…"
20 It is accepted that Mr Sharpe's report was not "served in accordance with this rule". That, coupled with its status as an "expert's report" within the rule 31.18 definition (which applies to rule 31.28), means that it is "not admissible" unless the court grants leave as contemplated by rule 31.28(3). And the court may not grant such leave unless it is satisfied as the matter in rule 31.28(4)(a), that is, that the grant of leave is warranted by "exceptional circumstances".
21 Again, the question whether the court should grant leave (and the antecedent question whether it is permitted by rule 31.28(4)(a) to grant leave) is best left until other questions concerning the admissibility of Mr Sharpe's report have been considered.
22 I turn now to the Evidence Act. It is accepted that the "opinion rule" in s.76(1) will render Mr Sharpe's opinion inadmissible to prove the existence of a fact about the existence of which the opinion was expressed unless some exception to that opinion rule applies.
23 Mr McHugh submitted on behalf of the plaintiffs that the exception in s.77 operates. That section is as follows:
"The opinion rule does not apply to evidence of an opinion that is admitted because it is relevant for a purpose other than proof of the existence of a fact about the existence of which the opinion was expressed."
24 As I said at the outset, one of the purposes for which the plaintiffs seek to tender Mr Sharpe's report is to establish the state of mind of Mr Barr regarding the value of the land in the period after the preparation of the report and leading up to the purported exercise of the option in April 2003. In the context of the case as a whole, one consequence may follow if it is found that Mr Barr had a reasonable basis for a certain belief on the question of the land's value, while another result may follow if no such basis is shown. I am satisfied that, for this reason, the report is relevant for a purpose other than proof of the value itself. But that is on the assumption, of course, that Mr Barr received the report and that it may therefore be taken to have played a part in his reaching whatever view he did reach on the question of value at the relevant time.
25 Mr Neil submitted on behalf of the defendant that it has not been shown that Mr Barr received the report, with the result that its content cannot be seen to be relevant for the purpose of establishing Mr Barr's state of mind on the question of value.
26 I am of the opinion that there is ample room for an inference that Mr Barr did receive the document and that that inference should be drawn.
27 In the first place, the valuation says on its face that it was prepared under instructions from Mr Barr. Under the heading "Instructions" appears the following:
"To estimate the open market value, for the exclusive use of Mr Tim Barr, solely for the purchase of a call option purposes, of the land known as 'Cudgen Paddock' off Old Bogangar Road, Kingscliff NSW 2489, as at the date hereof."
28 There is also a statement in the report that it is for the use "only of the party to whom it is addressed and for no other purpose". The party to whom it is addressed is clearly Mr Barr.
29 In a letter to Mr Edgar Hung dated 11 April 2003, Mr Barr discussed exercise of "the call option under my lease agreement with Narui Gold Coast Pty Ltd". In that letter, Mr Barr spoke of submitting a market value "using, for example, the John Sharpe market evaluation of $A1.8 million" subject to certain adjustments. The value stated in the 11 February 2002 report is $1.8 million.
30 A letter from Mr Barr to Mr Sharpe dated 25 January 2002 (that is, a little over two weeks before the date the report bears) shows that Mr Barr had already commissioned Mr Sharpe to prepare a "land evaluation".
31 When the valuation report itself is viewed in the light of the letter of 25 January 2002 and the letter of 11 April 2003, there is, in my view, a firm foundation for the conclusion that Mr Barr commissioned Mr Sharpe to prepare the report and that Mr Sharpe furnished the completed report to Mr Barr some time before Mr Barr wrote to Mr Hung.
32 I am accordingly satisfied that the content of Mr Sharpe's report is material to establishing the state of mind of Mr Barr as to the value of the land at (or before) the time option was exercised.
33 It follows that I accept Mr McHugh's submission that the valuation report is admissible as evidence of Mr Sharpe's opinion on value by virtue of s 77 despite the fact that it contains an opinion otherwise excluded by s 76. And once the report is found to be admissible by operation of s 77, it is, of course, admissible for all purposes and without limitation as to use unless a limitation arises under some other provision.
34 Mr Neil next says, however, that Mr Sharpe's opinion is excluded by the hearsay rule in s 59 of the Evidence Act. The riposte is that it is a business record of Mr Barr within s 69(1) and that its hearsay content is therefore made admissible by s 69(2). Mr Neil accepted that the report is a business record but submitted that the operation of s 69(2) is excluded by s 69(3) because the report was "prepared or obtained … in contemplation of … an Australian or overseas proceeding" (s 69(3)(a)). The only potentially relevant proceedings are these proceedings.
35 Mr McHugh submitted that the valuation report was not prepared or obtained "in contemplation" of these proceedings. For reasons I am about to state, I accept that submission.
36 The only apparent connection between the valuation report and these proceedings comes from the simple matter of timing. The report is dated 11 February 2002. The proceedings were commenced by Mr Barr and his company (Tim Barr Pty Ltd) on 17 May 2002, a little more than three months later. This timing factor provides only scant grounds, at best, for finding a connection of the kind described by the words "in contemplation of".
37 There is, however, other evidence about the genesis of the report. First, there is Mr Barr's letter to Mr Sharpe dated 25 January 2002 to which reference has already been made. That letter shows that Mr Sharpe had been briefed and given his instructions to prepare the report before that date, so that the time interval can be seen to be even greater. Also in evidence is a letter from Mr Barr dated 14 January 2002 to "Land Evaluator". It begins:
"Please receive additional information regarding your report on market value of the provided description of property located within Kings Forest property."
38 Then follow references to features of the land and matters affecting it. The letter contains a passage as follows:
"I would like to purchase this property on today's market value to continue my lemon scented tea tree plantation and I look forward to your fair price as my contract clearly states that there is a call option on market value and it must be accepted by independent land valuer and the client will accept accordingly, regarding your market value on the Cudgen Paddock."
39 The letter just quoted is not addressed to Mr Sharpe by name. But the reference at the beginning to a purpose of providing "additional information" to the "Land Evaluator", plus the nature of the information given and other content of the letter, makes it clear enough that it was sent to a "Land Evaluator" already retained by Mr Barr. The "Land Evaluator" was probably Mr Sharpe, given that he produced a valuation report in relation to the particular land slightly less than a month later. And whether the "Land Evaluator" was Mr Sharpe or someone else, the letter clearly states the purpose for which Mr Barr was seeking, in January 2002, a valuation of the Cudgen Paddock. It was a purpose wholly related to the need to establish the current market value for the purposes of the exercise of the option. Mr Sharpe's report must be accepted as having been commissioned and obtained for that purpose.
40 It follows, in my view, that any weak inference, based on timing alone, that these proceedings were in contemplation at the time of the commissioning and obtaining of a valuation and that the report was commissioned and obtained in contemplation of the proceedings is entirely overborne by the evidence about purpose stated in the letter of 14 January 2002 which has nothing to do with contemplated legal proceedings.
41 I am accordingly of the opinion that s 69(3) does not preclude the operation of s 69(2) to exclude the hearsay rule in relation to Mr Sharpe's report.
42 This conclusion with respect to s 69(2) is sufficient to deal with the hearsay objection. It is therefore not necessary to deal with submissions directed to s 60(1):
"(1) The hearsay rule does not apply to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of an asserted fact."
43 I nevertheless observe that, had s 69(2) not operated, Mr Sharpe's report would have been admissible to prove Mr Barr's state of mind despite the hearsay rule in s 59(1). That is because s 59(1) operates to make a person's previous representation inadmissible to prove the existence of a fact that the person intended to assert by the representation - that is, in the present context, to prove the facts stated in the report, as distinct from, for example, that a party, at a past time, was aware of the content of the report (whatever may be the quality or accuracy of that content). And had the report been admitted on that basis, s 60(1) would have caused the hearsay rule not to apply to the facts stated in the report - in other words, the report would, as in the case of s 77 discussed at paragraph [33] above, have been admissible for all purposes and without limitation as to use, unless some limitation came from some other section of the Act.
44 At this point, therefore, the position reached is that the content of Mr Sharpe's report, being evidence that is, in terms of s 55, relevant in these proceedings, is admissible by virtue of s 56 unless excluded by some other Evidence Act provision; that none of the potentially excluding provisions of that Act to which the defendant points operates to exclude; and that, in terms of the Evidence Act itself, the report is admissible. Having reached that point, I must return to the Uniform Civil Procedure Rules.
45 I have found that each of rule 31.23(3) and rule 31.28(3) of the Uniform Civil Procedure Rules makes the report inadmissible unless the court, by order, allows it to be admitted into evidence; also that the exclusion effected by the rules is effective even though the Evidence Act does not operate to exclude. In relation to rule 31.28(3) the court may not make such an order unless it is satisfied that "exceptional circumstances" warrant its doing so, that being the effect of rule 31.28(4)(a). It is necessary for the possibility of an enabling order to be considered separately by reference to each rule.
46 In relation to rule 31.23(3), the clear intention is as stated by McDougall J in the Investmentsource case at [44], that is, to keep out expert evidence unless it can be seen that the expert has conduct himself or herself in the way required by Schedule 7 in relation to the preparation of the report and the formation of the opinion stated in it. The concern is a quality assurance concern: to be sure that an expert has approached the task responsibly and mindful of the importance the expression of opinion will have as part of a body of evidence placed before the court. As a general rule, a written statement of the opinion of an expert should not be accepted as authoritative on a matter within the relevant field of expertise unless the person expressing the opinion is shown to have proceeded in that way; but the court may, in a particular case, allow the statement to be admitted even where the person is not shown to have proceeded in that way.
47 I accept that the absence of a Schedule 7 acknowledgment from Mr Sharpe's valuation report means that the court should not receive it as evidence of the value of the relevant land in January 2002. A party wishing to lead evidence of that value should do so by commissioning a qualified valuer to make a valuation as at the relevant past time, with that valuer then approaching the task in the way rule 31.23 and Schedule 7 envisage. There is no basis on which the court could confidently conclude that the report had been prepared in accordance with the prescribed regime of quality control.
48 As I have noted, however, the plaintiffs wish to have Mr Sharpe's report in evidence for a second purpose, that is, as evidence indicative of the state of mind of Mr Barr on the question of value in the period after preparation and delivery of the report. The concern underlying rule 31.23(3) is not relevant to that second purpose. It might therefore be appropriate to make an order under rule 31.23(3) allowing the report to be admitted into evidence, provided that its use was limited to the second purpose.
49 Rule 31.28(3) has a quite different purpose. The rule exists in aid of an objective of efficient case management. It seeks to keep out an expert's report which has not been made available to the other side in a timely way and in circumstances making it clear that the party making it available intends to seek to rely on it at trial. The main purpose of the rule appears to be to prevent the other party being taken by surprise. This is, I think, borne out by the fact that the other party's consent, if given, removes the barrier.
50 In approaching the question whether the court should make an order under both rule 31.23(3) and 31.28(3) in the present case, two particular matters must be borne in mind. First, the plaintiffs' purpose of using Mr Sharpe's report to prove Mr Barr's state of mind on the question of value is one that does not cut across the purpose of rule 31.23(3). Second, the defendant has been aware of Mr Sharpe's report for a long time and the plaintiffs' intention to seek to introduce it into evidence is no surprise at all to the defendant.
51 There is, to my mind, a case for making an order under rule 31.23(3) allowing the report to be used in evidence if the use is restricted to proof of Mr Barr's state of mind on the question of land value. With such a restriction in place, the policy of rule 31.23(3) of keeping out evidence of the actual opinion of an expert who has not made a Schedule 7 acknowledgment is observed and the evil against which the rule is directed is avoided. At the same time, the admissibility provided for by the Evidence Act will be preserved to the extent consistent with the rule of court.
52 When it comes to the question of a grant of leave under rule 31.28(3), the same approach will be appropriate, provided that the requirement for "exceptional circumstances" laid down by rule 31.28(4) is met. The meaning of "exceptional circumstances" was discussed by Campbell JA at [66] and [67] of his judgment in Yacoub v Pilkington (Australia) Pty Ltd (above) in a passage repeated at [206] of his Honour's judgment in State of New South Wales v Tyszyk [2008] NSWCA 107:
"Another question of construction concerned "exceptional circumstances" in rule 31.18(4). In San v Rumble (No 2) [2007] NSWCA 259 at [59]-[69], I gave consideration to the expression "exceptional circumstances" in a different statutory context to the present. Without repeating that discussion in full, I shall state such of the conclusions as seem to me applicable in the construction of rule 31.18(4).