Investec Bank (Australia) Limited v Peter Kenneth Mann
[2012] VSC 58
•28 February 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST A
No. 6566 of 2010
| INVESTEC BANK (AUSTRALIA) LIMITED (ACN 071 292 594) | Plaintiff |
| v | |
| PETER KENNETH MANN | First Defendant |
| PETER ROLLAND MORTIMER | Second Defendant |
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JUDGE: | Pagone J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 February 2012 | |
DATE OF JUDGMENT: | 28 February 2012 | |
CASE MAY BE CITED AS: | Investec Bank (Australia) Limited v Peter Kenneth Mann & Anor | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 58 | |
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PRACTICE AND PROCEDURE – Expert reports - Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 44.03 – Leave to file and serve export report out of time – Whether late service of expert report would cause prejudice to opposing party – Solicitor’s lack of candour.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Paterson | Baker & McKenzie |
| For the Defendants | Mr D Luxton | Madgwicks Lawyers |
HIS HONOUR:
On 23 February 2012 I heard an application made by the defendants for leave to file and serve “any expert report upon which they intend to rely” by 4pm on 2 March 2012. The defendants relied upon an affidavit by their solicitor, Mr Laurance Davis, sworn 20 February 2012 in support of their summons. The plaintiff opposed the summons and filed an affidavit sworn by its solicitor, Mr Peter Lucarelli, on 22 February 2012. Mr Lucarelli also gave evidence when cross-examined on his affidavit during the course of the hearing of the defendants’ summons. I dismissed the summons and said that I would give written reasons on 28 February 2012. The trial in the proceeding is due to start on 13 March 2012.
The plaintiff opposed the summons on various grounds but in particular on the basis that it was made too late, would cause prejudice to the plaintiff’s conduct of the trial and that the material upon which the defendants relied in support of the summons lacked candour.
A party to a proceeding should not lightly be denied an opportunity to lead probative evidence in support of a case. On the other hand, a party should not be exposed to unnecessary risk or prejudice in the proper conduct or preparation of a trial. The defendants’ summons sought leave for an unidentified, and as yet unprepared, expert report to be filed and served on 2 March 2012 in a proceeding set down for hearing on 13 March 2012. The proceeding was set down for hearing on that date on 9 December 2011.
It has long been a rule of this Court that a party who intends to rely upon an expert report is required to serve on each other party and to deliver a copy for the use of the Court “not later than 30 days before the day fixed for trial”.[1] That requirement has not been satisfied in this proceeding and no application was made by the defendants to adjourn the date fixed for trial.
[1]Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 44.03.
It is impossible from the materials relied upon in the summons to ascertain what, if any, probative value there may be in any report that the defendants may seek to tender when, and if, it is prepared. Counsel for the defendants candidly admitted that as at the date of hearing of his clients’ summons on 23 February 2012 there was no report, or even a draft report, in existence. The best he could point to concerning the content and usefulness of any report was the general statements in his instructor’s affidavit that the “expert report (as refined and limited) will address issues concerning the value of the properties at the subject development that were sold by the Receivers and Managers appointed by the Plaintiff”. What those issues (as refined and limited) might be were not identified and what the expert report might have contained about those issues was conjectural as at the date of the hearing of the summons. Indeed, at the hearing of the defendants’ summons, there was not even tendered in evidence for the defendants a set of instructions to the expert or even a draft set of instructions to the expert, setting out the questions to be asked or the basis upon which questions might be asked.
The plaintiff commenced the proceeding on 6 December 2010. The plaintiff is a bank which appointed receivers and managers pursuant to certain agreements over the assets and undertakings of a borrower whose debts the bank contends had been guaranteed by the defendants. The defendants first filed a defence dated 8 March 2011 in which they pleaded, amongst other things, that the sale proceeds received by the receivers and managers were less than they would have been if the stock items had been sold by the borrower. The factual allegation that more could have been received upon the sale of stock items than was obtained in sales by the receivers and managers appeared in several places of the defence and was particularised in general terms when the defence was amended on 28 June 2011. The defence then stated that expert evidence would be given at trial “as to the higher sales proceeds which would have been obtained if the stock items were sold by the Borrower”. It appears that on 8 April 2011 there had been some preliminary communications by a member of the firm of the defendants’ solicitors with Mr Brendan Arnel with a view to obtain expert evidence from him for this litigation. The materials before me did not disclose what steps, if any, were taken after 8 April 2011.
It is not clear how the allegations in the defendants’ pleadings could confidently have been made on 8 March 2011 or on 28 June 2011 in light of the current position about an expert’s report. It is plain from the material filed for the defendants on their summons heard 23 February 2012 that there was, as at that date, nothing in existence that would be described as an expert report that could be led in support of the particulars in the defence which has been in existence since 28 June 2011. The defence had also been amended on 16 May 2011 with, therefore, attention having been given to its content on at least three occasions.
The proceeding has had significant judicial case management since it was initiated. Several directions hearings were conducted and a case management conference was held on 5 May 2011. There was also an attempt to mediate the dispute. Orders were first made for mediation on 11 February 2011 and again on 9 December 2011 for a mediation undertaken by Mr George Golvan QC on 6 February 2012. An expert report might have been useful for the mediation.
On 9 December 2011 the trial of the proceeding was set down to commence on 13 March 2012 on an estimate of four days. On 23 December 2011 Mr Lucarelli wrote to the defendants’ solicitors proposing a timetable for the filing and service of expert reports to ensure compliance with r 44.03(1)(b). The timetable would also have enabled the defendants to rely upon any expert report at the then proposed mediation on 6 February 2012 (although the plaintiff’s answering report, on the timetable proposed, would not have been available in time for the mediation). There was no reply to that letter until 23 January 2012. On that date the defendants’ solicitors proposed obtaining consent orders for filing the defendants’ expert report on 5 March 2012 and adjourning the trial to 5 April 2012. The defendants’ letter gave as their reason only that they had been instructed that it was “not feasible to comply” with the timetable which had been proposed by the plaintiffs. No further explanation was proffered and no adjournment was sought from the Court.
Further correspondence occurred between the parties’ respective solicitors. Relevantly, however, on 27 January 2012 the defendants’ solicitors wrote to Mr Lucarelli agreeing to a proposal by which the defendants would file and serve on the plaintiff “any expert report upon which they intended” to rely by 4pm on 16 February 2012. That email contemplated that the plaintiff would serve its expert report on 5 March 2012 in the expectation that the trial would commence on 13 March 2012 as had been ordered in December 2011. Mr Lucarelli continued to press for receipt of the defendants’ expert report by 13 February 2012 but none was received. On 15 February 2012 Mr Lucarelli wrote to the defendants’ solicitors inquiring whether the defendants’ time frame for delivery of the expert report by 16 February 2012 would be met. A directions hearing was then scheduled for 17 February 2012 and, late on the afternoon of 16 February 2012, the defendants’ solicitors informed Mr Lucarelli that an additional two weeks were required to finalise the expert report. The defendants’ solicitors had not previously informed Mr Lucarelli that the defendants would not be able to meet the date previously proposed by the defendants’ solicitors for provision of their clients’ expert reports.
The terms of the communication from the defendants’ solicitors on 16 February 2012 requires attention. The relevant paragraph of the letter sent by the defendants’ solicitors to Mr Lucarelli at 4.47pm on 16 February 2012 (the day before the scheduled directions hearing) said:
We advise that our clients’ expert requires an additional two weeks to finalise the expert report for the Defendants. We request your client’s consent to this extension of time. We are instructed that our clients will also afford your client a similar extension of time for the filing of its expert material.
The natural reading of the first sentence quoted suggests that the additional two weeks sought to finalise the report was based upon a request made by the expert. It is also a natural reading of the first sentence that the expert had already been retained and that such additional time as was required was for the purpose of a task fairly able to be described as “to finalise” something which had already begun. Indeed that is consistent with an aspect of Mr Davis’ affidavit to which I shall refer below. Before doing so, however, I should mention that a person reading the letter from the defendants’ solicitors would ordinarily also assume that the basis of the information conveyed by the writer (a legal practitioner) was from personal knowledge rather than from what he may have been told by one or other of his clients. That flows from the words used by the defendants’ solicitors, from the absence in the email of any qualification of the basis upon which he conveyed the information, from the subject matter of the information being the provision of expert reports for use in the litigation and from the fact that the writer is a legal practitioner having the carriage of the proceeding for the defendants. The provision of expert reports for use in court proceedings is ordinarily obtained by legal practitioners. It is they, and not the lay clients, who are expected to know and to ensure compliance with the rules of court. The preparation of expert reports give rise to particular duties on the part of the expert which a legal practitioner should ensure are fully understood and complied with by the expert. The affidavit from Mr Davis, however, whilst relaying the need for additional time for the filing of an expert report did not suggest that the basis of that need was something known to him only because one or other of his clients had told him and not from direct discussions with the expert. Furthermore, Mr Davis explained in his affidavit that it was not until “the days preceding 16 February 2012” that the second named defendant had informed Mr Davis that “the expert had other intervening commitments that would prevent the delivery of an expert report until 2 March 2012”. However, Mr Davis did not go on to explain why he had not initiated the correspondence with Mr Lucarelli in the days before the directions hearing on 17 February 2012 but, rather, had left it until 4.47pm on 16 February 2012 to raise the need for additional time and had only done so in response to a letter from Mr Lucarelli seeking confirmation that the timetable proposed by the defendants’ solicitors would be met.
Counsel who appeared for the defendants at the directions hearing on 17 February 2012 sought an extension of time to serve any expert report for use at the trial of the proceeding but did not have any report, or a draft report, or any supporting material on that occasion. Directions were then made that any application for an extension of time was to be by summons to be filed on 20 February 2012 and made returnable at 10am on 23 February 2012. The affidavit of Mr Davis in support of the summons was filed and served on the morning of 20 February 2012. In it he deposed to having been informed by the second defendant in early April 2011 that the defendants had consulted a Mr Arnel in relation to acting as the expert witness for the defendants. He also deposed to, and exhibited, communications and correspondence between his firm and the proposed expert in April 2011. Mr Lucarelli, for the plaintiffs, upon receipt of that material, took it upon himself to contact Mr Arnel to inquire whether he had been retained to prepare an expert report. Mr Arnel responded that he had not been retained to prepare a report but was waiting to receive an email in respect of the provision of such a report and was otherwise waiting to receive communication from the defendants’ solicitors about the timing of the expert report. Mr Lucarelli was cross-examined about these matters by counsel who appeared for the defendants on the date of hearing of their summons.
The defendants have not established a sufficient foundation to justify the orders sought by their summons. It is plain that Mr Arnel had been contacted as a potential expert from as early as April 2011 and that he was awaiting instructions to prepare an expert report. It is equally plain that there is no expert report currently in existence to be filed, or even a draft report to be finalised. There is also no basis upon which to form any view about the probative value of such a report if it were to come into existence in time for the trial. The proceeding was set down for trial in December 2011 on matters alleged in general terms from 8 March 2011 and particularised on 28 June 2011 as dependant upon an expert’s report. It is the duty of the parties to have their material ready for trial. It is the duty of the parties’ practitioners to ensure compliance with the rules. Order 44 is one of those rules and is well known to the practitioners in this proceeding. Furthermore, to grant the orders sought would occasion prejudice to the plaintiffs. It is unrealistic to assume that they would be in any position to respond meaningfully for a trial date on 13 March 2012 to an expert report received by them on 2 March 2012. The position might be different if the defendants had articulated the precise nature of the report upon which they sought to rely sufficiently to enable the Court to evaluate the potentially probative effect of the material.
Accordingly, for these reasons I dismissed the defendants’ summons and will hear the parties’ submissions on the question of costs including submissions on whether costs orders should be made under r 63.23.
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