[2005] NSWSC 149
BrisConnections Finance Pty Limited (Receivers and Managers Appointed) v Arup Pty Limited (2017) 252 FCR 450[2017] FCA 1268
Clear Wealth Pty Limited v Kwong [2012] NSWSC 561
Dasreef Pty Limited v Hawchar (2011) 243 CLR 588
Judgment (3 paragraphs)
[1]
JUDGMENT
Mr Thomas Richard Wenkart and Mrs Christine Wenkart (the applicants) have commenced proceedings pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) objecting to the amount of compensation offered by Blacktown City Council (Council) following a compulsory acquisition. I am assisted in this matter by Acting Commissioner Kempthorne.
Council objects to the admission of a report dated 29 February 2024 (the report), the author of whom is Mr Peter Irwin Phippen (Mr Peter Phippen), valuation expert, Abbotts Valuers. The report is sought to be relied upon by the applicants as evidence in chief. The report bears the electronic signature of Mr Peter Phippen and attaches his curriculum vitae.
The attached curriculum vitae identifies Mr Peter Phippen as senior valuer at Abbotts Valuers, and Mr Thomas Leon Phippen (Mr Thomas Phippen) as principal at Abbotts Valuers. Under the headings "Professional appointments" and "Client list", there are numerous references to "Messrs Phippen" and "Abbotts Valuers and Messrs. Phippen".
The basis for the objection is that the authorship of the report is unclear.
That is because of the use of the first person collective pronoun "we" throughout the report. For example:
1. "We understand that Electricity, Telephone, Town Water, Sewerage, and Drainage, are all available to property in this area" (at [3.4]).
2. "… in this respect we note that part of the residue land fronting on to Garfield Road East has been designated for road widening" (at [3.5]).
3. "We note that the SJPER shows slightly different figures …" (at [3.6]).
4. "The Planners individual reports provide all of the information relevant to uses to which the Subject Property could be put. We have relied upon the content of the report prepared by DH …" (at [4.2]).
5. "… We have provided two assessments of the s.55(a) Market Value of the Subject Property based on the two different land areas …" (at [6.2]).
6. "We have analysed 22 different sales that have occurred in the area …" (at [7.1]).
7. "Based on our analysis of the available, adjusted sales and market evidence, we have assessed that the value of RU4 land in this location would be around $400 psm" (at [7.3]).
8. "Overall, to maintain our usual conservative approach, for the E2 land we have adopted a rate of $200 psm, less 10% equating to a rate of $180 psm" (at [7.3]).
9. "Based on our analysis of the available, adjusted sales and market evidence, we have assessed the following LVs for the two land classifications" (at [7.3]).
10. "We do not consider that a claim under this heading is appropriate in this case" (at [7.4]) in relation to s 55(b) of the Just Terms Act.
11. "We do not consider that a claim under this heading is warranted in this case" (at [7.4]) in relation to ss 59(1)(c), 59(1)(d), 55(e) and 55(f) of the Just Terms Act.
12. "… We do not assume any responsibility of accept any liability where this valuation is relied upon after the expiration of one month…" (at [7.6]).
13. "… we are of the opinion, subject to the qualifications and recommendations made within the body of this report, that the fair market value of the subject property…" (at [7.8]).
Council submits that the lack of clarity in relation to the authorship of the report is also apparent at [1.1] of the report where there is a shift from the possessive adjective "my" to the possessive pronoun "his" in the discussion of Mr Peter Phippen's curriculum vitae.
The opinion rule in s 76 of the Evidence Act 1995 (NSW) (Evidence Act) does not apply if a person has specialised knowledge based on the person's training, study or experience and the evidence of an opinion of that person is wholly or substantially based on that knowledge. The exception to the opinion rule in s 79 is plainly directed to the opinion of a single person.
It is true that the rules of evidence do not apply in Class 3 proceedings in this Court. However, the requirement for an expert witness to be a single expert is confirmed in r 31.23(1) the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) which provides that an expert witness must comply with the code of conduct set out in Schedule 7, being the Expert Witness Code of Conduct.
The Expert Witness Code of Conduct which applies to any expert witness engaged or appointed requires every report prepared for use in court to state, relevantly:
1. the name and address of the expert (cl 3(a));
2. an acknowledgement that the expert has read the Code of Conduct and agrees to be bound by it (cl 3(b));
3. any examinations, tests or other investigations on which the expert has relied, identifying the person who carried them out and that person's qualifications (cl 3(g));
4. the extent to which any opinion which the expert has expressed involves the acceptance of another person's opinion, the identification of that other person and the opinion expressed by that other person (cl 3(h)).
Rule 31.28(3) and (4) of the UCPR provide relevantly:
(3) Except by leave of the court, or by consent of the parties -
(a) an expert's report … is not admissible unless it has been served in accordance with this rule …
(4) Leave is not to be given as referred to in subrule (3) unless the court is satisfied -
(a) that there are exceptional circumstances that warrant the granting of leave, or
(b) that the report concerned merely updates an earlier version of a report that has been served in accordance with subrule (1).
Rule 31.28(1) of the UCPR provides relevantly:
(1) Each party must serve experts' reports … on each other active party -
(a) in accordance with any order of the court, or
(b) if no such order is in force, in accordance with any relevant practice note, or
(c) if no such order or practice note is in force, not later than 28 days before the date of the hearing at which the report is to be used.
Order 5 of the orders of the Court made on 24 February 2024 required the parties' experts to comply with the Expert Witness Code of Conduct. Paragraph 55 of the Court's Class 3 Compensation Claims Practice Note also requires an expert to comply with the Expert Witness Code of Conduct.
Council submitted that the report said to be the report of Mr Peter Phippen does not identify another person who undertook investigations or whose opinion he otherwise accepted in the course of preparing the report, and that the "we" referred to throughout the report is entirely opaque. I accept that submission.
To the extent that Mr Peter Phippen may have relied on an unidentified assistant in the preparation of the report, in ASIC v Rich [1] (ASIC v Rich) Austin J at [329]-[332] said as follows (emphasis added):
6.8 Expert's delegation and reliance on others
329. The defendants have complained that Mr Carter relied on "unidentified work done by unidentified assistants" as the basis for his opinions. They do not contend that it was impermissible for Mr Carter to delegate tasks connected with the preparation of his Report to staff of PwC. There is nothing in the law to prevent such delegation from occurring. But it is necessary for the expert who is the author of a report to apply his or her mind to the analysis and reasoning processes that his or her subordinates have developed, so that when the report is finalised, the whole of the reasoning and conclusions that it contains have been adopted as the expert's own reasoning and conclusions. Were that not the case, the expert could not claim to be the author of the report. To the extent that an expert's report contains evidence of facts by direct lay or expert observation, that evidence is (subject to s 60) inadmissible unless the observation is the expert's and not the observation of someone else who has relayed it, as hearsay, to the expert.
330. The defendants' contention was that, because Mr Carter has used assistants to prepare drafts of his Report, without adequately identifying the assistants and their work, the Carter Report has failed to identify the factual basis for Mr Carter's opinions, and that it has failed to set out the reasoning process adopted by Mr Carter to support his conclusions, as required in each case by Makita.
331. It is clear that ineffective delegation of work to assistants can lead to the exclusion of the expert's opinion evidence. As Jacobs JA said in Steffen v Ruban (1966) 84 WN (Pt 1) (NSW) 264 at 268-269:
If his evidence is such that it is impossible to analyse and determine what are conclusions based on his own observations and what are conclusions based on what he has been told, then in such a case as the present one the danger of a mistrial becomes great …
332. If the expert has not properly reviewed the assistant's work, and fully understood it, and then adopted it as his or her own reasoning and conclusions, the other party to the litigation would be unfairly prejudiced by admission of the expert's evidence, because the party who has actually carried out the work leading to the conclusions expressed in the report, namely the assistant, will not be called and cannot therefore be cross-examined: R v Sing (2002) 54 NSWLR 31 at [34]-[36] per Hodgson JA; Roach v Page (No 11) [2003] NSWSC 907 at [71] per Sperling J.
ASIC v Rich was referred to by Lee J in BrisConnections Finance Pty Limited (Receivers and Managers Appointed) v Arup Pty Limited, [2] a case in which his Honour rejected reports prepared by Mr Michael Veitch and his son Mr Tim Veitch engaged by BrisConnections to provide expert opinions. There was no suggestion that either Mr Michael Veitch or his son Mr Tim Veitch lacked specialised knowledge. Nor was it suggested that their opinions, purportedly based on their knowledge, were not relevant to a fact in issue. The objection was that as a "joint" opinion, it was not apparent that the opinions expressed were wholly or substantially based on the specialised knowledge of either Mr Michael Veitch or his son Mr Tim Veitch and, as a consequence, the exception to the exclusionary opinion rule in s 79 of the Evidence Act was not engaged. In the circumstances, a voir dire was conducted. Lee J at [38] recorded BrisConnections' contention that the "critical point" was that the whole of the reasoning and conclusions in the Veitch report by Mr Michael Veitch had been adopted as his own reasoning and conclusions. His Honour recorded the submission for BrisConnections that in any complex expert report prepared, at least in part, by a team, the process will necessarily involve an exchange of views and interaction between those involved. The submission was that what is necessary to make the opinions in such a report admissible is that if the expert who comes to give evidence has duly considered everything in the report, and has "adopted" the opinions in the report, including the reasoning process, as the expert's own.
Lee J at [51] referred to BrisConnections' submission having been expressed at "too high a level of generality". His Honour said:
"…The abstract use of the word 'adopt' in this area of discourse is problematical. It could mean blithely accepting compromised opinions as an expedient or, used differently, it could mean refinement and change through discussion with another in a principled way".
At [52], his Honour said that it cannot be correct that a report is admissible under s 79 just because "the expert who signs the report takes all of the opinions as his own and can testify about them".
His Honour continued:
If the so-called "taking of all the opinions" involves the "adoption" of compromised opinions, or otherwise does not involve and make apparent the application of specialised knowledge by the "adopter", it is not admissible. Put another way, the pervading vice of which Arup complains (there is no real way to identify who did what, on the basis of what, and whose specialised knowledge was deployed) would exist.
And at [53]-[54], his Honour said:
53. That being said, there needs to be some recognition of the reality of complex litigation here: any expert report in an arcane area of specialised knowledge, which requires analysis of a very large volume of primary data in order to form an opinion, is likely to be, in a literal and practical sense, a collaborative effort. Provided the expert's mind is applied to the analysis and reasoning processes which those working with the expert have deployed, so that when the report is finalised it is apparent that the whole of the reasoning and conclusions it contains have been "adopted" as the expert's own reasoning and conclusions (as the process was explained by Austin J in Rich), even if this causes the expert's initial or tentative views to change. There is no difficulty.
54. It may seem a trite observation, but what is acceptable (and what is not) depends on what is apparent on the evidence, as revealed in writing and as supplemented on any voir dire.
At [58], Lee J said:
In the end, what was clear from the affidavit evidence as tested on the voir dire, was that Mr Veitch "ultimately signed off on all of the opinions in that report, and all the inputs to the model. So [he] was happy with everything" (T 298). Mr Veitch held every one of the opinions expressed in the Veitch Report, which he arrived at, in part, by relying on the work of the team he assembled (and particularly Tim Veitch in testing, discussing and recording his views) …"
I consider that there is considerable force to Council's submission that the difficulty with the valuation report as presented is that the words "we" and "our" are deployed in critical parts of the report, namely in relation to conclusions based on apparently collective analysis. At no point in the report does Mr Peter Phippen acknowledge work done by an unidentified assistant in the preparation of the report, say that he has reviewed the assistant's work, or that he has adopted it as his own reasoning and conclusions.
In oral submissions today, Ms McKelvey for Council submitted that it is plain that Mr Peter Phippen is not or may not be the author of the report, that "he is at best a co-author", and that the identity of the co-author is not disclosed. Ms McKelvey submitted that in the absence of evidence to the contrary, the report is on its face inadmissible.
Ms McKelvey agreed that admissibility of the report should be dealt with on a voir dire in order for Mr Peter Phippen to be questioned in relation to the authorship of the report. Ms McKelvey submitted that whilst s 79 of the Evidence Act does not apply in Class 3 proceedings, it would inform the exercise of the Court's discretion.
Mr Eastman SC for the applicants submitted that the requirement in r 31.28(3) of the UCPR that except by leave of the court, or by consent of the parties, an expert's report is inadmissible unless served in accordance with r 31.28, unless the court is satisfied that there are exceptional circumstances that warrant the granting of leave, only applies to circumstances where the expert report has not been served in accordance with r 31.28. Mr Eastman submitted that r 31.28 is directed to a temporal failure to serve an expert report, and the requirement in that circumstance to demonstrate exceptional circumstances in order to obtain leave is not required.
On the voir dire, Mr Peter Phippen gave the following evidence in chief:
1. In relation to [3.4] of the report: "[t]he word we is used being my firm Abbotts' Valuers …I prepared the report. I do get assistance from other people as all valuers do … 100% of the work that went into the report was my work".
2. In relation to [3.4] of the report, he agreed that the reference to services and amenities was a reference to his work.
3. In relation to [3.5] of the report, and the use of "we", he said that "we refers to my firm."
4. In relation to [4.2] of the report, and the use of "we", he agreed that it meant himself. In relation to [6.2] of the report, and the use of "we", he said "yes, totally" that was his work.
5. In relation to the analysis of 22 sales at [6.2], he "personally" had analysed those sales, and it was his work.
6. In relation to various further paragraphs of the report where he used the word "we", he said that it should have been "I".
In cross-examination on the voir dire, Mr Peter Phippen gave the following evidence:
1. The reference in the valuation summary at [1.1] of the report referring to his curriculum vitae "which sets out details of his qualifications" was a typographical error, he usually has his reports proofread and "that one slipped through".
2. The report "was 100% prepared by me. I have done thousands of valuations before. I have never before been picked up on use of we".
3. As to [3.6] of the report, he "physically reviewed the supplementary expert report of planners before writing it and … physically typed it".
4. His son Mr Thomas Phippen who was in attendance at the site inspection by the Court on 4 November 2024 "never assists with writing reports; he assists with research of comparables".
5. His son Mr Thomas Phippen provides him with a list of comparables and he goes and inspects: "I think most valuers do that". The list of comparables were generated from a database named "Red Square".
6. He could not recall whether he put in the search parameters into "Red Square" to generate a list of sales in this instance: "I can't recall … but it is quite common … I get assistance …".
7. He "possibly" discussed the comparable sales with his son, Mr Thomas Phippen.
8. He could not recall before starting to analyse a large collection of sales, who initially collected the sales.
9. He worked out the adjustments to the sales himself.
I do not derive particular assistance from either of the decisions relied upon by the applicants. In NM Rural Enterprises Pty Limited v Rimanui Farms Limited, [3] the issue in relation to the admissibility of an expert report prepared by Mr McDougall concerned the similarity between the opinions expressed by two different experts Ms Woollams and Mr McDougall, it being contended that Mr McDougall had utilised the opinions of the other expert but with a significant difference that he had failed to refer to them. In those circumstances, Harrison J was satisfied that one expert was the person responsible for all of the opinions expressed in the report prepared by the other expert. Mr McDougall had given evidence to that effect, and explained why Ms Woollams had signed the report. It did not appear to Harrison J that any collaboration between Mr McDougall and Ms Woollams had resulted in the production of a report that was not, or reports that were not, identifiable as genuine opinions of Mr McDougall, or that any such collaboration marked or disguised the extent to which they were not. The facts here are quite different.
The second of the cases relied upon by the applicants, Clear Wealth Pty Limited v Kwong (Clear Wealth) [4] a decision of Rein J in the Equity Division, concerned an objection to the admissibility of an expert report in which there were found to be minor ambiguities, including the use of "we" and the use of the passive voice "it was found" so that it was not clear whether a computer forensic expert had done the work himself or whether someone else did it or assisted him. Rein J found at [9] that while the tasks identified involved expertise in how to inspect and access information on a computer, it was at "the low end of the spectrum of opinion evidence". At [10], Rein J said that in stating what he had observed on the computer, it was not really a matter of "reasoning", but to the extent that it was, he thought it of a category to which the plurality in Dasreef Pty Limited v Hawchar [5] referred to at [37], namely:
That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying "specialised knowledge" based on his or her "training, study or experience", will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered.
When attention was directed to [9] of decision of Rein J in Clear Wealth, Mr Eastman submitted that the highest the questioning by Council rose was to suggest that a list of comparable sales may have been prepared by someone in the office, maybe Mr Peter Phippen's son, and that "this evidence fits entirely within the conclusion in para 9 that this is about computer produced material that is analysed by the expert himself." Further, Mr Eastman submitted, given the circumstance that there are now 5 agreed sales out of the original 22 referred to in the original points of claim filed 5 May 2023 (as reflected in the amended points of claim filed 5 November 2024), this is "at the absolute lowest end of the spectrum".
Despite my considerable reservations concerning a serious non-compliance with the Expert Witness Code of Conduct in relation to critical matters of valuation evidence, in particular the identity of the author of the report on which the applicants seek to rely, which matters I would not place at "the low end of the spectrum of opinion evidence", in light of the evidence given on the voir dire and the fact that the rules of evidence do not apply in Class 3 proceedings, I admit the report of Mr Peter Phippen dated 29 February 2024 over the objections of the respondent.
It will arise on another occasion to determine the weight to be attached to the evidence of Mr Peter Phippen in his report dated 29 February 2024, and generally.
The Court makes the following orders:
1. The report of Peter Irwin Phippen dated 29 February 2024 is admitted over the objections of the respondent.
2. The Court is adjourned until 10am tomorrow, Thursday, 7 November 2024.
(2011) 243 CLR 588; [2011] HCA 21 at [37] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).
[3]
Amendments
07 November 2024 - Correction of typographical error on coversheet.
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Decision last updated: 07 November 2024