Pro-Invest Pitt Street Development Pty Ltd v Charter Hall Holdings Pty Ltd

Hearing dates: 25 July 2025

Date of orders: 1 August 2025

Decision date: 01 August 2025

Jurisdiction: Equity - Commercial List

Before: Rees J

Decision: Orders made for further evidence.

Catchwords: CIVIL PROCEDURE — evidence in reply — whether evidence in chief — principles at [6]-[15] — whether entitled to costs ‘thrown away’ — plaintiff sues for loss of chance to build hotel development — evidence in chief based on hotel design considered at time of breach of contract — defendant serves evidence pointing out problems with that design and an alternate design conceived by defendant — plaintiff reply evidence includes further design said to meet issues identified by defendant — $100 million claim — no trial date set — plaintiff amenable to defendant putting on further evidence in respect of further design — case management directions made.

Legislation Cited: Civil Procedure Act 2005 (NSW), s 57(1)

Cases Cited: Australian Securities and Investments Commission v Adler (2001) 40 ACSR 214; [2001] NSWSC 1168
David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Limited (No 2) [2025] NSWSC 7
EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310
Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 4) [2019] QSC 199
Shaw v Beck (1853) 8 Ex 393
Wright v Willcox (1850) 9 CB 650

Category: Procedural rulings

Parties: Pro-Invest Pitt St Development Pty Ltd (First Plaintiff)
Pro-Invest 70 Pitt Street Development Pty Ltd (Second Plaintiff)
Pro-Invest Developments II Pty Ltd (Fourth Plaintiff)
Pro-Invest Hotels II Pty Ltd (Sixth Plaintiff)
Pro-Invest International Assets Management (Two) (Seventh Plaintiff)
Pro-Invest International Asset Management (Three) (Eighth Plaintiff)
Charter Hall Holdings Pty Ltd (Defendant)

Representation: Counsel:
J Hutton SC / D Farinha (First Plaintiff)
S Lawrance SC / C Marshall (Defendant)
Solicitors:
Corrs Chambers Westgarth (First Plaintiff)
Dentons Australia (Defendant)

File Number(s): 2022/284673

JUDGMENT

1. HER HONOUR: The defendant seeks an order that the plaintiff not be permitted to rely on five expert reports and a lay affidavit, either in whole or part, which were served ‘in reply’. The defendant contends that this material is, in truth, further evidence in chief.

2. Alternatively, the defendant seeks the opportunity to reply to this material, together with an order that the plaintiff pay the costs thrown away as a consequence of not serving this material in chief. Further, the defendant seeks an order that these costs be awarded in a lump sum amount, either as agreed or otherwise fixed by the Court on being provided with evidence from the parties as to the amount of those costs and hearing further argument as to quantum.

3. The plaintiff maintains that the material is in reply but seeks leave to rely on the material if leave is required.

4. To determine these applications at the level of granular detail advanced by the parties would require me to closely read 12 expert reports spanning some 1,200 pages, together with portions of two detailed lay affidavits. The purpose which would be served by this is not entirely clear, where the plaintiff does not oppose the defendant putting on further evidence. This was said not to be because its evidence was not in reply, but as a matter of fairness and given that there is no trial date. As such, I have relied on the parties’ summaries of the expert reports to determine the motions. I consider that to do otherwise would not be an efficient use of available judicial resources: s 57(1)(c), Civil Procedure Act 2005 (NSW).

5. Before turning to the competing motions, it may assist to consider what is evidence ‘in reply’.

Evidence ‘in reply’

6. It is not an infrequent occurrence on interlocutory applications or, indeed, at trial, for parties to debate whether evidence sought to be relied upon may be described as ‘in reply’ or, in truth, new evidence in chief for which leave to adduce must be sought.

7. Such debates are not new. In Shaw v Beck (1853) 8 Ex 393, Pollock CB observed at 398:

Where there are several issues, some of which are upon the plaintiff and some upon the defendant, the plaintiff may begin by proving those only which are upon him, leaving it to the defendant to give evidence in support of those issues upon which he intends to rely, and the plaintiff may then rebut the facts which the defendant has adduced in support of his defence. … [for example] in the action of ejectment, in which the question depends upon the title of the disputed property the plaintiff may prove a prima facie case, the defendant may then set up an entirely new case, the plaintiff may then in reply set up another case, and so on.

8. Put another way, the plaintiff is not “bound to waste time by answering by anticipation that which might never be set up”: Wright v Willcox (1850) 9 CB 650 at 657 per Maule J.

9. The procedural requirements for pleadings and case management have developed in the years since. In Australian Securities and Investments Commission v Adler (2001) 40 ACSR 214; [2001] NSWSC 1168, Santow J rejected a valuation sought to be relied upon by ASIC in reply, as ASIC was “impermissibly splitting its case”. While the report was “framed by way of rebuttal”, it dealt with “a critical aspect of the plaintiff’s case” that bore directly on liability: at [18]. Further, “Its subject matter in substance constituted an important part of the plaintiff’s case in chief … [T]his affidavit … goes to that, though it be framed in form as a rebuttal”: at [21].

10. However, as McDougall J noted in EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310 at [81]:

… in the current era, where (generally at least) all testimonial evidence is adduced through affidavits or statements that are served before the hearing, the real (as opposed to notional) detriment to a defendant that could arise where a plaintiff splits its case is probably not as significant as it was in the days of oral evidence and trial by jury.

11. That said, McDougall J considered that it was not appropriate to attempt to rectify defects in a party’s case in chief “under the guise of replying” to a defendant’s evidence; further evidence in chief is not available without the leave of the court: at [79].

12. In Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 4) [2019] QSC 199, Bond J observed that the fact that an order refers to evidence ‘in reply’ “flags an intention that the evidence “in reply” would be limited to evidence rebutting the evidence to which the evidence “in reply” was addressed. As a general proposition, case management orders permitting of evidence “in reply” are not intended to provide gateways for evidence merely providing supplementary confirmation of a plaintiff’s case. Nor, a fortiori, are they intended to provide a gateway to admit of new or alternative modes of proving the plaintiff’s case”: at [17(b)]. Further, the rationale for this is the promotion of case management principles, including the just, quick and cheap resolution of the real issues in dispute; “So construing such case management orders is necessary to ensure fairness and to avoid the vice that if evidence “in reply” were to be extensively admitted it would be necessary to give the opponent the opportunity in turn to rebut the new “reply” evidence, with the consequence that issues would not be narrowed and the interlocutory process would meander on”: at [17(c)].

13. Sanrus was followed in David William Pallas & Julie Ann Pallas as trustees for the Pallas Family Superannuation Fund v Lendlease Corporation Limited (No 2) [2025] NSWSC 7 at [201] (McGrath J). His Honour observed that, when determining whether evidence constitutes evidence “in reply”, the court should concern itself with substance over form, following ASIC v Adler: at [203]. McGrath J also noted at [281]:

“New expert evidence that is based on new material and corrects that omission or deficiency in the plaintiffs’ expert evidence and case in chief, as opposed to new expert evidence merely explaining why [the expert’s approach in chief] was appropriate, and likely leading to a substantial revision of the whole suite of the plaintiffs’ expert evidence in the process, cannot in my opinion properly be characterised as “evidence in reply”.”

14. Importantly, where – as here – the debate as to whether evidence is ‘in reply’ occurs long before trial, it may be something of an arid debate, as resulting problems may be able to be solved by suitable case management directions. As Bond J also observed in Sanrus at [17(d)]: (emphasis added)

The delivery of evidence purporting to be in reply but actually amounting to further evidence in chief would require leave. But it may well occur sufficiently in advance of trial or be of such a nature that the failure to comply with the constraint intended by the words “in reply” is hardly worthy of remark, let alone of a contested application for leave to deliver the evidence notwithstanding failure to comply with the order. In those cases, leave would be a formality. But the closer to trial and the more disruptive reception of the non-compliant material would be, the more likely it is that there will be objection and the greater the weight there might be to the argument that fairness requirements might require the Court not to permit non-compliant material to be received into evidence.

15. Whether evidence is ‘in reply’ or further evidence in chief will depend, at least in part, on the nature of the proceedings, including the pleaded causes of action or defences and relief sought (Shaw v Beck) and, obviously enough, the contents of the evidence as it comes to be served. Whether leave will be granted to rely on evidence which is not truly in reply will depend on the usual case management principles, including the procedural history of the matter, any delays or prejudice which may follow if leave is granted, and whether any prejudice can be cured.

These proceedings

16. Turning to these proceedings, the defendant is a property investment and funds management company. It owns 68 Pitt Street, at the corner of Pitt and Hunter Streets, Sydney.

17. The plaintiff is engaged in property development. In March 2021, the plaintiff had drawings prepared by architect Fender Katsalidis for a 26-storey hotel development at 70 and 72 Pitt Street, with a cantilever over 74 Pitt Street Sydney. (The proposed building was referred to by the parties as the “FK Scheme”.) The drawings comprised only five pages, indicating that the design was at an early stage. Given the cantilever, the plaintiff needed to acquire the air space above 74 Pitt Street in order to pursue the development.

18. In April 2021, the parties entered into an agreement to work together to develop 68 to 74 Pitt Street. However, in June 2021, the defendant acquired a “blocking stake” in 74 Pitt Street, which it sought to deploy to thwart the plaintiff’s plans.

19. In September 2022, these proceedings were commenced. Initially, the plaintiff sought an injunction to prevent the defendant from exercising its voting rights in the “blocking stake”. In January 2023, the defendant agreed not to oppose the development. The plaintiff then decided not to pursue the development, for reasons with which it is unnecessary for me to become familiar. The plaintiff chose to seek damages instead.

20. The pleadings were re-calibrated. The plaintiff contends that it lost the opportunity to derive profits and fees from the acquisition and re-sale of the lots in 70 and 72 Pitt Street and the airspace over 74 Pitt Street. Beyond this, the pleading is spare as to precisely what development the plaintiff would have undertaken. For its part, the defendant accepted that it had breached the agreement but contended that the agreement was unenforceable as contrary to public policy. The defendant denied that the plaintiff had suffered loss.

Evidence in chief

21. In June 2023, directions were made for the plaintiff to serve lay and expert evidence within two months. The same day that the order was made, the plaintiff approached the first potential expert but, as the plaintiff’s solicitor later complained, it was difficult to engage unconflicted experts where the defendant was “one of the largest commercial landlords in Australia”.

22. The plaintiff approached the defendant for additional time to serve its evidence, where eight experts had been approached before finding one that was prepared to provide a report. The defendant was unwilling to agree to an extension absent an explanation by affidavit, which was duly provided. Further extensions were granted. Ultimately, the plaintiff served its lay and expert evidence 25 weeks after the order to do so was initially made.

23. The lay evidence included an affidavit by director, Timothy Sherlock, who set out the plaintiff’s feasibility model in respect of the FK Scheme.

24. An expert report was provided by town planner, Brett Brown, who opined on the likelihood of obtaining development consent for the FK Scheme. Mr Brown noted that the plans represented an early stage of the development approval process. A considerable amount of design development would have been needed, and a detailed assessment of issues undertaken, before a development application could be submitted. But Mr Brown considered that a development that complied with the permitted height and floor space ratio was highly capable of being approved.

25. A second expert report was provided by hotel expert, Dean Dransfield, who considered whether the plaintiff’s feasibility model was reasonable. He thought it was, albeit noting that he was not an expert in retail or office development (which comprised one-third of the development.)

Defendant’s evidence

26. Directions were made for the defendant to serve its lay and expert evidence. The defendant encountered the same problem in finding experts as the plaintiff. Indeed, the defendant sought the plaintiff’s consent to use an expert who had previously done work for the plaintiff; consent was provided.

27. In July 2024, the defendant served its lay evidence.

28. In August 2024, the defendant served an expert report from heritage consultant, Natalie Vinton, who opined that lodgement of a development application would prompt the City of Sydney to apply heritage restrictions to 72 and 74 Pitt Street. The proposed development, in its current form, was not considered to be compatible with the heritage objectives of the Local Environment Plan.

29. An expert report was also served by architect, Benjamin Donohoo, who opined that the FK Scheme was not compatible with development controls. Mr Donohoo was asked to design an alternate development which did comply with development controls. Mr Donohoo did so, but said that his alternate design had problems too.

30. In September 2024, the defendant completed service of its expert evidence. It was now 40 weeks since the defendant was first ordered to put on its evidence.

31. Town planner, Andrew Duggan, opined that the FK Scheme would not be approved, as demolition of a heritage item would not be acceptable. He also estimated the likely timeframe for the development application.

32. Mr Donohoo provided a second report, opining on the net lettable area if 74 Pitt St was excluded from the site area.

33. Valuer, Luke Mackintosh, opined that the FK Scheme would, if constructed, result in a loss of some $165 million, including based on the net lettable area detailed by Mr Donohoo. Mr Mackintosh also criticised Mr Dransfield’s report on the basis that he had not tested the assumptions in respect of the retail or office components.

Reply evidence

34. The plaintiff turned to the preparation of reply evidence, making enquiries of 13 heritage and architectural experts before finding experts who were prepared to be engaged. In addition, ten companies and eight individuals were approached before experts in retail and office space were engaged. In February 2025, the plaintiff’s solicitor sought a further four weeks to put its reply evidence, but was not favoured with a response. In April 2025, the plaintiff sought a further two weeks, to which the defendant agreed.

35. In April and May 2025, the plaintiff served its reply evidence, being 31 weeks since the order for reply evidence was first made. The centrepiece of this material was an expert report by Mr Lonergan, who commented on heritage, architecture and planning issues. Specifically, Mr Lonergan addressed the various points raised by the defendant’s experts and Mr Donohoo’s alternate design. Mr Lonergan proffered a further design of the development, which was said to resolve these suggested problems. The building was now 31 storeys, and devoted a greater proportion to hotel rooms.

36. Mr Sherlock made an additional affidavit, in part, preparing a revised feasibility study in respect of Mr Lonergan’s design.

37. Alongside Mr Lonergan’s report, Terry Davis prepared a valuation on the retail portion of the proposed development, both responding to Mr Mackintosh’s comments and undertaking a valuation by reference to Mr Lonergan’s design.

38. Similarly, Lester Alvis provided a valuation of the office space in the proposed development, both responding to Mr Mackintosh’s observations on the office component of the development and valuing that component by reference to Mr Lonergan’s design.

39. Finally, Mr Brown and Mr Dransfield responded to the defendant’s expert reports. Mr Dransfield performed a revised calculation of loss based on Mr Lonergan’s revised design and the associated feasibility study.

Motions

40. This brings us to the defendant’s motion, in support of which it’s solicitor, Christopher Pagent, estimated that some 60% of the $310,000 expended on the defendant’s expert reports was considered to be wasted, being based on the FK Scheme. To this should be added the associated costs of the defendant’s solicitors and counsel. He considered that quantifying the costs thrown away would not be straightforward. Mr Pagent estimated that $250,000 to $300,000 would now need to be spent to meet this new material. The trial would be longer. Expert conclaves would be more complex. He complained about delay, advising that he considered that four months would be needed to reply to this material.

41. In turn, the plaintiffs filed their motion. In support, the plaintiffs’ solicitor, Louise Massey, said that it was necessary to obtain expert evidence from an architect or heritage specialist to meet the defendant’s evidence. Where Mr Brown and Mr Dransfield did not include expert evidence on the retail or office components of the proposed developments, it was similarly necessary to require experts to now address that material in reply. Ms Massey set out in great detail the extent to which the experts’ reports, and Mr Sherlock’s reply affidavit, were ‘in reply’.

Conclusion

42. There is some merit in the position put by both sides. Mr Lonergan’s design is different from the FK Scheme. This might hardly be thought surprising, where the FK Scheme was based on five pages of early drawings. Much ink has since been spilt by experts from a range of disciplines on suggested problems with that design.

43. Against this, the defendant’s submission that the plaintiff should have foreseen all potential problems with the FK Scheme and put on all experts in chief, including experts on retail and office space, heritage and the like is well answered by the plaintiff’s submission that, if it had anticipated every potential issue that the defendant may raise with the FK Scheme, then the plaintiff’s evidence in chief would have been far more expansive and expensive, covering matters such as geotechnical engineering, quantity surveying, traffic, contamination, building method and the like. Some of this material may have provided irrelevant if the defendant did not contend that the FK Scheme would have failed by reason of some of these matters.

44. So far as the pleadings go, the plaintiff’s case remains the same: as a consequence of the defendant’s breach of the agreement, the plaintiff lost the opportunity to pursue a profitable development and earn associated fees. The pleading did not specify the development that would have been pursued. That development was identified in the plaintiff’s evidence in chief, being the FK Scheme.

45. The defendant’s experts pointed to numerous problems with the FK Scheme and proffered another design, which was said to be unfeasible too.

46. In response to that body of evidence, the plaintiff addressed the problems suggested by the defendant’s experts. The plaintiff considered the defendant’s alternate design. That resulted in the production of a further design, which is the product of the ‘to and fro’ of the competing expert reports.

47. This is not a case where the plaintiff failed to serve evidence in chief of a critical aspect of its case. It is a case where the plaintiff has taken ‘on board’ the suggested deficiencies in its evidence in chief and, in the course of responding to those suggested deficiencies, produced a further refinement which, presumably, the plaintiff will argue addresses the defendant’s criticisms, would have been approved for development and would have been profitable.

48. Obviously, it would have been better if Mr Lonergan’s design had been put forward in the first place. But it is not entirely clear how or why the plaintiff would have done this. Mr Lonergan’s design bears little resemblance to the plaintiff’s concept drawings of March 2021. What would have been the rational basis to put that design forward in chief as the design that the plaintiff would have advanced for the site? Rather, Mr Lonergan’s design appears to be the product of the competing experts’ work. As such, strictly speaking, I consider that the plaintiff’s material is in reply.

49. The more important question is what case management orders should be made to ensure the just determination of the proceedings in the circumstances: s 57(1)(a) Civil Procedure Act 2005 (NSW). As matters presently stand, the plaintiff seeks damages of some $100 million. The amount in issue is large. The difference between the FK Scheme and Mr Lonergan’s design is significant. I consider that fairness dictates, and the plaintiff accepts, that the defendant should have an opportunity for their experts to consider and comment on Mr Lonergan’s design and the associated feasibility study. The defendant’s experts will address those matters in the expert conclaves in any event. Having their considered views on those matters committed to print before the conclaves will result in the more efficient conduct of those conclaves.

50. Given the amount of time that both the plaintiff and defendant have taken to assemble their evidence thus far, an estimate of four months seems reasonable. The trial is expected to take some three weeks. Where the matter is unlikely to be listed for a trial commencing sooner than four months hence, I consider that the defendant should be given that time. This will save the parties the costs of corresponding and appearing before the Court to seek extensions, should a shorter period be permitted now but a longer period prove necessary. The plaintiff does not expect that it will need to put on evidence in answer to what is served by the defendant.

51. Nor do I consider that the costs orders requested by the defendant should be made. The defendant’s senior counsel was unable to identify any expert report on which he did not intend to rely at trial. That is not surprising. I expect that the defendant will only be in a position to know for sure which of its expert reports are otiose once the matter comes to trial or, perhaps, not until the trial has concluded. By then, the trial judge will be fully appraised of how the 12 (or more) expert reports intersect, and whether the costs incurred in commissioning some of these reports has been wasted in light of Mr Lonergan’s design. The trial judge will be well placed to resolve any remaining contention by the defendant that it should have such costs. I do not consider it appropriate to make such orders at this stage. Whilst I agree with Mr Pagent that quantifying such costs “will not be straightforward”, I consider that any such costs cannot be identified now in any event.

52. Although not squarely raised by the motion, I decline to order that the plaintiff not rely on expert reports said to be duplicative, for the reasons advanced by the plaintiff.

Orders

53. For these reasons I make the following orders:

54. Direct the defendant to file and serve any evidence in respect of the revised development designed by Peter Lonergan, and the feasibility study based on that design, by 14 November 2025.

55. Otherwise dismiss the defendant’s Notice of Motion filed on 3 June 2025 and the plaintiffs’ Notice of Motion filed on 30 June 2025, with no order as to costs.

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