming its ability to rely upon Dr Cordery at trial, but rather was seeking leave to adduce evidence from a further expert, namely Mr Wyllie. There were factors both in favour of and against a further grant of leave. 34 In the Claimant's written submissions, as the Opponents pointed out, there was little attempt to identify any error of principle which would attract the intervention of the Court in accordance with well-established limitations on the power of this Court properly to intervene in relation to a discretionary power exercised against a grant of leave on an interlocutory application. 35 Dealing with the matter as it had been dealt with before Gzell J, the best the Claimant could do was to point to the difficulty which it would face at trial in establishing its case, if it were not entitled to rely upon Mr Wyllie. However, the mere fact that a party produces a report which contradicts a court expert cannot, of itself, be sufficient to warrant a grant of leave, where the order appointing the court expert has been made by consent and the purpose underlying r 31.33 is manifest. 36 One basis of the Claimant's case (though not put in these terms) may have been that case management principles, and the undesirability of further delay, had prevailed against the interests of justice: c.f. State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146. However, Gzell J relied upon more than a concern about delay, although in circumstances where a strike-out application for want of prosecution appears to have narrowly failed in 2005, that consideration was by no means insignificant. However, his Honour's reference to the fact that the court expert had been given leave to respond to the first additional expert report presented by the Claimant suggested that he would need to be given the opportunity to reply also to Mr Wyllie (if his report were to be adduced in evidence) and that there might, perhaps, be an application by the Opponents to put on their own expert evidence in reply. 37 The Claimant suggested that the emphasis being given to the self-evident purpose of r 31.33 did not accord with UK practice. However, he did not take the Court to English decisions with respect to an equivalent rule. 38 Counsel for the Claimant was inclined to accept in oral argument that if forced to rely upon Dr Robinson, the Claimant would fail; that critical aspects of Dr Cordery's report were inadmissible because he disclaimed expertise, and that what he in effect sought was leave to withdraw reliance on the report of Dr Cordery and substitute that of Mr Wyllie. 39 However, an order to that effect was not considered by Gzell J. What order he would have made had it been presented in those terms is not known. The matter was only formulated in that way in the course of argument on the application for leave to appeal, through questioning from the Court. Counsel for the Opponents protested at such a change in tack and indeed argued that the appellate jurisdiction of this Court was not properly invoked by such an application, even if it were clearly articulated, which was not the case with the present application. 40 In my view the Opponents' complaints have merit. Gzell J dealt with the application before him in a manner which would not attract a grant of leave to appeal. If the Claimant seeks to make a different application he can do so, but should do so before an equity judge in the first instance. The present application should be refused with costs. **********

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