Coyne v Calabro

[2009] NSWSC 1023

CITATION:	Coyne v Calabro [2009] NSWSC 1023
HEARING DATE(S):	15/09/09
JUDGMENT DATE :	18 September 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
DECISION:	Refer to paras 23 and 24 of judgment.
CATCHWORDS:	EVIDENCE – expert evidence – single expert appointed – communication took place between appointed expert and party which should not have occurred – significant differences in opinion between appointed expert and expert separately engaged by the defendants - leave to adduce further expert evidence
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005 (NSW)
CATEGORY:	Procedural and other rulings
CASES CITED:	Tomko v Tomko [2007] NSWSC 1486 Wu v Statewide Developments Pty Ltd [2009] NSWSC 587 Daniels v Walker [2000] 1 WLR 1382 Cosgrove v Pattison [2000] All ER (D) 2007
PARTIES:	Terence Michael Coyne & 1 Or v Grazia Rita Calabro & 1 Or
FILE NUMBER(S):	SC 2817/08
COUNSEL:	Plaintiffs: P Barham Defendants: J Ireland QC with J S Cooke Cross-Defendant: A P LoSurdo
SOLICITORS:	Plaintiffs: Comino Prassas Defendants: Pikes Lawyers Cross-Defendant: Lander & Rogers Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Friday, 18 September 2009

2817/08 Terence Michael Coyne & 1 Or v Grazia Rita Calabro & 1 Or

JUDGMENT

1 HIS HONOUR: One of the significant issues in these proceedings is the value of the subject property as at 6 May 2008. Some parties contend that the value of the property at other dates is also relevant to questions of damages.

2 The defendants filed an affidavit of Mr Jason Field, a practising valuer, sworn 10 December 2008. He exhibited to his affidavit a valuation report he prepared on 14 November 2008. He valued the subject property as at 6 May 2008 at $5 million. No application was made under r 31.19 of the Uniform Civil Procedure Rules 2005 (NSW) for directions in relation to the adducing of expert evidence at the trial.

3 On 20 April 2009 for reasons which I then gave I acceded to an application by the plaintiffs pursuant to r 31.37 for an order that a single expert be engaged by the parties jointly to value the property as at each of the dates any of the parties contended to be relevant. I stood the proceedings down to a convenient time for the parties to consult further on the identity of the person to be appointed as the single expert and to consult upon the terms of his or her instructions. The plaintiffs’ solicitors submitted to the other parties the names of three valuation firms as potential appointees as a single expert. On 30 April 2009 I made orders appointing Mr Danny Sukkar of LandMark White to be engaged jointly by the parties as the parties’ single expert in the proceedings. I directed that the instructions to the valuer include a direction that any communication seeking further instructions or clarification should be done in writing with a copy to each party’s solicitor. That statement was duly included in the instructions to Mr Sukkar. The letter of instructions also advised him that:

“ All parties [scil. parties’ solicitors] have been directed by the Court to inform their clients in writing of their obligations not to communicate with you either directly or indirectly. Also any parties’ solicitors who wish to communicate with you have been directed by the Court to do so only in writing after first providing a copy to the solicitors for the other parties and obtaining consent to any such communication. ”

4 Mr Sukkar’s valuation report assessed the market value of the subject property as at 6 May 2008 to be $6.25 million. He also provided valuations as at three other dates which one or other of the parties contends to be relevant.

5 Malouf Real Estate Pty Ltd is a cross-defendant. It acted as one of the selling agents for the plaintiffs on the sale of the property to the first defendant. Its director, Mr William Malouf, acted in the matter.

6 In giving his opinion of the subject property’s market value as at 6 May 2008 Mr Sukkar said that “the most appropriate method of valuing a residential property is via the direct comparison method whereby sales of similar properties are directly compared to the subject in determining a current market value.” He said that he had particular regard to four sales between May 2007 and June 2008 which he described. He then said:

“ In light of these details and with regard to the aforementioned sales evidence I have assessed the market value as at 6 May 2008 to be $6,250,000 (free of GST).
Furthermore, to clarify the events leading to the May 2008 sale I have met with the selling agent, Mr Bill Malouf of LJ Hooker Double Bay. Following my enquiries regarding offers for the subject property, it was ascertained that an initial offer of $6.25 million was submitted by L & D Mulham in April 2008, and that a second offer of $6.15 million was made by Mrs Calabro. Mr Malouf informed Mrs Calabro that her offer was lower than a current offer of $6.25 million and invited both parties to submit written offers the following day. Mulham maintained his offer of $6.25 million, whereas Calabro increased her offer to $6.455 million, hence the sale was agreed at the higher price on 6 May 2008.
The adopted value of $6,250,000 is supported by the abovementioned offers at the time of sale. ”

7 I was told that Mr Malouf had been advised by his solicitor of the court’s direction not to communicate with the valuer, but I understand he responded to Mr Sukkar’s approach.

8 I do not understand there to be a dispute as to the matters which Mr Sukkar says he ascertained from Mr Malouf, in the sense that I do not understand there to be a dispute that offers in the amounts stated were submitted by the parties stated at or about the times stated. However, there is an issue as to the true value of the offer of $6.25 million submitted by L & D Mulham. The defendants say that the true value of the offer was affected by its having been made on the basis of an extended settlement period.

9 The plaintiffs and the cross-defendant say that that fact, and the facts described by Mr Sukkar in the paragraph quoted above, appear in the pleadings and the affidavits with which Mr Sukkar was provided. They also submit that Mr Sukkar only used the evidence of the offers as confirmation of the value he had independently assessed.

10 The defendants submit that the communications between Mr Malouf and Mr Sukkar have undermined Mr Sukkar’s position as a single expert and that his views cannot be considered to be independent or impartial. They submit that his role as a single expert has become untenable. They say they are not in a position to know exactly what was communicated between Mr Malouf and Mr Sukkar.

11 I do not understand the defendants to submit that Mr Sukkar’s report should not be received. For the reasons which follow, I would not in any event be prepared at this juncture to exclude his report on the basis of the communication between him and Mr Malouf. The defendants submit that they should now be given leave to rely upon the valuation of Mr Field which was exhibited to his affidavit of 10 December 2008. They do not seek any wider leave.

12 Where a single expert is appointed pursuant to r 31.37, the parties may not adduce evidence of any other expert on any issue arising in the proceedings if the parties’ single expert has been engaged in relation to that issue unless the court gives leave (r 31.44). In Tomko v Tomko [2007] NSWSC 1486, Brereton J said (at [9]) that where some arguable basis is shown for challenging the report of the single expert, the court should be disposed to grant leave lest trial by judge be supplanted by trial by single expert. In Wu v Statewide Developments Pty Ltd [2009] NSWSC 587, his Honour identified three guidelines relating to the exercise of the discretion whether to grant leave under r 31.44. After referring to Daniels v Walker [2000] 1 WLR 1382 at 1387; Cosgrove v Pattison [2000] All ER (D) 2007; and Tomko v Tomko, his Honour said (at [17]):

“ These cases establish, at least as guidelines, the following:

• An order for a single expert is a first step, not necessarily the last word on the topic. While the magnitude of the case will influence the court’s willingness to permit further reports, having regard to considerations of proportionality, the process was not intended to substitute trial by expert for trial by court.
• It will be a significant factor in favour of permitting further exert evidence if the existence of a competing respective expert opinion can be shown.
• It will be a significant factor in favour of permitting further expert evidence if otherwise the party affected would have a legitimate sense of grievance that it had not be permitted to advance its case at trial. ”

I accept those guidelines.

13 The defendants not only point to a competing valuation, they also point to the fact that there was communication between the single expert and a party which ought not to have occurred.

14 Certainly, the communication should not have occurred. Where a single expert is appointed there is every chance that her or his opinion will be determinative of the issue submitted to her or him. Whilst parties have a right to cross-examine the single expert, they need leave to adduce other expert evidence on the issue. For justice to be seen to be done it is important that there be no unauthorised private communications between a party and a single expert jointly retained by all parties. A party adversely affected by the single expert’s opinion (which might be determinative of the issue) may justly complain that he does not know of all that passed between the expert and the other party. He may apprehend and complain that the case was not decided openly on the evidence. Express instructions to the expert and directions to the parties were given to avoid just such a situation as has now arisen.

15 It may well be, as the plaintiffs and cross-defendants submit, that nothing passed between Mr Malouf and Mr Sukkar beyond confirmation of the submission of offers about which there is no dispute, and of which Mr Sukkar was already informed by the materials provided to him by the parties with his letters of instruction. It may also be that the communications did not have any material effect on the opinion of value he formed.

16 Counsel for the defendants submits that it should be inferred from Mr Sukkar’s analysis of one of the sales he used as a directly comparable sale that his conversation with Mr Malouf caused him to increase substantially his opinion of value. The cross-defendants dispute that Mr Sukkar’s report is properly open to the construction the defendants seek to give it. I do not propose to go into that issue. It is sufficient to say that prior to the trial and cross-examination of the persons involved, I cannot be sure of the full extent of the communications between Mr Sukkar and Mr Malouf, nor assess what effect, if any, such communications might have had upon the formation of Mr Sukkar’s opinion as to value. In those circumstances, the defendants would have a legitimate grievance if they were refused leave to adduce other expert evidence on the same issue. Allowing the parties to adduce further expert evidence means that expense will be incurred which it was hoped might be avoided by Mr Sukkar’s appointment. That is an unfortunate consequence. But it does not outweigh the requirements of open justice.

17 On the other hand, I do not consider that Mr Sukkar’s report should be excluded because of his contact with Mr Malouf in the course of undertaking his valuation. I would exclude his report if I were satisfied that his impartiality was compromised, but I draw no conclusion about that question in advance of the trial. As the parties will have leave to call other expert evidence on the same issue, Mr Sukkar’s opinion will not be determinative of it. His evidence will not carry any greater weight because of his appointment as a single expert. The process of justice will not be tainted. There can be no apprehension that the issue of value will be tried otherwise than by the judge.

18 A further reason for granting the defendants leave to rely on the affidavit of Mr Field is the significant differences between the opinions of each valuer. There is a substantial difference of opinion as to the value of the property as at 6 May 2008. As might be expected from that difference, there is a difference between the valuers as to what sales should be considered as directly comparable sales. I think that is another significant factor in favour of permitting further expert evidence.

19 The plaintiffs submit that there is serious doubt whether or not Mr Field’s report should be admitted into evidence. I understand it to be common ground that Mr Field had been retained by the National Australia Bank to value the property and did so on 29 August 2008. The plaintiffs submit that Mr Field’s original report to the National Australia Bank contained no statement concerning the Expert Witness Code of Conduct. They submit that having prepared that opinion for a different purpose, Mr Field would be unlikely to back away from it for the purposes of these proceedings. They submit that as it is unlikely that his earlier report would be admitted into evidence, his later report should be rejected as it is clearly built on, and arises out of, the earlier report.

20 Moreover, whilst Mr Field’s affidavit of 10 December 2008 includes his testimony that he has read the Expert Witness Code of Conduct which is Schedule 7 to the Uniform Civil Procedure Rules and agrees to be bound by the Code, his valuation report of 14 November 2008 exhibited to that affidavit appears not to contain that statement. If the report does contain that statement, it has not been drawn to my attention. Rule 31.23(3) provides that:

“ Unless the court otherwise orders, an expert’s report may not be admitted in evidence unless the report contains an acknowledgment 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. ”

21 These matters go to the admissibility of Mr Field’s report. I do not propose to go into them in advance of the hearing. There may well be additional evidence upon which the defendants would wish to rely on to establish the admissibility of Mr Field’s report. In my view, the defendants should have leave pursuant to r 31.44 to adduce evidence of Mr Jason David Field, being his affidavit of 10 December 2008. In giving leave to the defendants to adduce that evidence, I say nothing as to the admissibility of the evidence sought to be adduced. I express no view as to whether an order should be made under r 31.23(3), if such an order is needed for the report to be admissible.

22 The plaintiffs and the cross-defendant should also have leave to adduce expert evidence on the issues which are the subject of Mr Sukkar’s report. Any further reports of experts should be provided within a sufficient time to enable all of the experts to confer to endeavour to reach agreement on any matters in issue, to identify those matters upon which they are agreed, and those upon which they are not agreed, and to identify the reasons for any disagreement. I expect that I will make orders under r 31.24 for that purpose in order to facilitate the evidence of the experts being taken concurrently.

23 For these reasons I give leave pursuant to r 31.44:

(a) to the defendants to adduce evidence from Mr Jason David Field by way of his affidavit sworn 10 December 2008 and his valuation report which is exhibit JDF-1 to that affidavit;

(b) to the plaintiffs and cross-defendant to adduce evidence from a valuer or valuers (but not more than one valuer to be retained by the plaintiffs on the one hand or cross-defendant on the other) on the issue of the value of the property at 2A Gillivar Avenue, Vaucluse, New South Wales on an arm’s length basis between a willing but not anxious buyer and a willing but not anxious seller at each of the following dates:

6 May 2008
15 September 2008
2 October 2008
the date on which the valuer prepares his or her expert report.

24 I order that any further expert report to be adduced by the plaintiffs or the cross-defendant be served and a copy provided to my Associate within 28 days. I list the matter for directions before me on 20 October 2009 at 9.30am for the purpose of giving directions pursuant to r 31.24. The parties should advise any experts retained by them whose report will be tendered that they will be expected to be available for a joint conference in the week commencing 19 or 26 October 2009. I direct the plaintiffs’ solicitors to notify Mr Sukkar that I envisage making an order for a joint conference of experts to be held prior to 30 October 2009 to enable a joint report to be prepared by the week commencing 2 November 2009.

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