Glenariff Holdings Pty Ltd v Delta Bay Holdings Pty Ltd [No 4] - [2022] WADC 55

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   GLENARIFF HOLDINGS PTY LTD -v- DELTA BAY HOLDINGS PTY LTD [No 4] [2022] WADC 55
CORAM:   COMMISSIONER COLLINS
HEARD:   20 MAY 2022
DELIVERED          :   8 JUNE 2022
FILE NO/S:   CIV 2319 of 2016
BETWEEN:   GLENARIFF HOLDINGS PTY LTD
Plaintiff
AND
DELTA BAY HOLDINGS PTY LTD
Defendant

Catchwords:

Practice and procedure - Evidence - Application for leave to adduce expert evidence - Case management considerations - Turns on own facts

Legislation:

Planning and Development Act 2005 (WA)
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B

Result:

Application for leave allowed

Representation:

Counsel:

Plaintiff	:	Mr C S Williams
Defendant	:	Mr T J Palmer SC

Solicitors:

Plaintiff	:	Solomon Brothers
Defendant	:	Hotchkin Hanly

Case(s) referred to in decision(s):

AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296

COMMISSIONER COLLINS:

Introduction

This is the plaintiff's application for leave to adduce and rely upon an expert report dated 6 February 2021 prepared by Stuart Murphy of Murphy CE Pty Ltd (Murphy Report). The plaintiff's application was brought by way of a chamber summons filed 10 March 2022. The application was supported by an affidavit from Giuseppe Zagari dated 10 March 2022 (Zagari affidavit) together with an outline of submissions dated 4 May 2022. In its outline of written submissions, the plaintiff also foreshadowed seeking an order to file an amended statement of claim.
In response, the defendant filed an affidavit from Phillip Bruce Dobson dated 27 April 2022 and an outline of written submissions dated 11 May 2022.
At the conclusion of the hearing before me on 20 May 2022, I allowed the application. I said that I would publish my reasons for coming to this conclusion, which are as follows.

Background to plaintiff's application for leave to adduce expert evidence

By way of broad outline, the plaintiff's action was commenced in July 2016. The plaintiff's principal claim was a claim for a contribution for costs associated with a subdivision of land that allegedly benefits the defendant.
In its written submissions, the plaintiff set out the material elements of its case. I have largely borrowed that summary, as follows:
(a)the plaintiff subdivided land in Canning Vale, Western Australia, during 2006 and 2007;
(b)as part of carrying out and in connection with the subdivision, the plaintiff incurred costs in:
(i)providing a new road named 'Clontarf Terrace';
(ii)upgrading and expanding a road named 'Merrion Ramble' (previously known as Govan Road);
(c)the land subdivided by the plaintiff has a common boundary with Clontarf Terrace and Merrion Ramble;
(d)the defendant subdivided land during 2014 which also has a common boundary with Clontarf Terrace and Merrion Ramble;
(e)at no point in time did the defendant contribute to the cost of the development of Clontarf Terrace or Merrion Ramble, whether by payment to the plaintiff or otherwise;
(f)accordingly, pursuant to s 159 of the Planning and Development Act 2005 (WA), the plaintiff is entitled to recover from the defendant the sum representing one‑half of the reasonable cost as was borne by the plaintiff of providing or upgrading each part of Clontarf Terrace and Merrion Ramble that has a common boundary with the lots that comprise the land that the defendant subsequently subdivided.
I do not understand the plaintiff's summary to be in dispute.
In support of its claim, the plaintiff had engaged Bradley Harris of Porter Consulting Engineers (Mr Harris) to give evidence as an expert at the trial in these proceedings and to rely on a report that he had prepared dated 27 October 2017 (Harris Report).
The matter was listed for a trial to commence in November 2018 before his Honour Judge Troy.
In late October 2018, Mr Harris was served with a subpoena to attend and give evidence at the trial listed to commence on 7 November 2018.
On the first day of the trial, Mr Harris made an application to the court to be relieved from his obligation to attend and testify on the grounds that he had been retained to and did prepare a report for use by the plaintiff, but he had not been fully paid for that work and did not wish to invest further time and effort on behalf of the plaintiff in the trial.
His Honour Judge Troy granted the application and discharged Mr Harris.
The plaintiff applied to vacate the trial on the basis that it was unable to properly continue in the absence of Mr Harris as its expert witness.
His Honour Judge Troy made orders in the following terms:
1.The trial be vacated and adjourned to a listing conference before a Registrar on 17 December 2018 at 9.30 am.
2.The plaintiff may not adduce any further expert report without first obtaining leave of a Judge.
3.The plaintiff is to pay all the defendant's costs thrown away by the adjournment of the trial to be taxed, if not agreed, and paid forthwith.
At the time of making the abovementioned orders, his Honour Judge Troy made observations which are recorded in the transcript of the proceedings on 7 November 2018, a copy of which is attached to the Zagari affidavit at GZ-3. In particular, at page 67 of the transcript (page 137 of the Zagari affidavit), his Honour stated:
And if there was a further report from a new different expert as I anticipate there would be, and if it was the case that such a report had the hallmarks of catering for the criticisms advanced in the defendant's written submissions, that would be a matter that could be considered when leave is sought to rely upon such expert statement.
Between November 2018 and March 2022, various orders were made in relation to matters which are not material to this application.
By letter dated 6 February 2021, Stuart Murphy prepared a report (Murphy Report), which the plaintiff proposes tendering at the trial of the matter in October 2022. In effect, the plaintiff proposes relying on the Murphy Report instead of the Harris Report.
The plaintiff gave the defendant a copy of the Murphy Report on or about 7 February 2022.
On or about 7 February 2022, the parties attended a listing conference whereby the matter was allocated a trial commencing on 10 October 2022 for five days. Arising out of that conference were orders for a special appointment to hear argument as to whether leave should be given for the plaintiff to adduce and rely upon the Murphy Report.
On 20 May 2022, I heard the plaintiff's application for leave to adduce and rely upon the Murphy Report at the hearing scheduled for October 2022.

Issues for determination

The following matters require determination:
(a)whether the plaintiff should be granted leave to rely upon and adduce the Murphy Report at the hearing scheduled for October 2022;
(b)whether the plaintiff should be permitted to amend its statement of claim; and
(c)whether the parties suffer any injustice and/or prejudice if the abovementioned orders were made.

Plaintiff's submissions as to why leave ought to be granted

The plaintiff's submissions (PS) in support of its application can be summarised as follows.
First, the plaintiff submitted that it would suffer significant prejudice if leave was not granted and it was unable to rely upon the Murphy Report: PS, par 13. In this regard, in the plaintiff's written submissions, the plaintiff submitted that it would have difficulties proving a significant component of the costs of providing Clontarf Terrace and Merrion Ramble.
I note here that there is a difference between the parties as to whether the Murphy Report proves the costs incurred or simply provides a basis and methodology as to how the costs should be apportioned between the parties. Ultimately, resolution of that issue is not material to the outcome of this application.
Secondly, the defendant has not given any evidence as to the prejudice it may suffer if leave is given: PS, par 14. In this regard, the plaintiff referred to Mr Dobson's affidavit where he indicated that if leave were given to rely on the Murphy Report, his client would seek leave to adduce and rely on its own expert report in response: PS, pars 15 ‑ 16.
Given that the trial is listed to commence on 10 October 2022 for five days, it seems to me that the defendant has a reasonable amount of time within which to provide a responsive report, if it has not already obtained one. There was no evidence led to the contrary.
Thirdly, the plaintiff submitted that the defendant's principal objections as outlined in Mr Dobson's affidavit focused on the differences in the methodology used in the Murphy Report when compared to the Harris Report: PS, pars 17 ‑ 29.
As I have understood this complaint, at the original trial of the matter in 2018, the plaintiff was proposing to rely upon the Harris Report. The defendant intended to object to the Harris Report on the basis of various parts of the report being inadmissible. The defendant's central complaint is that the plaintiff, by filing the Murphy Report, has had an opportunity to rectify any deficiencies in its expert evidence.
It is not disputed that there are differences between the reports of Mr Harris and Mr Murphy (including as to the methodology and apportionment of costs). In my view, that is not unexpected given that Mr Harris and Mr Murphy were engaged as independent experts. In the present case, there were no orders prescribing the methodology that the experts should use in performing their calculations or in determining an outcome.

The defendant's submissions in opposition to the application for leave

The defendant's submissions (DS) in opposition to the leave application can be briefly stated as follows.
First, the Murphy Report has adopted a different methodology to that contained in the Harris Report: DS, par 8. In elaboration of that point, the defendant's written submissions ask the question why a different methodology was adopted and why Mr Murphy has not provided evidence as to the different methodology he has adopted in comparison to the Harris Report.
In my view, questions as to the methodology adopted by an expert are ordinarily matters for the trial of the matter. In this regard, they are matters for cross‑examination of the relevant expert. Insofar as the defendant wants to allege that there is no basis for the methodology, then that can be put to the relevant expert. It is not a matter which, in my view, is ordinarily relevant to an application for leave to adduce such expert evidence.
Secondly, the defendant submitted that the plaintiff was, in effect, materially changing its case which would prejudice the defendant: DS, par 11.
At the hearing of the leave application, the defendant's counsel further submitted that the adjournment of the November 2018 trial was not an opportunity for the plaintiff to 'refine and tailor its case' (ts 75).
The defendant submitted that the prejudice complained of was two‑fold (ts 75, ts 76). In the first instance, the defendant had been deprived of the opportunity to advance the defence that it would otherwise have run at the trial of the matter in 2018 (ts 85): DS, par 11. At the hearing, the defendant's counsel submitted:
'the prejudice is the prejudice articulated to Judge Troy, which is the loss of the opportunity to run its old case, right? That can never be cured by - that's just a chance which may or may not have manifested. That's been lost.' (ts 85)
'the defendant having come to trial on a particular basis' (ts 89)
In effect, by reason of the adjournment of the trial in 2018 and the provision of a different expert report, the defendant is prejudiced in defending this matter. It would have to amend or adjust its defence.
The defendant's counsel submitted that this involved an element of unfairness - because the plaintiff was being allowed to improve its position due to a circumstance of its making (which I understood to be a reference to the plaintiff's failure to pay Mr Harris, which caused Mr Harris to dispute the plaintiff's subpoena and which ultimately led to the subpoena being setting aside). The defendant's counsel summarised the argument this way: the plaintiff 'created the problem and aborted the trial [November 2018]' - they should not be afforded an 'opportunity to benefit from their [sic] own conduct … to refine their [sic] case' (ts 79).
The defendant submitted that it was prejudiced in a second way: because the plaintiff had changed its case, 'the goalposts are now moved' (ts 76). The defendant now had the burden of obtaining a responsive expert report for which it would bear the expense (ts 87). The cost the defendant would have to incur in preparing the new case (ts 87).
Thirdly, the defendant submitted that Mr Murphy was involved in drafting the Harris Report: DS, par 15. The significance of this lay in the fact that the plaintiff had not led any evidence to explain the change in the methodology to that contained in the Harris Report (ts 84, ts 85).

Resolution of the dispute

I am satisfied that leave should be given to allow the plaintiff to rely on the Murphy Report at the trial of the action in October 2022. These are my brief reasons for reaching that conclusion.
The defendant's fundamental complaint was that the plaintiff was, via the Murphy Report, changing and improving its position since the matter was due to go to trial in October 2018. During the hearing, the defendant's counsel submitted that the defendant's chief concern was whether the Murphy Report involved the plaintiff 'tailoring' its expert evidence (ts 83). Put differently, whether the plaintiff was changing the methodology used in its expert's report, which on the defendant's case, involved the plaintiff improving its case.
The defendant's submission was to the effect that it had raised the above concerns with his Honour Judge Troy when he adjourned the trial in November 2018. This was allegedly reflected in his Honour's observations about the orders and the necessity for leave. It is worth repeating what his Honour said at the time:
And if there was a further report from a new, different expert, as I anticipate there would be, and if it was the case that such a report had the hallmarks of catering for the criticisms advanced in the defendant's written submissions, that would be a matter that could be considered when leave is sought to rely upon such expert statement.
The defendant submitted that the plaintiff's leave application was informed by the circumstances in which the orders were made. In effect, this was not a normal case involving an application for leave to adduce expert evidence. It was a 'unique' case involving an adjournment, which was due to the plaintiff's fault, the plaintiff having caused the situation, the defendant having come to trial on a particular basis (ts 89).
Further, the defendant's counsel submitted that the question for the court was whether it was fair for the plaintiff to be able to start again (with a different approach in its expert evidence) (ts 90). At the very least, the plaintiff should be required to explain why its expert was adopting a different methodology to the Harris Report. Both of these matters were relevant to whether the court should grant leave.
In my view, several things may be said about the defendant's submissions.
First, at the heart of the defendant's submissions are case management considerations. It is axiomatic that a party must be afforded a proper opportunity to plead its case (and ultimately, run its case). The proper opportunity is subject to limits, which include consideration of the matters contained in Rules of the Supreme Court 1971 (WA) O 1 r 4B and AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (AON) [89] ‑ [103] and [111] ‑ [112]. Beech J helpfully summarised the limits in Hightime Investments Pty Ltd v Lungan [No 2] [2010] WASC 296 [52].
In the present case, the plaintiff will suffer significant detriment if it is prevented from leading expert evidence about how the costs it has incurred should be apportioned between the parties (as I understood the matter, it was not in dispute that the actual costs incurred would be led by lay evidence).
The defendant's response to this was to say that the plaintiff was not prevented from relying on an expert report per se: the plaintiff could still rely on an expert report if it adopted the same methodology as the Harris Report (however, that would require a new report).
In my view, the defendant's position involved, in effect, prescribing and circumscribing the methodology which the plaintiff's expert was required to use. While that approach is adopted in some matters for efficiency reasons, it is not warranted here. His Honour Judge Troy did not make such a stipulation. Further, experts should ordinarily be able to choose the methodology to suit the task at hand. Often in matters where experts do adopt different methodologies, they are required to provide a supplementary opinion adopting the methodology of their counterparty. This is common in technical matters, and in arbitrations.
In contradistinction to this, the defendant will suffer no real prejudice, in circumstances where it is given an opportunity to provide a responsive report prior to the trial of the action. From receiving the Murphy Report to the scheduled trial date, the defendant will have about eight months. It was not disputed that the defendant has had a copy of the Murphy Report since early February 2022 (further, it is likely that any prejudice would be cured by costs should the defendant be successful at the substantive hearing).
I observe here that the defendant's counsel accepted that the defendant had sufficient time to provide an expert report in reply (ts 90). That issue was not in dispute.
Secondly, insofar as the defendant submitted that it would lose the opportunity to run its old case, the defendant's submission in effect, rested on the defendant succeeding at the trial of the matter in November 2018. The defendant's counsel accepted that what the defendant had lost was a chance of a good outcome based on the defence of the Harris expert evidence, or other evidence, which employed the same methodology. However, he could not say what that chance was worth (ts 85). It was not possible to value that chance. Counsel accepted that it was not a 'certainty' and that it was 'difficult to determine', but it had 'some value' (ts 85, ts 86, ts 87).
I am satisfied that the defendant may have lost a chance of a better outcome based on earlier expert evidence. However, absent conducting a full trial on the matter, it is not possible for me to value the strength of the defendant's claim. And obviously, the plaintiff would have a different view about it.
Insofar as the defendant has the burden and expense of obtaining a new responsive expert report, the defendant would ordinarily expect to recover some of those costs if it succeeded on the action. Insofar as the defendant incurred wasted costs in preparing to defend the Harris Report, then that would seem to be a matter for the trial judge.
Thirdly, as to the defendant's submission that the plaintiff and/or Mr Murphy ought to explain the reasons for the changes from the Harris Report, that seems to involve an attack on the credibility and independence of Mr Murphy, the plaintiff's expert.
I understood this part of the defendant's submission to arise out of the concern that the plaintiff may have 'tailored' its case. In my view, insofar as the defendant has objections as to the authorship, methodology, and/or substance of the Murphy Report, those are matters which can be put to Mr Murphy during cross‑examination at the trial of the action (subject to the direction of the trial judge). Mr Murphy's responses will bear on the weight to be given to his opinion. Again, I do not see that the defendant is prejudiced in this regard.

Many of the defendant's objections to the Murphy Report related to a context in which a trial was to be had in 2018. That time has passed. A trial is now scheduled for October 2022. In my view there is limited utility in reviewing and spending time on arguments made in relation to a report that was not tendered (being the Harris Report) when considering an application for a different expert. Insofar as the defendant wishes to pursue this in cross‑examination, that will be a matter for the trial judge.
Fourthly, much of the hearing was spent discussing what his Honour Judge Troy meant by his observations extracted above. The defendant's case was that the unusual, unique circumstances in which the November 2018 hearing was adjourned had a strong bearing on the circumstances in which the plaintiff would be entitled to lead fresh expert evidence. In effect, the circumstances of the adjournment were a relevant consideration as to whether the plaintiff should be granted leave.
In my view, the circumstances of the adjournment and his Honour Judge Troy's orders are relevant considerations when considering whether to grant the plaintiff leave to rely on an expert report, but they are not definitive. In this regard:
(a)his Honour Judge Troy did not prescribe or provide conditions or limit who may give expert evidence or on what basis. In fact, it appears to me that his Honour was careful to leave the discretion to the next Judge to deal with the matter;
(b) his Honour Judge Troy was alive to the fact that the plaintiff might (or was likely to) engage a different expert. Implicit in that is that there would be a different expert report and that the methodology might be different; and
(c)there is little value in speculating as to what his Honour Judge Troy meant by what he said above. In this regard, trawling the transcript for clues as to how the orders should be interpreted is not appropriate. Ultimately, his Honour Judge Troy made orders which required the plaintiff to obtain leave for further expert evidence.
Although the circumstances of the November 2018 hearing adjournment are a relevant consideration in the present context, the defendant's characterisation of the plaintiff's conduct at the time is less so. For example, it may equally be said that the plaintiff simply had a falling out with its expert.
Fifthly, when this matter goes to trial in October 2022, it will be just under four years since the matter was due to be heard in 2018 but ultimately adjourned. The lapse of time, while not significant, is also a relevant consideration.
Ultimately, the question involves the exercise of a discretion in determining what is in the interests of justice. In the present case, it seems to me that the plaintiff should be permitted to lead the expert evidence it chooses. It will suffer significant prejudice if it is not granted leave. The defendant on the other hand, will not be prejudiced to the same extent. It has time to provide a responsive report. If the defendant is subject to other prejudice, that is part of the balancing exercise.
As to the plaintiff's foreshadowed plan to amend its pleading, the defendant's counsel submitted that the plaintiff should provide a minute showing the amended pleading: in effect, leave should not be given at large. The plaintiff's position was that the amendments were likely to be relatively minor. In my view, the plaintiff should provide an amended pleading forthwith and if the defendant has an objection (taking into account that the matter has been listed for a trial in about five months' time), that should be dealt with promptly.

Objections to the Murphy Report

Although I have given the plaintiff leave to rely on the Murphy Report at the trial of the matter, I have not heard nor dealt with any objections that the defendant may have to the substance of the Murphy Report. In my view, those matters are best left to the trial judge at the trial of the matter.
I observe here, that insofar as the defendant has objections to the substance of the Murphy Report, that from a practical point of view, those objections should be raised forthwith and not reserved close to the trial of the matter. That type of conduct does not assist with the efficient conduct of the litigation. If there are material differences between the plaintiff's and defendant's experts, I would prefer them to confer and produce a report outlining those matters on which they agree and those matters on which they disagree, thus, narrowing the issues in dispute. That approach is common and is consistent with case management considerations for the efficient use of the court's and parties' time and scarce resources.

Conclusion

At the conclusion of the hearing, I allowed the application.
I made orders that costs be in the cause.
I also discussed with the parties the terms of proposed orders. The parties have now provided the court with an agreed minute of orders and those orders have been made.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
SZ
Associate to Commissioner Collins
7 JUNE 2022