Equity 8 Pty Ltd v Shaw Stockbroking Ltd

[2006] NSWSC 1251

CITATION:	Equity 8 Pty Ltd v Shaw Stockbroking Ltd [2006] NSWSC 1251
HEARING DATE(S):	20/11/06, 21/11/06
JUDGMENT DATE :	21 November 2006
JURISDICTION:	Equity
JUDGMENT OF:	Barrett J
EX TEMPORE JUDGMENT DATE:	11/21/2006
DECISION:	Paragraphs admitted
CATCHWORDS:	EVIDENCE - relevance - expression of opinion by market participant about market practice - where pleading particularises allegation of market practice by reference to statutory analogies - opinion evidence - where witness not retained as expert - compliance with rule 31 not required
LEGISLATION CITED:	Conveyancing Act 1919, ss.85(1)(d), 129 Evidence Act 1995, s.79 Retail Leases Act 1999, s.44(1)(b) Uniform Civil Procedure Rules 2005, Divisions 1 and 2 of Part 31
CASES CITED:	Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Pty Ltd (1985) 160 CLR 226 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
PARTIES:	Equity 8 Pty Limited - Plaintiff Shaw Stockbroking Limited - Defendant
FILE NUMBER(S):	SC 2963/05
COUNSEL:	Mr B.R. McClintock SC/Ms T.L. Wong - Plaintiff Mr D.J. Hammerschlag SC/Mr D.R. Stack - Defendant
SOLICITORS:	Gilbert + Tobin - Plaintiff Surry Partners - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

TUESDAY 21 NOVEMBER 2006

2963/05 - EQUITY 8 PTY LIMITED v SHAW STOCKBROKING LIMITED AND ANOR

JUDGMENT (On objection to paragraphs 15 and 16 of affidavit of Bruce John Wookey sworn 20/08/05; see p 50)

1 The defendants object to paragraphs 15 and 16 of the second affidavit of Mr Wookey sworn on 20 August 2005. There are two bases for the objection: first, relevance and, second, non-compliance with the provisions for the admissibility of opinion evidence.

2 Mr Wookey was the chief executive of the plaintiff and has had experience in the field of corporate finance transactions in the equity capital markets over a substantial period.

3 In paragraphs 15 and 16, he gives reasons why he thinks that reasonable notice is required for termination of a contract of the kind with which the case is concerned, that is an agreement for the provision of the skills and services of a corporate finance "team" to a retail stockbroking firm and what a reasonable notice period is.

4 The relevance objection arises in the light of paragraph 12 of the further amended statement of claim which pleads an implied term requiring reasonable notice of termination and goes on to identify "a minimum of three months" as the period of notice required by the implied term.

5 The particulars to paragraph 12 refer to "common practice in the industry", adding a reference to three things that "industry practice includes". These three things are described by reference to statutory provisions regulating actions of landlords to terminate or re-enter. The references are to s.44(1)(b) of the Retail Leases Act 1994 and ss.129 and 85(1)(d) of the Conveyancing Act 1919.

6 The relevance objection proceeds on the basis that in pleading common practice in the industry and giving these particulars, the plaintiff has tied its case to an analogy with the lease situations which are dealt with by the three statutory provisions and that evidence of what, according to a market participant's experience, actually happens in the corporate finance market could not rationally affect the assessment of the question of market practice.

7 That submission cannot be accepted. The references to the statutory provisions concerning leases are prefaced by the words "industry practice includes". The pleading does not put forward the lease situations as the sole indicators or determinants of industry practice and I am satisfied that evidence about matters in the market going beyond the habits or propensities of landlords has a rational bearing on the question of the nature and content of the market practice referred to in the statement of claim and the content of the implied term.

8 There is a subsidiary issue on the matter of relevance. Mr Hammerschlag pointed to observations in the High Court in the Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Aust) Pty Ltd (1985) 160 CLR 226 at p.236 about a need for evidence that a custom relied on is so well-known and acquiesced in that everyone making a contract in the particular context can reasonably be supposed to have intended to adopt the implied term. Whether that principle applies to this case is something I do not need to decide now. If it does, and the only evidence I have is that of Mr Wookey, it may be that the plaintiff fails to show what it needs to show but that does not mean that Mr Wookey's evidence on the matter has no capacity to affect the finding on the issue.

9 I turn then to the objection based on the provisions about expert testimony. Mr Wookey's earlier affidavit makes it clear that he has long experience in the relevant field of commercial activity. I am satisfied that that qualifies him in terms of s.79 of the Evidence Act 1995 to give an opinion on what is usual or standard practice in the market involving that field of commercial activity.

10 The fact that Mr Wookey is the plaintiff's main witness and a principal of the plaintiff does not affect the admissibility of his opinion evidence on matters within his expertise. It might well, however, affect the weight that his evidence is ultimately found to deserve. Self-interest may eventually be seen to have compromised objectivity. That is a judgment for the future.

11 It is objected that Mr Wookey's evidence on the matter at hand does not conform to the requirements in Division 2 of Part 31 of the Uniform Civil Procedure Rules 2005 and that, for that reason, the court must not receive his opinion evidence. The answer to that is that Division 2 of Part 31 is concerned with the evidence of "expert witnesses" as defined by rule 31.17 and situations where experts are retained to provide reports. That is not the case here. Mr Wookey is a witness in the ordinary course who happens to have experience which causes his opinion on the relevant matter to be admissible.

12 There is also a Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 objection based on the proposition that the necessary underpinnings of Mr Wookey's opinion are lacking – that is, underpinnings in the form of fact or assumption coupled with revealed reasoning based on the facts or assumptions. I accept that the factual substratum is thin and that much of what Mr Wookey's statement covers is of a general kind that is not expressed to be based on particular facts or cases, but there is, in paragraph 16, reference to some concrete situations which introduce the required substratum and provide a basis for questioning him as to the processes of reasoning and extrapolation that have led him to the opinion expressed in relation to this particular case.

13 In summary, paragraphs 15 and 16 of the affidavit are admissible and will be admitted, but the question of their ultimate value and weight is one that I will have to address in due course, having regard particularly to the witness' obvious interest in the outcome of the proceedings and the result of his cross-examination.

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