McKay v Commissioner of Main Roads [No 2] - [2010] WASC 153

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: McKAY -v- COMMISSIONER OF MAIN ROADS [No 2] [2010] WASC 153

CORAM: BEECH J

HEARD: 14 & 15 JUNE 2010

DELIVERED : 24 JUNE 2010

FILE NO/S: CIV 1558 of 2007

BETWEEN: RODERICK DOUGLAS McKAY
KATHLEEN GLENYS McKAY
Plaintiffs
AND
COMMISSIONER OF MAIN ROADS
First Defendant
WESTERN AUSTRALIAN PLANNING COMMISSION
Second Defendant

Catchwords:

Evidence - Hearsay - Statutory exceptions - Evidence Act 1906 (WA), s 79C - Whether completed survey responses are business records of the business conducting the survey - Whether survey responses are statements made by qualified persons - Whether report outlining results of survey is a business record - Whether a report whose author is deceased should be rejected under s 79C(6)

Legislation:

Evidence Act 1906 (WA), s 79C, s 79C(1), s 79C(2a), s 79C(6)

Result:

Rulings given on objections

Category: B

Representation:

Counsel:

Plaintiffs:     Mr M J McCusker QC, Mr T Houweling & Ms J P See
First Defendant            :     Mr K M Pettit SC & Ms F B Seaward
Second Defendant        :     Mr K M Pettit SC & Ms F B Seaward

Solicitors:

Plaintiffs:     Cornerstone Legal
First Defendant            :     State Solicitor for Western Australia
Second Defendant        :     State Solicitor for Western Australia

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

Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542
Atra v Farmers & Graziers Co‑op Co Ltd (1986) 5 NSWLR 281
Beamish v The Queen [2005] WASCA 62
Cavill v The State of Western Australia [2008] WASCA 108
Chino Pty Ltd v Transport Infrastructure Development Corporation [2006] NSWLEC 768; (2006) 153 LGERA 136
Coffman v The Queen [2010] WASCA 54
Connell v The Queen (No 6) (1994) 12 WAR 133
Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560
McKay v Commissioner of Main Roads [2009] WASC 353
Mouritz v Hegedus (Unreported, WASCA, Library No 990188A, 19 April 1999)
Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158
RW Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152
Shmee Pty Ltd v Bresham Investments Pty Ltd [2008] VSC 291
Shoshana Pty Ltd v 10th Cantanae Pty Ltd (1987) 18 FCR 285
Sterling Pharmaceuticals Pty Ltd v Johnson & Johnson Australia Pty Ltd (1990) 96 ALR 277
Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647

BEECH J:

Introduction

On 14 and 15 June 2010 I heard numerous objections to evidence by both parties. With two exceptions, I made rulings with oral reasons in the course of the hearings. I do not propose to say more about those rulings.
I reserved my decision in relation to two rulings, both of which raise issues involving s 79C of the Evidence Act 1906 (WA).
The first relates to the evidence of Ms Marion Thompson. It raises issues of admissibility under s 79C(1) and (2a) of the Evidence Act.
The second relates to the report of Emeritus Professor Whipple, who is now deceased. It raises the question whether the report should be rejected under s 79C(6) on the ground that the probative value of the report is outweighed by the consideration that its admission may create undue prejudice or may necessitate undue consumption of time.
Further, the plaintiffs sought and were granted leave to file supplementary written submissions in relation to an objection made by the defendants to a part of the evidence of Mr Brian Haratsis.
I begin with the objection to Ms Thompson's evidence.

Marion Thompson's evidence

The plaintiffs object to pars 24 – 31 of the witness statement of Ms Marion Thompson. They also object to the annexure to par 24. I refer to the annexure as the Survey Report.
The plaintiffs object to this evidence on the ground that it is hearsay. They also object on the ground that the evidence is irrelevant because it refers to matters after the date of the taking of the land, the subject of the main dispute. However, the parties have agreed that in respect of the latter objection, the evidence should be admitted provisionally and a ruling be given in the course of my reasons for decision after the trial. Accordingly, at this stage it is necessary to rule only on the hearsay ground of the objection. For the reasons that follow, I uphold that objection on that ground.

The substance of the evidence of Ms Thompson

The substance of the evidence objected to can be summarised as follows. In August 2006 the Department of Planning and Infrastructure (the Department of Planning) carried out a survey of conditionally approved subdivisions in the Peel Sector of the Perth metropolitan region with 30 or more lots that, as at 30 June 2006, were yet to be developed. The purpose of the survey was said to be to collect evidence of the supply of forthcoming lots and the extent and types of delay experienced by land developers.
The methodology of the survey is set out in part 2 of the Survey Report (pages 125 – 127). (In this case, all parties refer to reports and documents by reference to the page number in the witness statement volume or trial bundle volume, rather than the page number of the report or document itself. I will do the same.)
The survey was a mail‑out questionnaire for self‑completion. The survey instrument had three parts, summarised at page 125. The Survey Report presents the results of parts A and B of the survey which deal with subdivisions in progress.
The survey was mailed to the owner or developer of each selected subdivision within the Peel Sector. The identification of the recipients of the survey is explained at pages 126 ‑ 127. I will say more about that later in these reasons.
In pars 25 – 31 of her statement, Ms Thompson states some of the conclusions that she says flow from the Survey Report. They relate to:
(a)the proportion of inactive lots that were part of an approval where other lots were being progressed, the proportion of inactive lots and where all of the lots in the approval were inactive;
(b)the proportion of lots scheduled for final approval by 30 June 2006 that were delayed; and
(c)reasons given for delays in lot production.

The plaintiffs' objection to the Survey Report

The plaintiffs object to this evidence on the basis that it is hearsay. They say that developers may be able individually to give direct evidence about the matters the subject of the survey, but the Survey Report cannot be used as evidence of the truth of the respondents' responses to the survey.
The plaintiffs also object to the Survey Responses, referred to immediately below.

The defendants' grounds for admission of the Survey Report and the Survey Responses

The defendants submit that under s 79C(2a) of the Evidence Act the Survey Report is admissible as evidence of the truth of the responses and of its contents generally.
Further, in response to the plaintiffs' objection, the defendants propose to tender the individual completed responses to the survey (the Survey Responses). The defendants contend that the Survey Responses are admissible under s 79C(2a), further or alternatively, under s 79C(1). Under s 79C(1), the defendants contend that the general requirement to call the survey respondents as witnesses should be dispensed with under s 79C(2)(g).
It is convenient to begin with some general principles, before turning to the question of admissibility of the Survey Responses.

Section 79C: legal principles

Section 79C(1), (2) and (2a) provide as follows:
79C.Documentary evidence, admissibility of
(1)Subject to subsection (2), in any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if the statement -
(a)was made by a qualified person; or
(b)directly or indirectly reproduces or is derived from one or other or both of the following -
(i)information in one or more statements, each made by a qualified person;
(ii)information from one or more devices designed for, and used for the purpose of, recording, measuring, counting or identifying information, not being information based on a statement made by any person.
(2)Where a statement referred to in subsection (1) is made by a qualified person or reproduces or is derived from information in a statement made by a qualified person, that person must be called as a witness unless -
(a)he is dead;
(b)he is unfit by reason of his bodily or mental condition to attend or give evidence as a witness;
(c)he is out of the State and it is not reasonably practicable to secure his attendance;
(d)all reasonable efforts to identify or find him have been made without success;
(e)no party to the proceedings who would have the right to cross examine him requires him to be called as a witness;
(f)having regard to the time which has elapsed since he made the statement and to all the circumstances, he cannot reasonably be expected to have any recollection of the matters dealt with in the statement;
(g)having regard to all the circumstances of the case, undue delay, inconvenience or expense would be caused by calling him as a witness; or
(h)he refuses to give evidence.
(2a)Notwithstanding subsections (1) and (2), in any proceedings where direct oral evidence of a fact or opinion would be admissible, any statement in a document and tending to establish the fact or opinion shall, on production of the document, be admissible as evidence of that fact or opinion if -
(a)the statement is, or directly or indirectly reproduces, or is derived from, a business record; and
(b)the court is satisfied that the business record is a genuine business record.
Section 79C makes a statement in a document admissible notwithstanding, among other things, the rule against hearsay and the rule against secondary contents of documents: s 79C(3). The section provides two avenues of admissibility. The first avenue relates to documents generally (subsections (1) and (2)) and the second relates solely to business records (subsection (2a)): Beamish v The Queen [2005] WASCA 62 [152].
Section 79C renders statements in a document admissible, not (necessarily) the whole document: Cavill v The State of Western Australia [2008] WASCA 108 [98].
Section 79C(2a) is not restricted to statements made by a qualified person or derived from such a statement. That is evident from the terms of the section. See also Beamish [157].
Section 79C permits second‑hand hearsay. Section 79C(1) and s 79C(2a) apply to statements made by a qualified person, including statements tendered for the truth of their contents, recorded in a document by a third party: Cavill [36] – [39] (McLure JA, Buss JA agreeing [97]). See also Coffman v The Queen [2010] WASCA 54 [194] and Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542, 569, referred to with approval by Buss JA in Cavill [99].
Section 79C(1) does not necessarily require the identification by name of the maker of the statement: Connell v The Queen (No 6) (1994) 12 WAR 133, 193.
That brings me to the question of the admissibility of the Survey Responses.

Are the Survey Responses admissible?

The defendants invoke both avenues of admissibility under s 79C. They submit that:
1.the Survey Responses constitute business records of the state and are therefore admissible under s 79C(2a);
2.further or alternatively, the Survey Responses are statements made by a qualified person and are therefore admissible under s 79C(1).
I deal with these submissions in turn.
The term 'business' in relation to business records is widely defined. I accept the defendants' submission that the subject matter of the survey was related to planning issues in Western Australia and, consequently, was part of the business of the state, through the Department of Planning.
'Business record' is defined in s 79B to mean:
a book of account or other document prepared or used in the ordinary course of a business for the purpose of recording any matter relating to the business.
The presence of the alternative limbs 'prepared' or 'used' in the definition of business record means that two questions arise when considering whether the Survey Responses constitute business records. First, is a completed survey form 'prepared in the ordinary course of [the state's] business for the purpose of recording any matter relating to [the state's] business'? In my opinion, the answer to this question is no. The Survey Responses were not prepared in the ordinary course of the state's business because, in substance, each was prepared by the respondent developer who completed it, not by the officer of the state who prepared the pro forma document for completion by recipients. The representative of the developer who completed each survey was not acting in the ordinary course of the state's business.
The second question is whether the completed Survey Report is 'used in the ordinary course of [the state's] business for the purpose of recording matters relating to [the state's] business'.
I would infer that, once received, the state (through the Department of Planning) used the Survey Responses as information or as a record of information, relating to the state's business. However, in my opinion, if a business uses an externally generated document as a record of information relating to its business, it does not thereby use the document 'for the purpose of recording any matter relating to the business' within the meaning of the definition of business record. To my mind, a document is used for the purpose of recording matters relating to the business only if there is or it is contemplated that there will be some further or ongoing recording of information by or on behalf of the business.
In considering this question of the proper construction of the definition of business record, it is, I think, relevant to take account of the statutory consequence under s 79C(2a), of a document being a business record. The document will be admissible as evidence of the truth of its contents and that will be so notwithstanding the document is second‑hand hearsay. See [23] of these reasons.
If it is enough, in order that a document be a business record, that a business receive, retain and use it as a record of the information in it, then all documents externally generated, received and used in that way would be admissible as evidence of their truth under s 79C(2a)(a) (subject to the discretionary power of rejection under s 79C(6)). That is a proposition of broad scope for which I would expect there to be authorities in support if it represented the law. The defendants cite no authority that would support this reading of the definition of business record which they invite.
While some assistance can be derived from interstate authorities, it is important to bear in mind the differences in language of the various statutes. So far as they bear on the question presented in this case, the authorities from the other states are contrary to the defendants' contentions.
In Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647, 659, Franki J considered a statutory provision that defined business records to require that the relevant statement be 'made in the course of, or for the purposes of, the [relevant business]'. Consequently, that provision directed attention to the circumstances and purpose of the making of the statement. In this case, s 79C directs attention to the circumstances and purpose of the preparation and use of the document.
Franki J stated, as a general rule, that a statement of fact in a letter from A to B found in the files of B is not admissible as a business record of B simply because it was filed and kept by B. That is because statements in the letter are not made in the course of or for the purpose of B's business (659).
In RW Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 32 NSWLR 152, 159, Giles J stated that the report of a third person obtained by a business in the course of and for the purpose of the business is not necessarily part of the record of the business. His Honour gave an example: an insurer which engages a loss assessor to report on a loss and then retains the report on its files cannot prove the facts stated in the report by tendering it as part of a record of the insurer's business.
In Karmot Auto Spares Pty Ltd v Dominelli Ford (Hurstville) Pty Ltd (1992) 35 FCR 560 Heerey J applied the provision of the Evidence Act 1905 (Cth) which made admissible documents that formed 'part of the business records of the [applicant's] customers'. In that case the applicant (Karmot) received and retained numerous written complaints from customers about the product sold by the respondent to Karmot. Karmot sought to tender these written complaints as business records. Heerey J rejected the tender, holding that the documents were not part of the business records of Karmot (564 – 565).
For these reasons, I am not persuaded that the Survey Responses are business records of the state. Consequently, I reject the tender of the Survey Responses under s 79C(2a). I turn to s 79C(1).
A statement in a document will be admissible if it was made by a qualified person: s 79C(1)(a). The definition of 'qualified person' in s 79B is:
in relation to a statement, means a person who -
(a)had, at the time of making of the statement, or may reasonably be supposed to have had at that time, personal knowledge of the matters dealt with by the statement; or
(b)where the statement is not admissible in evidence unless made by an expert on the subject of the statement, was at the time of making of the statement such an expert.
The Survey Responses contain statements of fact or opinion. The first question that arises is who made those statements? The defendants submit that it was the individual person who filled in the form who was the maker of the statement. I am content to assume, favourably to the defendants, that that is so.
The next question is whether the person who completed the Survey Response is a qualified person. In other words, in so far as the Survey Response contains statements of fact, may that person be reasonably supposed to have had personal knowledge of the matters dealt with in the Survey Response?
The answer to that question must take account of the character of the respondents, so far as it is known, and the nature of the subjects and questions raised in the survey questionnaire.
Given the profile of the developers to whom the surveys were sent, it would be unsafe to infer that the respondents were likely to be small scale operations in which the person responding to the survey is likely to know about all aspects of the business. The survey was sent only to developers who had current conditional approvals where at least 30 lots were yet to be developed. While the scale of the businesses of the respondent developers no doubt varied, it is reasonable to expect that many of them were well beyond the scale of one or two person business where the person filling in the survey is likely to have knowledge of the whole of the operations of the business.
The survey asked each respondent to do a number of things including:
(a)identify how many lots are at each of various stages of approval;
(b)identify the numbers of lots sold and proposed for sale, and the proposed time periods for sale;
(c)(to the extent relevant,) identify reasons that finally approved lots are not on the market;
(d)estimate the breakdown of categories of purchases, including between owner occupiers and others;
(e)identify strategies used to facilitate purchase by owner occupiers;
(f)identify the extent of delays in progressing development of conditionally approved lots;
(g)identify the reasons for such delay; and
(h)suggest strategies to reduce delay.

When these matters are taken into account I am not satisfied that the person who completed the various forms may reasonably be supposed to have had personal knowledge of the matters dealt with in the Survey Responses.
Although not specifically argued by the defendants, I have also considered whether it can be inferred that the information in the Survey Responses was derived from other records of the relevant respondent developers (which records may themselves be statements by qualified persons). If that inference were drawn, the documents may become admissible under s 79C(1)(b). However I am not satisfied that an inference of that kind should be drawn in this case. In that regard, many of the questions in the survey would not be likely to be able to be derived from records of the business. For example, many of the questions relate to reasons for various matters, and invite the provision of estimates and the identification of strategies.
On the limited evidence available to me, I consider that the most likely inference is that a person completing the Survey Report would have had regard to a mixture of company records and the views of personnel in order to produce the responses.
For these reasons, I would not admit the Survey Responses under s 79C(1).
I turn to the question of admissibility of the Survey Report.

Is the Survey Report admissible?

The defendants' first argument is that the Survey Report is admissible under s 79C(2a) because the Survey Report directly or indirectly reproduces or is derived from the Survey Responses and the Survey Responses are a business record. However, as I have held that the Survey Responses are not a business record, that submission fails.
The defendants' second submission is that the Survey Report is itself a business record.
I accept that given the width of the definition of 'business', the Survey Report was prepared in the ordinary course of the business of the state. The question is whether it was 'prepared or used for the purpose of recording matters relating to the business'.
There may be a question as to whether the purpose of the preparation or use must be the dominant purpose, or whether it is enough that it is a substantial purpose. I will assume, favourably to the defendants, that it is sufficient if the relevant purpose is a substantial purpose.
The material before me is Ms Thompson's statement and its annexures. I am not satisfied by that material that the Survey Report was prepared or used for the purposes of recording matters relating to the business of the state. My reasons are as follows.
There is little evidence about the purpose and no evidence about the use of the Survey Report. It was published in June 2007. Ms Thompson does not say in her statement that she made any particular use of the Survey Report. Nor does she say that anybody else made any use of it. According to her statement, she used a preliminary report about the survey results that became available in February 2007 in preparing the Land Release Report that was published also in February 2007.
The only evidence relating to the purpose of the Land Release Report is contained in par 24 of Ms Thompson's statement. It may be summarised as follows. The Minister for Planning and Infrastructure announced the results of the survey (reflected in the 2007 preliminary report) at a conference on 13 March 2007. The media reported aspects of the announcement. Certain parts of the announced survey results were questioned by developers as not reflecting the experience of the industry. Mrs Thompson says that, as a result, the Department of Planning conducted further analysis of inactive lots data and in June 2007, published the Survey Report.
I would infer from that material that the Survey Report was prepared for the purpose of publication and not to record the results of the survey for the ongoing purposes of the Department of Planning.
Consequently, I am not satisfied that the Survey Report was 'prepared or used for the purpose of recording matters relating to the business' of the state.
While the statutory provisions differ, the following observations by New South Wales' courts about the term 'record of a business' seem to me to provide some guidance about the general character of business records. In a passage cited with approval in RW Miller (159), Wood J said in Atra v Farmers & Graziers Co‑op Co Ltd (1986) 5 NSWLR 281:
… the term 'record of a business' denotes documents which truly might be regarded as the internal records kept by or for that company in respect of its business such as its books of account, ledgers, employment records, stock records, postage books, its own correspondence, internal memoranda, and so on (288).
Finally, the defendants submit that a common law exception to the rule against hearsay justified receipt of the Survey Report. They rely upon the discussion in Heydon J D, Cross On Evidence (8^th Australian ed, 2010) [29,155].
I am not persuaded that any common law exception to the hearsay rule permits the admission of the Survey Report in this case.
In the passage referred to in Cross On Evidence, the learned author discusses a number of cases involving market surveys. These involve surveys about the thoughts and preferences of consumers. That subject matter meant that what was said by survey respondents fell within a recognised exception to the hearsay rule, namely state of mind: see, for example Shoshana Pty Ltd v 10th Cantanae Pty Ltd (1987) 18 FCR 285, 295 – 301; Ritz Hotel Ltd v Charles of the Ritz Ltd (1988) 15 NSWLR 158, 178 – 181; Sterling Pharmaceuticals Pty Ltd v Johnson & Johnson Australia Pty Ltd (1990) 96 ALR 277, 291 – 293.
In those cases the survey results were not tendered to prove the truth of the responses, but only as to the fact of the responses. By contrast, in this case the defendants seek to tender the Survey Report (and the Survey Responses) as evidence of the truth of its contents. Nothing in those cases seems to me to support that.
In the last paragraph of Cross On Evidence [29,155] the learned author suggests that an expert can rely upon published data, including statistics published by government bodies, if the material has been compiled over a field wider than the issue before the court. That seems to me to contemplate that an expert is permitted to rely upon data without rendering the expert's opinion inadmissible. It does not involve the data being admitted as evidence of its truth. This does not assist the defendants' contentions that the Survey Report is admissible. Nor does it assist the defendants' contention that Ms Thompson's evidence about the conclusions reached in the Survey Report are admissible. It may mean that the opinions of other experts, directed at different issues, who refer to the Survey Report as part of their reasoning, are not thereby rendered inadmissible. It is not necessary to give that detailed attention for present purposes.

Conclusion on objections to Ms Thompson's evidence

For these reasons, I uphold the objection on the ground of hearsay to the admission of the Survey Report and to the Survey Responses. It follows that pars 25, 27 and 29 – 31 of Ms Thompson's statement are inadmissible. Paragraphs 23, 24 (without annexure 'MT6'), 26 and 28 are provisionally admitted for a limited purpose only, under the parties' agreement about the approach to 'post‑taking evidence'. That evidence is admitted for the purposes of the defendants' 'completion of the process' contention. Thus it is admitted only to show what Ms Thompson did and what report and advice she gave to the state. As I have said, the plaintiffs object to that evidence, but it has been agreed that the evidence will be received provisionally and the objection dealt with in my reasons for decision.

Emeritus Professor Reginald Whipple's evidence

The plaintiffs tender a report of Emeritus Professor Whipple dated August 2009. I was informed at the hearing that Mr Whipple died in about January 2010. Subject to the question of whether the court should in its discretion reject the statement, the report is admissible under s 79C of the Evidence Act. The report meets the requirements of s 79C(1) and s 79C(2)(a).
The defendants oppose the tender of the report. They contend the court should exercise its discretion under s 79C(6) to reject the report on the ground that the probative value of the report is outweighed by the consideration that its admission may create undue prejudice or may necessitate undue consumption of time. For the reasons that follow, I accept the defendants' contention.
I begin by outlining the relevant legal principles.

Section 79C(6): legal principles

Section 79C(6) provides as follows:
For the purposes of this section a court may, in its discretion, reject a statement notwithstanding that the requirements of this section are satisfied with respect thereto, if the court is of the opinion that the probative value of the statement is outweighed by the consideration that its admission or the determination of its admissibility ‑
(a)may necessitate undue consumption of time; or
(b)may create undue prejudice, confuse the issues, or in proceedings with a jury mislead the jury.
The principles relevant to the exercise of discretion under s 79C(6) are not in dispute.
The starting point is that it is a discretion to reject. Thus once the requirements of the section are otherwise satisfied, the prima facie position is that the statement is to be admitted. The discretion to reject only arises if the court forms the opinion that the probative value of the statement is outweighed by, relevantly, the consideration that its admission may necessitate undue consumption of time or may create undue prejudice.
In considering whether any undue prejudice exists, regard must be had to the interests of both parties to the proceedings: Coffman [30].
Relevant 'undue prejudice' may be suffered by a party who is unable to cross‑examine a witness: Coffman [30]; Mouritz v Hegedus (Unreported, WASCA, Library No 990188A, 19 April 1999) (page 21).
The prejudice suffered by the party who is seeking to tender the document, if that document is not admitted, must also be considered: Coffman [30]. In Coffman, the result of refusing to admit the document would have been that the appeal would be dismissed. Of course, that is not the case here.
In this case, the prejudice to the plaintiffs in refusing to admit the report lies in the absence of the benefit of whatever probative value the report may have had. The extent of that prejudice must be considered taking account of whether, and to what extent, matters dealt with in the report can be the subject of cross‑examination of witnesses and submissions.
Other factors that may be relevant to the exercise of the discretion include:
(a)The extent to which the statement in the document is ambiguous and requires clarification or explanation: Cavill [41] (albeit said in a somewhat different context);
(b)whether the statement was prepared by the tendering party's lawyers as a witness statement and was intended for use by them in an adversarial context: Shmee Pty Ltd v Bresham Investments Pty Ltd [2008] VSC 291 [21];
(c)whether the statement seeks to provide evidence of a central issue in the case: Shmee [21]; and
(d)whether the other party is or is not in a realistic position to controvert the proposed evidence by firsthand evidence of their own: Shmee [19].

Mr Whipple's report

Mr Whipple's report is 66 pages. I provide the following outline, highlighting some aspects and, in the course of doing so, make some observations.
Mr Whipple was not a valuer and he did not profess to have any particular knowledge of the relevant market at the time that the land was taken. His expertise was in evaluation theory and methodology. He has taught, researched and published on valuation theory and methodology.
His report focuses on the methodology and approach of each of the four valuers to give evidence in this case. In it he provides a critique of each valuer's approach and report. He also provides particular comments on the hypothetical subdivision method and any other methods employed. He deals with some specific comparable sales, namely the 'Clough Rapley', 'Gold Fortune' and 'Frost' comparable sales.
He explains his view of the valuation process. He considers it involves the following steps:
(a)defining the issues for valuation;
(b)analysing the particular property and its characteristics;
(c)determining the alternative uses and the most probable use;
(d)determining the most probable buyer in light of the views about the property's characteristics and its most probable use;
(e)choosing the appropriate valuation method which, if sufficient data is available, will usually be an inference from past transactions (comparable sales);
(f)applying the chosen valuation method; and
(g)reviewing and adjusting the result and valuation as required.
He explains how this method would be applied to the subject land, in general terms.
At page 14 of his report he refers to the view he has expressed in a textbook that the notion of highest and best use is not useful. Rather, a better approach is to focus on the most probable use. On the face of the report, it is not clear what difference if any this distinction makes to his analysis. Of course, as the defendants submit, the inability to cross‑examine Mr Whipple means that this issue cannot be explored with him.
Mr Whipple contends that valuation reports must be transparent. He sets out passages from his textbook and an article about the need for a valuer to spell out his or her reasoning. There is some reference to legal authorities (pages 15 ‑ 16).
There is room for argument as to whether this is a matter for expert evidence at all, or whether it is a matter for submission and determination by the court. In any event, in my view, any contention that a valuer has failed to adequately disclose his reasoning can be the subject of submission by counsel for the plaintiffs. I do not consider that Mr Whipple's views about whether the reasoning of a valuer was appropriately transparent would be of any significant probative value. Consequently, the plaintiffs would not be prejudiced by the absence of evidence of Mr Whipple's views in that regard.
Mr Whipple's report first considers the valuation report of Mr Brian Zucal of 8 February 2007, relied on by the defendants.
Mr Whipple criticises Mr Zucal's approach to the zoning and planning issues. He says that Mr Zucal 'ignores the site's zoning history'. Mr Whipple says that the answers to question 2.2 in the planners' joint statement 'indicate the issue of the zoning of the subject lands was far from cut and dried and indicate the possibility that the resumed land was, in the earlier times before the road alignment was set, likely to be in the process of ripening into a higher use such as urban' (page 17). There is, at the least, room for questioning of Mr Whipple's interpretation of the answers to question 2.2 in the joint statement. The plaintiffs' planners gave one set of answers to that question and the defendants' planners expressed a contrary opinion. It is doubtful whether the defendants' planners' answer supports the quoted comment of Mr Whipple.
Further, Mr Whipple expresses a view on the analysis by Mr Chris O'Neill, one of the defendants' planners. Mr Whipple suggests that Mr O'Neill's analysis 'neither considers the site in a historical context nor considers the likelihood of rezoning' (page 17). I do not consider that Mr Whipple's views about the merits of Mr O'Neill's analysis have any probative value. Apart from anything else, Mr Whipple is not a planning expert.
Mr Whipple proceeds to emphasise that a valuer must, in forming an opinion, be 'wide‑minded' (page 17). Mr Whipple criticises Mr Zucal for not revising his report after he received the joint statement of expert planners of February 2009. Mr Whipple records that seven of the respondents were of the view that the land would have been urban had it not been reserved for public purposes while three said that it would be rural.
Mr Whipple expresses the opinion that Mr Zucal ought to have interviewed leading estate agents and developers 'to ascertain the perspective market actors might have had in relation to the subject land … if the reservation never existed' (page 18). He says that consequently Mr Zucal can be criticised for not conducting broader inquiries on which to base his views.
Generally, Mr Whipple criticises Mr Zucal for not taking sufficient account of views expressed by other experts. It seems to me that to the extent that there is force in this criticism, it is one that can be made through a combination of cross‑examination of Mr Zucal and submission.
At page 19 Mr Whipple criticises Mr Zucal for failing to mention some of the locational characteristics of the land. Again, these points can be made through cross‑examination and submission.
In considering alternative uses and the question of demand, Mr Whipple refers to evidence in a number of witness statements. He criticises Mr Zucal for not having regard to these and related matters or for not having made further inquiries about demand. Some of the paragraphs of the statement of Mr Tucker quoted by Mr Whipple (pages 19 – 20) have been ruled inadmissible: see McKay v Commissioner of Main Roads [2009] WASC 353 [23] – [24]. In any case, Mr Whipple's view on this would not have added anything of any real probative value to what can be done by cross‑examination of the valuers and by submission.
Mr Whipple applies a statistical analysis to the comparable sales used by Mr Zucal. He suggests that the comparable sales are widely dispersed from the figure of $70,000 per hectare ultimately adopted by Mr Zucal and that this casts doubt on the utility of the comparable sales.
Mr Whipple then concludes with a number of criticisms of Mr Zucal's report. He states that 'on its face the report lacks probative value'. He says that the valuation 'lacks the requisite standard and is deficient in a number of respects'. These conclusions are set out at page 24.
In some respects, I am satisfied that Mr Whipple's criticisms themselves do not have any probative value. For example, the value judgments he makes that the report 'lacks probative value' and 'lacks the requisite standard' are, in my view, matters for the court and not for an expert.
To the extent that the criticisms are not of this kind, it seems to me that, in large measure at least, they are matters that can adequately be pursued by cross‑examination and of the experts by submission.
One exception to that may be Mr Whipple's statistical analysis of the comparable sales. If the plaintiffs consider that kind of analysis to be of value, they would be at liberty to obtain a report from an appropriately qualified person in that regard, who could then be subject to cross‑examination. The conclusions to be drawn about the reliability of the respective comparable sales analyses from the statistical analysis of each set of comparable sales could then be a matter for submission. There would seem to be ample time to permit this course, should the plaintiffs decide to do so. The evidence of the valuers at trial is not anticipated to commence until September.
Mr Whipple then proceeds to explain his view on the hypothetical subdivision analysis. In his view, the method is flawed and the results are unreliable. Essentially he says that timing is a centrally important component of real estate development. Consequently, he says, any analysis that uses current dollar values for a process that by definition takes years, does not produce credible results.
The limits of the utility of the hypothetical subdivision analysis are referred to in many cases and are readily apparent. Mr Whipple's view on the topic would, I think, be of very limited probative value.

Mr Whipple analyses the report of 13 February 2007 by Mr Keith Wilson, the other valuer relied on by the defendants. Mr Whipple levels many of the same criticisms as he made of Mr Zucal's report.
He makes some criticism of sales used by Mr Wilson as comparable sales (pages 34 ‑ 35). He also performs a statistical analysis to analyse the dispersal of Mr Wilson's comparable sales. He criticises Mr Wilson's approach as indicating 'a lack of transparency [which] detracts from probative value', because generalised price levels are not tied to particular sales evidence. He suggests that the figure of $70,000 per hectare 'is to be rejected as being unsubstantiated' (page 38). For reasons I have already given, I do not think these views are of any real probative value.
Mr Whipple analyses Mr Wilson's approach in using some land in Johnson Road, Wellard and Raleigh Road, Forrestdale to derive a relationship between the values of rural land with urban potential and urban land. In doing so, Mr Whipple recites passages from a report by one of the plaintiffs' planners, Mr Kotsoglo.
Again, this point can and no doubt will be made in cross‑examination of Mr Wilson and in submissions.
At pages 43 ‑ 44, Mr Whipple sets out 12 reasons why he believes that Mr Wilson's valuation evidence is 'not reliable'.
My comments about the criticisms of Mr Zucal's report seem to me to apply again to the criticisms of Mr Wilson's report. Some of the criticisms are of little or no probative value because they are usurping the function of the court to make a judgment about the valuer's approach. Otherwise, the points made by Mr Whipple can substantially be made through cross‑examination and submission, with the exception of the statistical analysis.
Mr Whipple also reviews the reports of Ms Le Fevre and Mr Brown, the valuers relied on by the plaintiffs.
While he does make criticisms of Ms Le Fevre's report in some respects, Mr Whipple makes a number of very positive comments about the style and approach of her report. For example:
(a)'early on the reader has a clear idea as to the scope of the valuation' (page 45);
(b)'she has canvassed a wide range of views and conveyed that information to the reader in a brief but efficient manner' (page 46);
(c)'she has clearly explicated the issues to be addressed' (page 52);
(d)'she gives a useful account of the sites' location or characteristics' (page 52);
(e)'it is a conscientious piece of work. She backs her conclusions with persuasive argument' (page 52).
Mr Whipple performs a similar statistical analysis of the dispersal of the comparable sales used by Ms Le Fevre. He states that the percentage differences are less than those for Mr Zucal or Mr Wilson, and that this enhances the confidence one can place in her work (page 49).
Mr Whipple provides a generally favourable analysis of Mr Brown's report. Among other things, he says:
(1)'Mr Brown reports a careful review of planning documents and expert reports' (page 53).
(2)He has given environmental and town planning expert reports 'appropriate weight' (page 53).
(3)'Each of his chosen sales is accompanied by considerable supporting material in a carefully researched endeavour' (page 57).
(4)Mr Brown offers 'a useful review of the town planning history of the district' and 'his account is persuasive' (page 59).
(5)'Mr Brown's report is carefully considered and based on a wide range of information' (page 60).
(6)'The arguments he puts forward are persuasive and reasoned not only from the amassed information but also from considerable experience' (page 60).
Mr Whipple performs a statistical analysis of Mr Brown's sales and concludes that the dispersions are 'tighter' than those of Mr Zucal and Mr Wilson, generally making the tighter analysis more reliable (page 59).
My observations about Mr Whipple's appraisal of the reports of Mr Zucal and Mr Wilson apply to his appraisal of the reports of Mr Le Fevre and Mr Brown.
Finally, Mr Whipple analyses three transactions that are comparable sales, namely the Gold Fortune land, the Clough Rapley land and the Frost land.
I do not think that his untested views about these three transactions would have substantial probative value. First, it is, at the least, open to doubt whether his qualifications make him particularly equipped to express the opinions that he has expressed. Secondly, and in any event, all of the valuers have expressed opinions about these transactions in their reports. These transactions will no doubt be dealt with in the concurrent valuers' expert evidence sessions. They can, and no doubt will, be cross‑examined about those matters. Thirdly, the proper analysis of these transactions is ultimately a matter for submission.

Should Mr Whipple's report be rejected?

For the reasons that follow, and taking into account the observations I have made in the previous section, I am satisfied that the probative value of Mr Whipple's report is outweighed by the considerations that its admission may create undue prejudice and may necessitate undue consumption of time. The following matters, taken together, lead me to that conclusion.
First, Mr Whipple's report involves a consideration of the merits of the reports of the valuers. Consideration of the merits of the valuers' reports is at the heart of this case.
Secondly, while both parties are calling valuers as expert witnesses, neither party proposes to call any other witness of a similar character to Mr Whipple's appraisal of the methodology and approach of the valuers.
Thirdly, the defendants' inability to cross‑examine Mr Whipple will cause undue prejudice to them. It is true, as the plaintiffs' submit, that if I admit the report, the absence of an opportunity to cross‑examine will affect the weight to be given to the evidence. That affects the extent of the prejudice to the defendants but it does not eliminate that prejudice. Moreover, the decrease in weight afforded to the report because of the absence of cross‑examination bears upon the probative value that is to be weighed in exercising the discretion under s 79C(6).
Fourthly, substantial aspects of Mr Whipple's report are in my view of limited probative value. I refer to my earlier observations.
Fifthly, a number of aspects of Mr Whipple's report would benefit from explanation or elaboration. The inability to cross‑examine Mr Whipple means that his approach, for example, to the planning evidence and the joint statement of the planners cannot be explored further.
Sixthly, the prejudice to the plaintiffs from the absence of admission of the report is limited first, because of the limited probative value of substantial aspects of the report, and because:
(a)there will be a joint expert evidence session of the valuers. In the course of that session the valuers will be given an opportunity to comment on the approach as taken by other valuers and the valuers will be cross‑examined;
(b)the substantial bulk of the points made in Mr Whipple's critique of the valuers' approaches are matters that can be adequately canvassed in cross‑examination and in submissions; and
(c)one exception to that may be the statistical analysis of the dispersion of the comparable sales. In that respect, the plaintiffs can, if they are so minded, obtain evidence from a suitably qualified expert in that respect.

Conclusion on Mr Whipple's report

For these reasons, I exercise my discretion under s 79C(6) to reject the tender of Mr Whipple's report.

Objection to parts of the report of Mr Brian Haratsis

The defendants object to parts of pages 37 and 38 of the report of Mr Brian Haratsis dated October 2009.
Mr Haratsis' report was prepared and tendered in response to the statement of Ms Marion Thompson to which I have already referred. In the passages of Mr Haratsis' report to which objections are taken, he is responding to par 37 of Ms Thompson's statement. As I have ruled par 37 to be inadmissible, there would seem to be no occasion to respond to it, with the consequence that Mr Haratsis' evidence would become unnecessary. However, for the sake of completeness and given that the matter was fully argued, I provide my ruling on the objection.
It is, I think, necessary to repeat the context and basis of any receipt of Ms Thompson's evidence. The Land Release Report referred to in pars 35 and following was prepared and published in February 2007, seven months after the taking of the land in this case. Consequently, the plaintiffs object to the tender of the Land Release Report and to Ms Thompson's evidence about its contents. The defendants say that this evidence is admissible as one of the limited exceptions to the general rule against the receipt of evidence after the date of taking. The exception relied upon by the plaintiffs is described as the 'completion of a process underway at the time of taking' exception. The existence of that exception is said to be supported by the decision of Pain J in Chino Pty Ltd v Transport Infrastructure Development Corporation [2006] NSWLEC 768; (2006) 153 LGERA 136 [66]. There may be room for doubt as to whether what is set out at that paragraph records a submission made to her Honour, rather than her Honour's reasoning. But that is a question for another occasion. As I have said, the parties have agreed that this (and considerable other evidence) should be received provisionally on the basis that objections on the ground that evidence is 'post‑taking' are to be resolved in the course of the court's reasons for decision after trial.
As I have said, Ms Thompson expresses views based upon the Land Release Report about the supply of zoned land as at February 2007 or earlier.
In the passages to which objection is taken on pages 37 and 38, Mr Haratsis seeks to rebut what Ms Thompson says by reference to a publication entitled 'Urban Growth Monitor' (UGM) released in July 2009. For example, while Ms Thompson expresses an opinion based upon 2006 consumption rates, Mr Haratsis points to significant increases in consumption since 2006. He then applies a rate from the UGM to Ms Thompson's analysis for a period after the date of taking.
To my mind, as a matter of logic, one cannot use the information that became available only in 2009 to seek to rebut, in the way that Mr Haratsis has done, Ms Thompson's conclusions about the position as at February 2007.
In their written submissions filed with leave after the hearing, the plaintiffs submit that:
(1)some of the material in the UGM is information before the taking date, and some after the taking date;
(2)only the latter category is objectionable;
(3)the plaintiffs wish to supplement Mr Haratsis' evidence after a review of the UGM to clarify what reflects information before, as against after, the taking date; and
(4)in the meantime, the evidence should be admitted provisionally.
I accept the first two submissions, but not the last proposition. In my opinion, the evidence in its present form is inadmissible. The plaintiffs can seek leave to rely on supplementary evidence from Mr Haratsis about information available at the taking date if so advised and if the evidence is disclosed in a timely way.
For those reasons, I uphold the objection to the last three sentences on page 37 and to page 38.

Conclusion

For the reasons I have given I:
1.uphold the plaintiffs' objection to the Survey Report and the Survey Responses on ground of hearsay;
2.reject the report of Emeritus Professor Whipple under s 79C(6) of the Evidence Act; and
3.uphold the objection to the last three sentences of page 37 and to page 38 of the October 2009 report of Mr Haratsis.