Ballard v Brookfield Multiplex Ltd

[2010] NSWSC 1460

CITATION:	Ballard v Brookfield Multiplex Ltd [2010] NSWSC 1460
HEARING DATE(S):	16 - 19 November 2010
JUDGMENT DATE :	21 December 2010
JUDGMENT OF:	Smart AJ
DECISION:	Report of 23 December 1996 of Mr Ian McIntyre of EPM not admitted as to previous representations - see section 135 of Evidence Act 1995.
CATCHWORDS:	VOIR DIRE - inability of defendants to cross examine adequately due to 14 year lapse of time and lack of recollection - McIntyre reliant for facts on B Young, co-director of Stoneglow Pty Ltd (not being called) and P Hammond (similarly affected by lapse of time and lack of recollection) - admission of report of 23 December 1996 containing previous representations unfairly prejudicial - non-compliance with UCPR 31.17 - 29 - provisions apply to any expert report, in substance, sought to be relied on - not appropriate to otherwise order under UCPR 31.23(3) or to give leave under UCPR 31.28(3) where s 135 applied to report and previous representations
LEGISLATION CITED:	Evidence Act 1995 Uniform Civil Procedure Rules
CATEGORY:	Procedural and other rulings
CASES CITED:	Agricultural and Rural Finance Ltd v Atkinson [2010] NSWSC 635 ASIC v Rich [2005] 53 ACSR 752 Hansen Beverage Co v Bickfords Australia Pty Ltd [2008] FCA 406 Investmentsource v Knox Street Apartments [2007] NSWSC 1128 Makita v Sprowles (2001) 52 NSWLR 705 Re Enviro Energy Australia Pty Ltd (in liq) [2010] NSWSC 1217 Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 Roach v Page (No 15) [2003] NSWSC 939 Shoshana Pty Ltd v 10th Cantanae Pty Ltd (1987) 18 FCR 285 State of NSW v Mannall [2005] NSWCA 367 Supetina Pty Ltd v Lombok Pty Ltd (1984) 5 FCR 439 Waterwell Shipping Inc v HIH Casualty and General Insurance Ltd, unreported, Supreme Court, NSW, Giles CJ Com D, 8 September 1997
TEXTS CITED:	Odgers Uniform Evidence Law 9th Edition
PARTIES:	David Ballard (Plaintiff) Brookfield Multiplex Limited (First Defendant) Multiplex Corporate Agency Pty Ltd (Second Defendant) Construction Forestry Mining and Energy Union (Third Defendant) Construction Forestry Mining and Energy Union, NSW Branch (Fourth Defendant) Andrew Ferguson (Fifth Defendant)
FILE NUMBER(S):	SC 2007/266587
COUNSEL:	AJ Bannon SC, J Duncan and E Elbourne (Plaintiff) AS Bell SC and I Pike (First & Second Defendants) BC Oslington QC and J Pearce (Third, Fourth & Fifth Defendants)
SOLICITORS:	Sagacious Legal (Plaintiff) Clayton Utz (First & Second Defendants) Taylor & Scott (Third, Fourth & Fifth Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Smart AJ

Tuesday 21 December 2010

2007/266587 David Ballard v Brookfield Multiplex Limited & Ors

JUDGMENT – Voir Dire

1 HIS HONOUR: A number of arguments arose as to the admissibility of evidence sought to be led by the plaintiff. They concerned primarily the admissibility of the report of Mr Ian McIntyre, a civil engineer, who has worked in the construction industry since 1979 and was at all relevant times a principal of Evans and Peck Management (“EPM”). He has had extensive experience in valuing building works in the course of their construction. The works principally the subject of the dispute involved demolition work at the Sydney Central Plaza (the former Myer Store, with frontages to Pitt Street Mall, Market Street and George Street, Sydney) in the heart of the city’s retail shopping area. Multiplex was the principal contractor and Stoneglow Pty Ltd was the demolition sub-contractor. The plaintiff did not wish to tender the report of Mr Peter Hammond, a quantity surveyor, if Mr McIntyre’s report was rejected. Mr McIntyre’s report was more favourable to the plaintiff and Stoneglow, particularly as to variations, than that of Mr Hammond. Nevertheless, some reference will be made to the evidence given by Mr Hammond on the voir dire and his file notes (mostly of November – December 1996).

Section 69 Evidence Act

2 The plaintiff read the affidavit of Ian McIntyre of EPM of 10 November 2009, his resume, sundry notes, his draft appraisal of 27 November 1996 (Exhibit IM-1) and his valuation report of 23 December 1996 (his final report – Exhibit IM-2) and annexures. There was also the statement of Mr McIntyre of 16 November 2010. Amongst other matters that elaborated on his valuation experience, Mr McIntyre gave evidence and was cross-examined for about an hour in total. His experience has included the costs and value of variations and assessing the reasonable costs of work carried out and delay costs.

3 On the voir dire the plaintiff read the affidavit of Peter Hammond of 2 November 2009, his resume, sundry file notes made by him and his report /reconciliation of 13 November 1996, being pages 11 – 27 of Exhibit PDH-1 and referred to later. There was also the statement of Mr Hammond of 16 November 2010. He gave evidence and was cross-examined for about an hour. Mr Hammond was a principal of Napier & Blakely Limited and was in charge of its Quantity Surveying Services. He had extensive experience in assessing the costs of construction.

4 To prepare his reconciliation of 13 November 1996 Mr Hammond spoke with Mr Young at length. He also spoke with Mr Ballard. He spoke with officers of Multiplex and inspected the site. In all he spent some 48 hours on the site. He did a lot of his work there.

5 On 29 November 1996, at Mr McIntyre’s request, Mr Hammond conferred with Mr McIntyre at length. Mr Hammond thought that Mr Young left after a few hours whereas Mr McIntyre thought that he remained for most, if not all, of the day. Mr B Young, a co-director of Stoneglow, had a detailed knowledge of what occurred on site.

6 As a result of the lengthy conference and further information Mr Hammond revised his assessments and estimates as contained in his 13 November 1996 reconciliation. Mr McIntyre incorporated Mr Hammond’s revised estimates and assessment in his (McIntyre’s) final report of 23 December 1996. Mr Hammond’s revised assessments and estimates were communicated to Mr McIntyre informally about 9 December 1996.

7 On 19 November 2010 the plaintiff specified the s 69 representations on which he sought to rely thus:

“ Evans & Peck Management Report 23 December 1996
(EPM Report) (IMH 2)

1. A representation by McIntyre that the value of Contract Work Completed by Stoneglow on the Sydney Central Plaza Project was $2,262,270 (IM – 2 handwritten p32, typed p 30).

2. A representation by McIntyre that the value of variations net of back charges on the Sydney Central Plaza Project was $653,322 (IM – 2 handwritten p32, typed p 30).

3. A representation by McIntyre that the value of Contract Work Completed by Stoneglow on the Sydney Central Plaza Project plus the value of variations net of back charges less the amount paid to date was $1,317,192 (IM - 2 handwritten p 32, typed p 30).

4. A representation by McIntyre that the value of Contract Work Completed by Stoneglow on the Sydney Central Plaza Project plus the value of variations net of back charges less the amount paid to date together with an assumed amount due on Chatswood Chase Project of $147,864 and an assumed amount due on Grace Plaza Project of $29,610 was $1,494,666 (IM – 2 handwritten p 33, typed p 31).

5. A representation by McIntyre that in respect of each numbered item appearing under the heading “Item No” in Table 1 of the EPM Report, the value of the work not completed by Stoneglow at the Pitt Street Mall site and described by reference to that item number under the headings ‘Description’ and ‘Relevant Facts Reported to EPM by B Young and/or P Hammond’, was the amount appearing next to such item under the heading ‘EPM Valuation of Work Not Complete 29 November 96’.

6. A representation by McIntyre that in respect of each numbered item appearing under the heading ‘Item No’ in Table 3 of the EPM Report, the value of the work constituting work described by reference to that item number under the headings ‘Description’ and ‘Relevant Facts Reported to EPM by B Young and/or P Hammond’, was the amount appearing next to such item under the heading ‘EPM Valuation’.

7. A representation by Hammond as at 9 December 1996 that in respect of each numbered item appearing under the heading ‘Item No’ in Table 1 of the EPM Report, the value of the work not completed by Stoneglow at the Pitt Street Mall site and described by reference to that item number under the headings ‘Description’ and ‘Relevant Facts Reported to EPM by B Young and/or P Hammond’, was the amount appearing next to such item under the heading ‘P Hammond Valuation of Work Not Complete 9 December 96’.

8. A representation by Hammond as at 13 November 1996 that in respect of each numbered item appearing under the heading ‘Item No’ in Table 3 of the EPM Report, the value of the work constituting work described by reference to that item number under the headings ‘Description’ and ‘Relevant Facts Reported to EPM by B Young and/or P Hammond’, was the amount appearing next to such item under the heading ‘P Hammond Valuation 13 November 1996’.

9. A representation by Hammond as at 9 December 1996 that in respect of each numbered item appearing under the heading ‘Item No’ in Table 3 of the EPM Report, the value of the work constituting work described by reference to that item number under the headings ‘Description’ and ‘Relevant Facts Reported to EPM by B Young and/or P Hammond’, was the amount appearing next to such item under the heading ‘P Hammond Valuation 9 December 1996’.

Hammond Report PDH1 pp11-27

10. A representation by Hammond as at 13 November 1996 that the value of the work completed by Stoneglow at the Pitt Street Mall site was $2,019,815.”

8 It will be seen that in sub-paragraphs 7 – 10 (both inclusive) that the plaintiff purports to rely on the representations made by Mr Hammond. As the plaintiff does not propose to tender Mr Hammond’s report or seek to lead evidence from him, representation 10 can be excluded from consideration.

9 Mr McIntyre has recorded that Mr Hammond’s revised estimate of the value of the contract works completed has increased by $178,990 over his 13 November 1996 estimate, that the EPM 29 November 1996 evaluation of contract work completed (as embodied in his 23 December 1996 report) is $63,465 more than the P Hammond 9 December 1996 valuation and $281,060 greater than the Multiplex 13 November 1996 valuation.

10 Table 3 – Value of Variations to Mr McIntyre’s report of 23 December 1996 reveals large differences:

EPM Valuation	Multiplex Valuation 13 Nov 96	P Hammond Valuation 13 Nov 96	P Hammond Valuation 9 Dec 96
$653,322	(266,466)Dr	$7,929	$152,421

11 The history of events between 7 November 1996 and 19 November 1996 can be traced from the file notes made by Mr Hammond and his letter of 19 November 1996.

12 As a result of an intense amount of work (59 hours) Mr Hammond prepared a document dated 13 November 1996 and headed “Sydney Central Plaza Stoneglow Account Reconciliation” (“13 November Reconciliation”), (pp 11 – 27 of Exhibit PDH-1). Mr Hammond’s recollection is that between 7 and 13 November 1996 his work included inspecting documents made available to him by both Multiplex and Stoneglow for the purpose of his engagement and that he also inspected the site of the Pitt Street project and held discussions with representatives of Multiplex and Messrs Ballard and B Young on behalf of Stoneglow. Mr Hammond did not keep copies of documents that he inspected, although he has kept in the file and his workbook some notes of information taken from some of those documents and discussions. He no longer has any independent recollection of the contents of any documents that he inspected or of his discussions or site inspections. As to his 13 November reconciliation, Mr Hammond states:

“Part A records the effect of the original contract pertaining to the Pitt Street Project, particularly as it related to the split between the first and second stages of the Pitt St Project. Part B gives a valuation of the work that had been completed under both the original contract for the Pitt Street Project and any variations about which I had been informed by Multiplex or Stoneglow. The information in the column headed ‘Multiplex’ was taken by me from documents …”

inspected by him and made available by both Multiplex and Stoneglow, of which he did not keep copies. The information in the column headed ”Stoneglow” was taken by Mr Hammond from documents provided to him by Stoneglow. He did not keep copies of these. Mr Hammond said that, subject to one qualification, “the information in the column headed PH consists of his opinions as to the value of the work described”. The qualification relates to variations 4(a), 4(c), 16, 37 and 69(a). The amounts relating to each of these variations set out in the column headed “PH” were arrived at during a discussion between him and Raymond Yeo of Multiplex. (Mr Yeo was the contract administration officer of Multiplex for the Pitt Street project.) He was under Mr R de Bono, the project manager. Mr R Murphy was the construction manager for Multiplex. Mr Yeo attended to matters of cost.

13 Mr McIntyre has a file note of 20 November 1996 stating that he had received a request from Mr Gibara, the solicitor for Stoneglow, that he “[r]eview Stoneglow situation (?valuation) and information” and “[p]repare a Report on Valuation of Outstanding Issues, [d]iscuss outstanding issues with Multiplex and try to facilitate an agreement between Stoneglow/ Multiplex to resolve issues outstanding following contract termination”. Close to the name “G Gibara” appears the name “B Young”. Mr Young was an effective half-owner of Stoneglow through his company.

14 On an Assignment Plan, prepared and verified by Mr McIntyre on 20 November 1996, he has written, “work with BY at every stage”.

15 About 27 November 1996 Mr McIntyre prepared a draft report. This was superseded by his final report of 23 December 1996. The parties sensibly concentrated on the final report of Mr McIntyre of EPM. I shall do likewise as the draft report and the final report differed significantly.

16 On 29 November 1996, probably at the request of Mr McIntyre, he, Mr Hammond and Mr Young conferred. As mentioned, it was Mr Hammond’s recollection that Mr Young was briefly involved and that most of his time on that day was spent with Mr McIntyre. Mr Hammond had recorded “PH continued discussion with IMcI after BY departure”. Mr McIntyre told Mr Hammond matters which Mr McIntyre had been told by Mr Young in part (T 2550). Mr Hammond saw the request of Mr McIntyre to assist in the latter’s review as an opportunity to have his final conference with Stoneglow to check the figures in his report/ reconciliation. Mr Hammond has made this further note:

“IMcI will forward copy of report adjusted for todays meeting – he … will discuss with Ron Murphy.”

Mr Hammond has also made this note:


“Ron Murphy call (lasted 45 mins)

Ron was hostile and believed PH allowing Stoneglow to review PH’s values was (?illegible) if PH was then liable to modify. Much discussion – eventually Ron accepted that report could be submitted to Multiplex and they would ‘consider’”

There are these further notes of Mr Hammond:


“Ian requested PH input his values against those on his report

Note PH values are estimates where site reassessmt could be required, or further details from Multiplex required.

NOT DEFINITIVE”
“9/12.96 PH values finished put against Report.
Copies to IMcI and B Young.”

17 On 23 December 1996 Mr McIntyre finalised his “Report on Valuation of Outstanding Issues” as to the Sydney Central Plaza Project, Chatswood Chase Project and Grace Plaza Hotel Project. In that report Mr McIntyre wrote “[I]n essence, EPM was asked to carry out an independent assessment of the amount due to Stoneglow on each of the projects … “ and “[t]he amount due assessment tabled by Multiplex differed substantially to the overall assessment made by Stoneglow”.

18 Mr McIntyre said that he viewed the Sydney Central Plaza Project site from the footpath, but he was not able to go onto the site and that necessarily limited his ability in preparing a report. He was largely dependent on Mr Young for the source of his information (T 2565). Mr McIntyre did not have a list of documents he examined. He was unable to specify those documents.

19 In his report of 23 December 1996 Mr McIntyre records carrying out a detailed review over ten hours on 29 November 1996 and “ Mr Hammond was able to provide additional information to that provided by Mr Young which caused the assessment of the value of contract work not carried out to be increased and the likely validity and value of variations and back charges to be assessed by EPM.”

20 Mr McIntyre has written that Mr B Young was interviewed at length and Mr D Ballard to a lesser extent.

21 Mr McIntyre details the review process he undertook and states his conclusion on the basis of that review process and the facts as he understood them.

As to Table 1 of his 23 December 1996 report - “Sydney Central plaza Project – Evaluation of Works Not Complete”, a number of items are described. There is then a column headed “Relevant Facts Reported to EPM by B Young and/ or P Hammond”. It is not made clear which facts were established by Mr Hammond. Neither Mr McIntyre nor Mr Hammond is able to identify the source of the facts after this lapse of time.

22 As to Table 3 of his 23 December 1996 report “Sydney Central Plaza – Value of Variations”, some 134 items are described in varying degrees. Some items relate to back charges. There is a column headed “Relevant Facts Reported to EPM by B Young and/ or P Hammond”. It is not clear which facts were established by B Young and which were established by P Hammond. Neither Mr McIntyre nor Mr Hammond is able to identify the source of the facts after this lapse of time. There are columns headed:

EPM
Valuation Multiplex Valuation
13 Nov 96 P Hammond Valuation
13 Nov 96 P Hammond Valuation
9 Dec 96

23 Mr McIntyre has reported that relevant facts as to variations reported by Mr Young have been recorded and an assessment of the reported facts and details made, as set out in annexure 1 to the EPM report. Mr McIntyre has written that, in the course of his review, it became apparent that some other variations not listed on Annexure 1 had occurred (items 125 – 133 in Table 3).

24 Mr McIntyre has written:

“Subsequently, each of the variations and back charges was reviewed with Mr Hammond and Mr Young on 29 November 1996. Mr Hammond was able to clarify the situation in relation to many items and valuations were adjusted accordingly.”

25 The first and second defendants pointed to items where the claims for labour (hours worked) were probably supplied by Mr Young – item 5, Table 3, for example. Mr McIntyre agreed that, in his table of variations, he included large amounts for delay and that, for these claims, he was dependent on the integrity of the factual information of Mr Young.

26 As to Table 3 item 4(a) Mr McIntyre did not set out the facts as he understood them. He accepted that he had not set out his reasoning.

27 As to items 34 and 38 of Table 3, in the absence of better information Mr McIntyre adopted the Stoneglow position. As to item 40, Mr McIntyre adopted Mr Hammond’s estimate in the absence of detail.

28 As to item 62, Mr McIntyre agreed that he had assumed the correctness of what he had been told by Mr Young about that matter.

29 As to items 69(a) and 70, Mr McIntyre simply accepted Stoneglow’s denial of liability. Both items related to claims for delay and back charges made by Multiplex.

30 As to item 124 Multiplex has claimed a back charge of $19,021. Under the heading of “Relevant Facts reported to EPM” is the cryptic entry “Not a Stoneglow responsibility”. No reasoning process is set out which would support that entry and Mr McIntyre did not recall his reasons for that statement.

31 An examination of Table 3, which sets out the value of variations net of back charges as $653,322, indicates that there are serious difficulties on the present evidence treating that as a previous representation.

32 Central to the amount asserted to be due for variations is the amount deducted for back charges. As to items 34, 38, 40, 69(a) and 70 and Table 3, no assessment has been made and Mr McIntyre has mostly adopted Stoneglow’s position because of a lack of evidence or, in one instance, Mr Hammond’s estimate.

33 In item 133, the quantity of 120 square metres for extra concrete, was derived from Mr Young showing Mr McIntyre where it was shown on a drawing and $50 per square metre was the rate for that type of work in late 1996.

34 As to Table 1 – Item 37, Mr McIntyre agreed that he did not set out his reasoning process. I doubt if there would be a detailed reasoning process. These would be matters of impression and assessment on the spot. Similar considerations apply to Item 39.

35 As to item (q), no facts are stated in the Relevant Facts Reported columns for the assessments of EPM and P Hammond as to the value of the work not completed and there is no stated way of resolving the difference. With a small item such as this I would expect it to be resolved on a site inspection and a lack of detailed reasoning. It would be a matter of impression and on the spot assessment.

36 As to item (m), Mr McIntyre assumed that any steel recovered on the project by Stoneglow would be sold for scrap. The estimate that more than 250 tonnes of steel was recovered was that of Mr Young.

37 These were but examples. When both Tables 1 and 3 are studied there appear to be many items where the facts require greater elaboration and the reasoning process needs to be stated. There are some items where the claims (including back charges) are small and a statement of facts and reasoning could not be expected. I would expect them to be assessed in a summary way, at least initially. Otherwise the cost of investigating and assessing them could prove prohibitive.

38 Multiplex submitted that Mr McIntyre’s report should not be admitted because:

(a) it is not admissible as a business record;
(b) it is not a “lay “ opinion;
(c) if the report contains expert opinions within s 79 of the Evidence Act those opinions must comply with the requirements of Makita v Sprowles (2001) 52 NSWLR 705, per Heydon JA; and
(d) the Makita requirements must be satisfied even if an opinion can be admitted as a business record.

39 The Multiplex defendants submitted that the report of Mr McIntyre was not a business record because it neither formed part of the records belonging to or kept by a body in the course of, nor for the purposes of, a business. Further, Multiplex submitted that business records are not the records that are the product of the business itself: Hansen Beverage Co v Bickfords Australia Pty Ltd [2008] FCA 406 at [133] per Middleton J, citing Sperling J in Roach v Page (No 15) [2003] NSWSC 939 and Austin J in ASIC v Rich [2005] 53 ACSR 752 at 794. See also Re Enviro Energy Australia Pty Ltd (in liq) [2010] NSWSC 1217 per White J, and Agricultural and Rural Finance Ltd v Atkinson [2010] NSWSC 635 at [146] per Einstein J. Multiplex further submitted that the report of EPM (McIntyre) was the product or output of EPM and did not have anything to do with the actual business of EPM. The representations were about matters wholly external to EPM.

40 The Multiplex defendants submitted that the EPM report was not made “in the course of or for the purposes of” the business of either Multiplex or Stoneglow (cf s 69(1)(b)). It does not record the business activities of either Multiplex or Stoneglow. Multiplex and Stoneglow simply received a copy or copies of the EPM report, which is irrelevant under s 69. The Multiplex defendants submitted that the report was a bespoken report prepared by outsiders to Multiplex and Stoneglow and had none of the characteristics of inherent liability which underpin the business record exception to the hearsay rule.

41 The Multiplex defendants submitted that, even though an opinion can be a fact for certain purposes, it stretched the language of s 69(5) to say that a person has “personal knowledge” of an opinion. Section 69(2) requires that the person making the representation must have personal knowledge of the “asserted fact”. Under s 69(5) a person is taken to have had personal knowledge of a fact if such knowledge was, or might reasonably be supposed to have been, based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact). The Multiplex defendants submitted that one does not “see, hear or otherwise perceive an opinion”. See Odgers Uniform Evidence Law 9^th Edition at [1.3.2860], p 290 for a supporting analysis.

42 The plaintiff submitted that the proposition that a record which is, or is a copy of, a “product” of a business is per se excluded as a business record is incorrect and does not accord with s 69 of the Evidence Act. Section 69(1)(a)(i) requires that the document “forms part of the records belonging to, or kept by, a person, body or organisation in the course of, or for the purposes of, the business”. The word “kept” is important. Section 69 does not contain an exclusion comprised by documents which are the “product” of a business. The plaintiff submitted that the Multiplex approach cannot stand with the acceptance as business records of third party valuations (Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 per Hely J at [12] – [19], referred to in State of NSW v Mannall [2005] NSWCA 367 at [145], Investmentsource v Knox Street Apartments [2007] NSWSC 1128 at [19] – [22] per McDougall J), a survey report (in Waterwell Shipping Inc v HIH Casualty and General Insurance Ltd per Giles CJ, unreported, Supreme Court, NSW, Giles CJ Com D, 8 September 1997. The plaintiff pointed out that the bank statements are the product of a banking business and have been treated traditionally as business records. The plaintiff relied on Supetina Pty Ltd v Lombok Pty Ltd (1984) 5 FCR 439 at 445 (Spender J) and Shoshana Pty Ltd v 10^th Cantanae Pty Ltd (1987) 18 FCR 285 at 295 – 296 (Burchett J).

43 The plaintiff submitted that the facts in Roach v Page (No 15) [2003] NSWSC 939 (Sperling J), the seminal decision to the contrary of what the plaintiff was advocating, were important. There the record sought to be relied on as a business record for its truth was an article in the journal of an association of mushroom growers. An outcome in that case that the truth of statements in a magazine should not be received as evidence of the facts is understandable. Nevertheless, in ASIC v Rich Austin J adopted the distinction between the records of the business and the products of the business at [180] – [182]. See also [186] and [193] for the actual decision. Copies of the liquidator’s reports retained on the file were held to be records of the company’s (OneTel) business.

44 The plaintiff, relying on the remarks of Handley JA in Rich v ASIC 54 ACSR 365 at [13], submitted that the principles in Makita v Sprowles did not apply to out of court statements by experts in business records, even if such statements do have to meet the standard in s 79 of the Evidence Act. It would seem that the opinions of Mr McIntyre reflected and resulted from his specialised knowledge based on his training, study and experience. In Rich v ASIC at [13], Handley JA, with whom Giles JA agreed, said:

“It is far from clear that these principles [stated by Heydon JA in Makita ] apply with their full force, or at all, to out of court statements by experts in business records even if such statements do have to meet the standard in s 79.”

45 As I had reached the conclusion that the material sought to be tendered should not be admitted because it was unfairly prejudicial under s 135 of the Evidence Act, it is unnecessary for me to express an opinion on the issues earlier raised.

46 The Multiplex defendants submitted that the representations were prepared or obtained in contemplation of an Australian proceeding and should therefore be excluded. The words “prepared or obtained” are important.

47 I am satisfied on the balance of probabilities that Mr McIntyre of EPM did not prepare his report of 23 December 1996 in contemplation of litigation. He understood that he was preparing a report that would be used to assist with reaching a negotiated solution. He did not regard the institution of proceedings as reasonably likely.

48 I do not think that either Stoneglow or Mr Ballard obtained the report of EPM (McIntyre) in contemplation of an Australian proceeding. While there was the usual “huffing and puffing”, Mr Ballard and Stoneglow were wary of commencing proceedings. The costs of an arbitration would have been a major deterrent. Parties tend to be very conscious of these and the difficulty in predicting the outcome and this was the situation in 1996 – 1997. A negotiated solution was, and is, much preferred. In construction cases negotiations are often prolonged and interspersed with threats of proceedings. The Multiplex defendants referred to the events that took place from 1 November 1996 onwards, including the Notices given by Stoneglow, the letters it wrote and statements made. The Multiplex defendants submitted that the rejection of the figure determined by Mr Hammond and the hiring of Mr McIntyre by Stoneglow marked the end of any semblance of a consensual process between the parties to attempt to resolve the issue of what was owing to Stoneglow and that the logical end point of that new process was litigation between Multiplex and Stoneglow. That may have been the way the matter was viewed by Multiplex but I do not think that either Stoneglow or Mr Ballard approached the matter with that view. They anticipated that, on the preparation and delivery of Mr McIntyre’s report, further negotiations would occur. Stoneglow, Mr Ballard and Mr McIntyre did not anticipate the rejection of the EPM report of 23 December 1996.

49 I do not accept that the litigation anticipated by some of the officers of the Multiplex defendants was only avoided by Stoneglow’s liquidation and the liquidator compromising the claim with Multiplex. In my opinion Stoneglow and Mr Ballard did not contemplate litigation but pursued their expectations of a negotiated solution. The liquidator did not, it seems, have the funds to commence proceedings and Mr Ballard did not volunteer any funds. The liquidator appears to have been concerned to recover the costs and expenses of the liquidator.

50 In my opinion there was no contemplation of litigation on the part of either Stoneglow or Mr Ballard. Stoneglow had no money and could not pay its workers. Mr Ballard was not prepared to contribute funds by utilising his other assets. Mr Ballard held the simple belief that Stoneglow had done good work in a difficult demolition and should be paid. He claimed to rely on Mr Murphy’s statement that, if Stoneglow carried out certain remaining demolition, it would be paid all it was owed, including variations. I am satisfied on the balance of probabilities that the representations were not prepared or obtained in contemplation of an Australian proceeding.

51 I reject the proposition that s 69(3) applies to the representations.

Non-compliance with UCPR

52 The Multiplex defendants complained that the plaintiff had not complied with UCPR 31.17 – 29. Mr McIntyre’s report was prepared in November/December 1996 and finalised about 23 December 12996. This was long before UCPR 31.17 – 29, or the earlier version of those rules, or their predecessor, SCR Pt 36 R 13C, came into force.

53 Instead of obtaining leave or directions under UCPR 31.19, the plaintiff served a copy of the affidavit of Ian McIntyre of 10 November 2009 which stated that he had worked in the building and construction industry since 1979. Annexed to that affidavit were:

a) a copy of his CV setting out his study and training as a civil engineer, his extensive professional experience as a civil engineer, which included engineering management, planning scheduling and construction systems design and project management. He has been involved in major civil engineering and in the use of multi-disciplinary resources on projects. He has had considerable experience in the analysis of the reasons for project delivery problems. Consulting assignments have covered a wide range of infrastructure, systems integration and building projects;
b) a copy file note of 20 November 1996 made by him as to the engagement of Evans & Peck Management;
c) a copy of an Assignment Data Form of 20 November 1996. This records that EPM (per McIntyre) was engaged by Stoneglow “to prepare a contract claim review and to provide advice and opinions in respect of that claim (‘the Stoneglow assignment’).” Mr McIntyre recalled that the claim related to three projects including a substantial project known as the “Sydney Central Plaza Project”;
d) copy Assignment Plan of 20 November 1996; and
e) copy Assignment Record.

Exhibited to Mr McIntyre’s affidavit and marked IM-1 was copy draft report of 27 November 1996 and IM- 2 – copy Final Report of 23 December 1996.

54 Included in Mr McIntyre’s statement of 16 November 2010 are details of his experience in costing, calculating the value of work done to the date of the valuation and preparing estimates of costs to complete the project under consideration. He has also had experience in assessing the cost of defects in projects and the costs of alterations and changes and alterations in projects.

55 The Multiplex defendants submitted that there was nothing on the face of the report of 23 December 1996 or in the affidavit of Mr McIntyre of 10 November 2009 to put the defendants on notice that the plaintiff was relying on the report of 23 December 1996 as an expert report.

56 While there is nothing expressly stating that the plaintiff was relying on the EPM report as an expert report, it appears on its face in substance to be an expert report, although it does not comply with UCPR 31.17 – 29.

57 The plaintiff submitted that, once the affidavit of 13 November 2009 of Mr Tony Samuel of LEGG Limited was served, the defendants must have realised that the plaintiff was relying on the EPM report as an expert report. Annexed to the affidavit is Mr Samuel’s report of 13 November 2009. I have noted the contents of that report. I have paid attention to paragraphs 1(e), 2, 15, 17, 22 and 22(c). I have noted that Mr Samuel referred to demolition data provide by Multiplex.

58 It is apparent from reading Mr Samuel’s report that he placed reliance on the EPM report and assumed that the financial conclusions reached in that report were correct. On studying Mr Samuel’s report, it would probably have occurred to the first and second defendants and their legal advisors that the plaintiff was intending to rely upon the report of 23 December 1996 of EPM as an expert report.

59 However, the plaintiff should have made his position clear. No letter was tendered in which this was done. The defendants should not have been left in a state where they did not know, and were not told, that the plaintiff was relying on the report of 23 December 1996 of Mr McIntyre of EPM as an expert report and that leave would be sought to read and rely upon it at the hearing. Alternatively, orders could have been sought prior to the hearing.

60 Under UCPR 31.27 the expert’s report should include the facts and assumptions of fact on which the opinions in the report are based and the expert’s reasons for the opinion expressed.

61 Under UCPR 31.23(1) an expert witness must comply with the Code of Conduct (Schedule 7).

62 Under UCPR 31.23(3), unless the Court otherwise orders, an expert’s report may not be admitted in evidence unless the report contains an acknowledgement by the expert witness by whom it was prepared that he or she has read the code of conduct and agrees to be bound by it.

63 Mr McIntyre’s report contains no such acknowledgement. It was not required in 1996. Mr McIntyre has since become familiar with the expert codes of conduct in this Court and the Federal Court with their introduction in about 2000. He has written:

“I acknowledge and agree that the evidence that I will provide in this matter will be in accordance with the Expert Witness Code of Conduct (Schedule 7, Rules 31.23). Furthermore, I consider that, in my role as a consultant, over the years I have conducted my consultancy role in accordance with a number of the fundamental precepts underlying the expert code of conduct, in particular in relation to impartiality, and the application of independent and professional judgment. In relation to the work that I carried out in respect of the Sydney Central Plaza project, I consider that I exercised an impartial and independent professional judgment in arriving at the views that I set out in the reports that I prepared.”

64 As he gave evidence on the voir dire Mr McIntyre impressed me as robust and independent. I am satisfied on the balance of probabilities that he could be relied upon in any review he undertook, assessment he made and, in any evidence he gave, to give his own independent, impartial and expert assessment. It is important for an expert witness to prepare his report with the obligations of the Code at the forefront of his mind. That cannot happen in the present case but I am satisfied, having seen and heard Mr McIntyre, that any shortcomings with the situation may properly be repaired. Mr McIntyre may have been mistaken in some instances and he may have made errors due to being given incorrect factual information.

65 However, the lapse of time and his consequent lack of recollection will result in him not being able to identify all the facts on which he relied. Mr McIntyre had two important sources of information, namely, Mr B Young and Mr P Hammond. Mr Young is not going to be called and Mr Hammond is affected by the lapse of time and his lack of recollection of the details after 14 years. It does not appear that the plaintiff will be able to establish the facts on which Mr McIntyre relied, nor that there can be any adequate cross-examination upon them.

66 Mr McIntyre’s report of 23 December 1996 does have value in that it contains an assessment of the value of the work completed as at 29 November 1976 and an assessment of the value of variations and some deductions for back charges based on the costings which then applied. It was a contemporaneous assessment and does not suffer from the disadvantage of having to determine 1996 costings after the event. However, the facts on which it was based need to be established.

67 Since I indicated that I proposed to reject Mr McIntyre’s report on 23 December 1996 under s 135 of the Evidence Act 1995, the plaintiff has attempted to prove his case as to the value of the work completed by reference to claims made by Multiplex under the head contract and assessments made by WT Quantity Surveyors and Colin Ging & Associates, Project Manager under the head contract.

68 Mr Ballard, Mr Young and Stoneglow were hopeful that Mr McIntyre would have produced a substantially more favourable financial result than Mr Hammond had. Mr McIntyre was aware of this and, while he did so, this was not done as a result of any pressure from Messrs Ballard or Young or from Stoneglow but as a result of Mr McIntyre’s independent expert assessment.

69 Whilst I would be prepared to otherwise order under UCPR 31.23(3), as I am satisfied on the balance of probabilities that Mr McIntyre applied the standards embodied in the Code of Conduct in the preparation of his report of 23 December 1996, there is no point in doing so in view of the exclusion of the representations in the report under s 135.

70 Under UCPR 31.21:

“Unless the court otherwise orders, an expert witnesses’ evidence-in-chief must be given by the tender of one or more expert’s reports.”

71 The defendants have been aware since November 2009 that the plaintiff was going to rely on the affidavit of Mr McIntyre of 10 November 2009 and his annexed report of 23 December 1996. Unfortunately, as pointed out in the Judgment of 6 December 2010, that report does not set out all the facts (or assumptions of fact) on which Mr McIntyre proceeded. In some instances he does not appear to have been appraised of all the facts. In some instances his reasons are not stated. There is the further difficulty of proving the facts on which the 23 December 1996 report is based after this lapse of time.

72 UCPR 31.17 – 29 introduced a new regime. It was designed to ensure that the court has control over the giving of expert evidence and to declare the duty of an expert witness in relation to the court and the parties to proceedings.

73 UCPR 31.21 governs the way an expert witness’ evidence-in-chief must be given. This ensures that the opposing party is not taken by surprise and has sufficient opportunity to consider how it will object to, test or meet such evidence. That does not necessarily involve a long period.

74 The plaintiff submitted that reports prepared by expert witnesses in 1996 are not caught by UCPR 31.17 – 29. It could not have been intended to have a retrospective operation.

75 The predecessor to UCPR 31.17 – 29, namely SCR 36.13C contained a specific exemption:

“(4) This rule shall not apply to an expert engaged before this rule commences.”

No similar exemption appears in UCPR 31.17-29. Those rules envisage that expert reports will be prepared for the particular proceeding with the provisions of the Code well in mind and contain the matters specified. UCPR 31.23, the Code (Schedule 7) and UCPR 31.21 are complimentary and form part of the coherent scheme regulating the giving of expert evidence.

76 No application has been made to lead oral evidence from Mr McIntyre, nor, in view of UCPR 31.21, would it be likely to succeed.

77 I reiterate that the preparation of an expert report complying with UCPR 31.17 – 29 does not mean that, in the body of that report, use could not be made of the work done in November – December 1996 and January 1997.

78 Debate occurred as to whether the report of Mr McIntyre of 23 December 1996 should be admitted consequent upon a grant of leave by the Court pursuant to UCPR 31.28. This does not need to be explored further in view of the ruling that the report and the representations it contains should not be admitted – see s 135 of the Evidence Act.

79 The third to fifth defendants left the burden of the argument as to the admission of the McIntyre report to the first and second defendants but supported the approach which they took.

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