Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 5)
[2019] QSC 210
•27 August 2019
SUPREME COURT OF QUEENSLAND
CITATION: Sanrus Pty Ltd & Ors v Monto Coal 2 Pty Ltd & Ors (No 5) [2019]
QSC 210PARTIES:
First Plaintiff:
SANRUS PTY LTD AS TRUSTEE OF THE QC TRUST ACN 097 049 315
AND
Second Plaintiff: EDGE DEVELOPMENTS
PTY LTD AS TRUSTEE OF
THE KOWHAI TRUST ABN
26 010 309 529AND
Third Plaintiff:
H&J ENTERPRISES (QLD) PTY LTD AS TRUSTEE OF THE H&J TRUST ACN 077 333 736
AND
First Defendant: MONTO COAL 2 PTY LTD
ACN 098 919 414AND
Second Defendant: MONTO COAL PTY LTD
ACN 098 393 072AND
Third Defendant: MACARTHUR COAL
LIMITED ACN 096 001 955
FILE NO/S: SC No 8609 of 2007 DIVISION: Trial Division PROCEEDING: Application DELIVERED ON: 27 August 2019 DELIVERED AT: Brisbane HEARING DATE: 22 August 2019; 23 August 2019 JUDGE: Bond J ORDER:
1. In relation to the defendants’ objections to –
(a)
Expert Report of Jamie Freeman (P) dated 2 November 2018 [EXP.010.005.0001];
(b)
Expert Report of Jamie Freeman (P) dated 22 November 2018 [EXP.010.007.0001]
(c)
Joint Expert Report on Offsite Water Supply of Jamie Freeman (P) and Gary Harradine (D) dated 15 July 2019 [EXP.500.004.0001_2];
(d)
Joint Expert Report on Offsite Power Supply of Jamie Freeman (P) and Gary Harradine (D) dated 15 July 2019 [EXP.500.011.0001_2]; and
(e)
Joint Expert Report on Port of Jamie Freeman (P) and Euan Morton (D) [EXP.500.026.0001_2],
I make the provisional rulings set out in schedule 1 to these reasons.
2. I give the parties leave to supplement their arguments on admissibility by reference to the alternate basis on which the plaintiffs sought to support the admissibility of the impugned evidence, referred to in my reasons at
[63] to [71].
CATCHWORDS:
EVIDENCE – ADMISSIBILITY – OPINION EVIDENCE – EXPERT OPINION – GENERALLY – where the plaintiffs sought to adduce expert evidence in the form of a report from an expert in rail and other infrastructure as it relates to the development of a mine – where the defendants objected to extensive parts of the reports produced by the expert and some portions of the joint expert reports he was responsible for – where the bases of the objections included that the matters contained in the report are not properly the subject of expert opinion, that the expert is not adequately qualified to make the impugned statements and that the opinions stated are not based wholly or substantially on the expert’s expertise – whether the objections to the expert reports should be upheld
COUNSEL: K Downes QC with D de Jersey, K Gothard and A Psaltis for
the plaintiffs
D Clothier QC with E Hoiberg, for the defendantsSOLICITORS: Holding Redlich for the plaintiffs
Allens for the defendants
Introduction
I have before me about 120 objections which have been made during the trial of the present proceeding to expert opinion evidence which the plaintiffs seek to adduce from Mr Jamie Freeman (P).[1] There had been some 157 separate objections, but some are no longer pressed. The objections which are pressed and the responses which have been made to them are identified in schedule 1 to this judgment.
[1] In this proceeding, and because there are so many expert witnesses, I have adopted the convention of distinguishing
Mr Freeman was to be the next witness and I had hoped to rule upon all the objections relating to his evidence before any further expert evidence was adduced, however I have been told that another expert needs to be interposed because he is about to go overseas, and objections are being taken to his evidence also. Unfortunately I have not yet had the time to rule on each of the 120 objections in relation to Mr Freeman’s evidence and, as will appear, I have determined that I need to hear from the parties further about an alternative basis on which the plaintiffs sought to support the impugned evidence.
Nevertheless, I have formed the view that it will better assist the efficient management of the trial as a whole if I proceed in the following way.
In order to articulate a framework within which the objections may be resolved I will first explain at a high level of generality the nature of the present proceeding and how the plaintiffs seek to use the impugned expert opinion evidence. Then it will be necessary to outline the procedural context in which the objections were made and to explain why I have decided that, for the most part, it is appropriate that the present issues of admissibility of expert opinion evidence not be deferred until my ultimate judgment in the proceeding, as the plaintiffs sought to have me do.
I will identify the general principles which inform the disposition of the various objections to Mr Freeman’s evidence. I will then seek to identify and to explain the decisions which I have provisionally reached by the application of those principles to parts of Mr Freeman’s reports to which objection has been taken and which I have had the time to consider. I say provisionally because, as I have mentioned, I need to receive some further submissions on an alternative argument presented by the plaintiffs.
I hope that proceeding in this way will assist the disposition of objections in relation to the interposed expert. I would hope also that the parties will thereafter be able to reach agreement on the remainder of the objections to Mr Freeman’s evidence. If that does not occur, then I will have to proceed to rule item by item on each of the remaining objections in a subsequent judgment, once I have heard from the parties further in relation to the alternative argument.
The significance of expert opinion evidence in this proceeding
The trial of this proceeding concerns complaints made by junior joint venture partners (the plaintiffs) about the conduct of the senior joint venture partner (the first defendant, Monto Coal 2) in relation to decisions made in the course of performing a joint venture for the exploitation of a coal deposit at Monto in Queensland. For present purposes it is not necessary to describe the bases on which liability is sought to be attributed to the second and third defendants.
The two sides of the joint venture had entered into a written joint venture agreement in May 2002 which expressed various obligations in relation to the following two stages in the possible exploitation of the subject coal resource:
(a)
Stage 1, namely “Mining Operations producing between 1,000,000 and 1,500,000 tonnes of saleable coal per annum”; and
(b)
Stage 2, namely “the Mine Development and Mining Operations beyond Stage 1 with the expectations of production being 10,000,000 tonnes or more of saleable coal per annum”.
In brief summary, in this proceeding the plaintiffs contend that Monto Coal 2 breached the joint venture agreement by deciding to suspend all work on the Monto Coal Project in July 2003 and, accordingly, by failing to develop Stage 1 of the Project by 16 May 2005 and by failing to undertake a Stage 2 feasibility study in that time (or, indeed, at any time up to 31 December 2008). The plaintiffs allege Monto Coal 2’s decision-makers made relevant decisions in the absence of good faith and for contractually impermissible purposes.
The plaintiffs claim that by reason of the impugned conduct of Monto Coal 2 they:
(a) lost the opportunity to earn a profit from the sale of coal from Stage 2 of the project and to receive royalties therefrom and also lost the value of free carried interest in Stage 1 capital costs; and (b) further or alternatively, lost the opportunity to sell their interests in the joint venture at a value which would reflect the stage to which the Monto Coal Project would have advanced had the impugned conduct not occurred.
Because this is a loss of opportunity case, the plaintiffs rely on Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 and Principal Properties Pty Ltd v Brisbane Broncos Leagues Club Ltd [2018] 2 Qd R 584 to contend that there are two stages of analysis. The first, they contend, is concerned with proof of causation of an identifiable loss of some kind and the second, they contend, involves assessing the quantum of the loss. The plaintiffs contend that the first stage is to be assessed on the basis of proof on the balance of probabilities and the second, by reference to the Court’s assessment of the possibilities and probabilities of occurrence of the relevant hypothetical scenario or scenarios.
In their written opening submissions on causation and damages the plaintiffs put their case in this way (footnotes omitted, emphasis added):
63. The plaintiffs’ case is put on two bases. Each will be addressed in turn.
64. (First basis: lost opportunity to earn profits): The plaintiffs contend that the conduct of Monto Coal 2, in suspending the Project on 4 July 2003 and thereafter maintaining the suspension, and failing to provide for the development of Stage 1, constituted a breach of the obligation to use all reasonable efforts to develop Stage 1 by 16 May 2005, and the obligation to carry out the Stage 2 Feasibility Study, and this caused the plaintiffs to lose the opportunity to earn profits from the sale of coal from the Mine as developed in Stage 1 and Stage 2.
65. The plaintiffs’ case in this regard is that but for Monto Coal 2’s breaches:
(a)
Coal produced from Stage 1 would have been produced and sold during the period August 2004 to June 2007, and would have gained market acceptance by about May 2005;
(b) the Stage 2 Feasibility Study would have been prepared by about May 2005; (c)
the Stage 2 Feasibility Study would have demonstrated that Stage 2 would have been profitable with a net present value of $518million, as set out in paragraph 9 to 31 of Mr Jeff Hall’s (P) report of 21 November 2018;
(d)
the JVMC would have voted, in about May or June 2005, in favour of developing Stage 2; and
(e)
Coal would have been produced and sold from Stage 1 and Stage 2 at a profit with a net present value of $2,569 billion, the plaintiffs’ share of which is $1.002billion, as calculated in paragraph 13 of, and Annexure B to, Mr J. Hall’s (P) report of 30 November 2018.
66. Findings on the matters at paragraph 65(a) to (d) above (in particular, the matters at (a) and (c)) depend in large measure upon the Court’s assessment of the expert evidence. The expert evidence is, on any view, extremely complex, and requires the consideration of a very large number of imponderables. The issue is made more complicated by the circumstance that activities that would have been conducted in the counterfactual world, were in fact never done (viz. the further drilling required to “prove-up” the resource, and the extensive work required for a bankable feasibility study).
67. The difficulties referred to in the preceding paragraph arise as a direct result of Monto Coal 2’s breaches of the JVA, in circumstances where the defendants rather than the plaintiffs were responsible for the work required to be undertaken for the purposes of the Stage 2 Feasibility Study. It is submitted in this regard that the Court would draw inferences about causation by resolving doubtful questions against the defendants, as the party whose actions have made the assessment so problematic.
68. (Second basis: lost opportunity to sell interest): In the alternative to the first basis, the plaintiffs contend that the breach of the JVA by suspension of the Project on 4 July 2003 caused the plaintiffs to lose the opportunity to sell their interests in the Joint Venture in July 2008 at a value which would reflect the stage to which the Project would have advanced, had Monto Coal 2 not breached its obligations.
It seems apparent from the foregoing, that, amongst other things, the causation hypothesis on which the plaintiffs rely to assert the link between the conduct which they impugn and the opportunity which they say they lost requires them to establish that had it not been for the alleged breaches of the joint venture agreement, the Stage 2 feasibility study would have been prepared by May 2005 and would have demonstrated that the development of Stage 2 would have been profitable with a net present value of $518 million[2] and, accordingly, the joint venture would have made a decision to proceed with Stage 2.
[2] There has been a pleading amendment which asserts an alternative case with a slightly smaller NPV but that does
The proposition that if the Stage 2 feasibility study had been performed it would have had a particular outcome and that outcome would have led to the Joint Venture making a decision to proceed with Stage 2 is an essential element in the causation hypothesis underlying the plaintiffs’ case. It is part of the means by which the plaintiffs seek to persuade me that they lost a valuable commercial opportunity.
What is a “Stage 2 feasibility study”?
For present purposes, it suffices to identify that the phrases “Feasibility Study” and “Stage 2 Feasibility Study” were defined in the written joint venture agreement.
“Feasibility Study”, meant a study of all relevant aspects of possible methods of proposed Mining Operations (of a standard normally acceptable to a bank, merchant bank or other financial institution of international reputation having recognised expertise in mining project finance to make a decision as to whether or not to provide funding for the Mine Development) containing:
(a) estimates of both capital and operating costs; (b)
an analysis of how to proceed with the Mining Operations to economically and commercially extract Coal;
(c) a plan for Mine Development; (d) an economic appraisal based on a range of coal prices; (e) reference to other relevant marketing and financial considerations; and (f)
unless otherwise agreed, a statement as to whether a proposed Mine Development is commercially viable and a recommendation as to whether or not proposed Mining Operations should proceed.
“Stage 2 Feasibility Study” meant a bankable feasibility study to determine whether or not to undertake Stage 2 which included:
(a) exploration for Stage 2 to the extent reasonably necessary to prove up the Stage 2 resource to the extent necessary for a potential participant to decide to become a Participant; (b) mining studies required to define the method of mining and determine costs for the mining process for Stage 2; (c) the costing and conceptual design of the coal preparation plant for Stage 2; (d) the costing of the capital required for Stage 2; (e) all reasonably necessary environmental studies; and (f) the study into transportation options for Stage 2 but excluding design costs.
Having regard to those definitions, it is not difficult to understand why the plaintiffs opened their case by submitting that findings on what the hypothetical Stage 2 Feasibility Study would have demonstrated would depend in large measure upon the Court’s assessment of expert evidence, which evidence will require the consideration of a very large number of imponderables, and which imponderables will include counterfactual propositions about the extensive work required to carry out such a study.
And although the plaintiffs’ opening did not state this, it presently seems to me that the assessment of loss, if I am persuaded that the plaintiffs have been caused an identifiable loss of some kind, will in large measure also turn upon my consideration of the possibilities and probabilities of occurrence of many of the same imponderables and, importantly, by reference to the same body of evidence, including expert evidence as is relied on in relation to what the hypothetical Stage 2 Feasibility Study would have demonstrated.
That proposition is confirmed by the plaintiffs’ submissions before me on the present objections, which contended that the expert evidence of Mr Freeman (P) was relevant to two overarching questions which arise in the proceeding, namely –
(a) the content of a hypothetical Stage 2 feasibility study; and (b) the assessment of the quantum of the plaintiffs’ loss, in the event I determined that the plaintiffs have suffered some compensable loss.
By way of brief overview, the plaintiffs rely on the opinion evidence of Mr Freeman to establish that a hypothetical Stage 2 feasibility study for Stage 2 as at May 2005 would have determined that –
(a)
the source of raw water for the mine would likely have been the Paradise Dam, and that such water could be obtained by adopting the technical and commercial solution proposed by Mr Freeman and for about the cost identified by Mr Freeman;
(b)
offsite power supply for Stage 2 would have been obtained by adopting the technical and commercial solution proposed by Mr Freeman and for about the cost identified by Mr Freeman;
(c)
coal could be transported from the mine to port in the capacities suggested by Mr Freeman by adopting the technical and commercial rail solution proposed by Mr Freeman and for about the cost identified by Mr Freeman; and
(d) in relation to the requisite port requirements for Stage 2 – (i) port capacity was available for contract and would have been allocated to the joint venture in the manner suggested by Mr Freeman;
(ii) the solutions that could have been triggered had insufficient primary capacity been available were those suggested by Mr Freeman; and
(iii) the likely charges under a contract with the port were those suggested by Mr Freeman.
So far as the damages case is concerned, it is evident that the plaintiff’s case will require my assessment (amongst very many other things) of the possibilities and probabilities of things turning out in the way Mr Freeman opines they would.
The procedural context within which the objections have come on for argument
My two previous decisions Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 1) [2018] QSC 308 and Sanrus Pty Ltd v Monto Coal 2 Pty Ltd (No 2) [2019] QSC 162 identified the content of various case management orders governing the production before trial of the expert reports which parties intended to rely on at trial, the conduct during trial of multiple joint expert conclaves and the production of joint expert reports after the conclaves.
Orders which I made on 21 December 2018 requiring the experts to attend joint conferences for the purpose of preparing joint reports were expressed to be “without prejudice to the right to object to any expert evidence at trial”.[3] Further, they required that “fourteen days prior to the commencement of the giving of expert evidence the parties notify each other of the paragraphs of each of the others' expert reports which are objected to and the grounds of objection”.[4]
[3] See my order of 21 December 2019 at [9].[4] See my order of 21 December 2019 at [9].Mr Freeman (P) has produced three expert reports for the purpose of this proceeding:
[5] The trial is being conducted as an electronic trial. Numerical references in this format identify relevant documents
(a) Report dated 2 November 2018 [EXP.010.005.0001];[5] (b) Supplementary Report dated 15 November 2018 [EXP.010.006.0001]; and (c) Report (Actual Costs) dated 22 November 2018 [EXP.010.007.0001].
Mr Freeman (P) participated in four joint expert conclaves which led to the production of the following four joint expert reports:
(a)
Joint Expert Report for Offsite Water Supply dated 15 July 2019 by Mr Freeman (P), Mr Simpson (P), Mr Harradine (D), Mr Smith (D), Mr Cavanagh (D) and Ms Power (D) [EXP.500.004.0001_2];
(b)
Joint Expert Report for Offsite Power Supply dated 15 July 2019 by Mr Freeman (P), Mr Simpson (P), Mr Harradine (D), Mr Smith (D) and Mr Cavanagh (D) [EXP.500.011.0001_2];
(c)
Joint Expert Report for Port dated 22 July 2019 by Mr Freeman (P) and Mr Morton (D) [EXP.500.026.0001_2]; and
(d)
Joint Expert Report for Rail dated 24 July 2019 by Mr Freeman (P), Mr Hunter (D), Mr Morton (D) and Mr Cavanagh (D) [EXP.500.027.0001_2]
The trial has progressed to the stage of hearing the evidence of the various expert witnesses.
Some of the joint expert reports mentioned in [27], have already been admitted in the trial because an earlier expert has already been called. But in each case the right to object was reserved. Thus:
(a) The Joint Expert Report for Offsite Water Supply was admitted on day 53 of the trial through Mr Smith (D), on the basis that the other witnesses responsible for preparing the joint expert report will be called and subject to the reservation of rights in relation to objections for those other witnesses.[6] On day 54 of the trial Ms Power (D) was called to give evidence and on day 55 Mr Cavanagh (D) was called to give evidence, however the remaining experts responsible for the Joint Expert Report for Offsite Water Supply are yet to be called. (b) The Joint Expert Report for Offsite Power Supply was also admitted on day 53 of the trial through Mr Smith (D), on the basis that the other witnesses responsible for preparing the joint expert report will be called and subject to the reservation of rights in relation to objections for those other witnesses.[7] On day 55 of the trial, Mr Cavanagh (D) was called to give evidence, however the remaining experts responsible for the Joint Expert Report for Offsite Power Supply are yet to be called. (c) The Joint Expert Report for Rail was also admitted on day 53 of the trial through Mr Smith (D), on the basis that the other witnesses responsible for preparing the joint expert report will be called and subject to the reservation of rights in relation to objections for those other witnesses.[8] On day 55 of the trial, Mr Cavanagh (D) was called to give evidence, however the remaining experts responsible for the Joint Expert Report for Offsite Power Supply are yet to be called to give evidence.
On 8 August 2019 (which was the day the agreed timetable required notice of objections to be given), the defendants notified the plaintiffs of their objections to the reports of Mr Freeman (P). Parts of two of Mr Freeman’s individual reports and parts of three out of the four joint expert reports involving Mr Freeman were impugned: see [ALL.502.001.0004]. The objections were extensive. Although the objections fall broadly into similar categories, there were about 157 discrete items originally raised and each one must be separately considered.
Shortly prior to the commencement of oral argument on those objections, the defendants sought to supplement their objections: see [ALL.502.001.0054]. They also sought to object to some parts of the reports on the grounds that they were irrelevant to the case as pleaded. When the objections came on for argument, the plaintiffs were not in a position to deal with the supplementary objections or with the pleading point and, further, objected to the defendants being permitted to raise any objections beyond those notified within time. I have not yet heard argument on the latter proposition, and did not require the plaintiffs then to respond to the supplementary objections or to the pleading point. Instead I have required the parties to record their position as to the merits of the supplementary objections in a schedule and will consider whether I should rule on them at a later juncture.
The present judgment identifies and explains my provisional rulings only in relation to the objections first notified by the defendants, including as they were narrowed by the defendants during the course of oral argument. And, because of the exigencies of the trial, the present judgment does not express provisional rulings on each of the 120 discrete items which are still pressed in relation to the objections first notified by the defendants.
Preliminary issue as to whether I should defer ruling on admissibility
The plaintiffs contended that I should not proceed to determine the defendants’ objections, but should defer ruling on admissibility until my final judgment. I heard submissions on this question during oral argument. At the end of oral argument I advised the parties that I intended to rule on the objections and would explain why in my judgment.
In Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588, French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at explained (at [19] and [20]):
[…] As a general rule, trial judges confronted with an objection to admissibility of evidence should rule upon that objection as soon as possible. Often the ruling can and should be given immediately after the objection has been made and argued. If, for some pressing reason, that cannot be done, the ruling should ordinarily be given before the party who tenders the disputed evidence closes its case. That party will then know whether it must try to mend its hand, and opposite parties will know the evidence they must answer.
It is only for very good reason that a trial judge should defer ruling on the admissibility of evidence until judgment. […]
The general rule stated in Dasreef Pty Ltd v Hawchar has been referred to with approval in the Queensland Court of Appeal: see Mark Bain Constructions Pty Ltd v Avis; Mark Bain Constructions Pty Ltd v Barnscape Pty Ltd [2012] QCA 100 at [120] per Fraser JA with Chesterman JA and Fryberg J agreeing.
The plaintiffs sought to persuade me that there were very good reasons not to apply the general rule.
The plaintiffs argued that it was significant that the experts had “engaged productively in the joint expert conclave process without the difficulty which is sought to be imputed to the evidence of one of them”. That argument was not persuasive. The engagement of experts in conclaves was done by order which specifically stated the conclaves were to be without prejudice to objections to admissibility and in the context which specifically set a timetable for objections. In any event, expert witnesses are not judges. The fact that they might be able to “engage productively” (or even reach agreement, for that matter) in discussions about evidence is neither here nor there, if the evidence upon which they engaged or even reached agreement is found not to meet the criteria for admissibility of expert opinion when an objection is ruled upon by a judge.
The plaintiffs complained that the defendants had given no notice that they intended to object to the expert reports of Mr Freeman to the extent that was now sought to be done. The defendants gave the requisite notice in accordance with the timetable which had been set by order of the Court, as amended.[9] The complaint might have been more persuasive if the defendants’ objections were spurious or marginal. However, it will appear, many of the defendants’ objections have merit. While it is true that the resolution of the objections has caused disruption to the trial plan, that cannot be helped. I do not find the extent of the objections do be a good reason to defer ruling.
[9] The notification was received after working hours on the day it was required, but the plaintiffs took no point aboutThe plaintiffs pointed out that if the defendants’ objections to Mr Freeman’s reports were to be upheld, then it may be that similar objections should be upheld in respect of one or more of the defendants’ expert reports. Although I do not know what is the content of any objections which may have been notified by the plaintiffs in respect of the defendants’ experts, my preliminary view is that there may well be some merit in this proposition. Without conceding the point in respect of any specific part of their expert reports, the defendants accepted that a ruling in their favour in respect of some parts of Mr Freeman’s reports might well mean that they could not press parts of their own expert reports. But that is as it should be. Neither side should be permitted to rely on inadmissible evidence, if objection is taken to it. And if objection is taken, the law must be applied to both sides equally.
Subject to some caveats concerning the application of the proof of assumption rule (as to which see [50] below) and other specific issues in which I have formed the view that I should not yet make an evaluative judgment about disputed matters of proof, in my view this was an appropriate case for the application of the general rule. My ruling on the present objections will permit both sides of this case to make informed forensic judgments about the future conduct of the proceeding. In particular, it will permit the defendants to conduct the course of their cross-examination of Mr Freeman (P) in the knowledge of the particular evidence which is admissible and which they must answer. But further, and to the extent that any other expert reports from either side are subject to such deficiencies as I might find to exist in Mr Freeman’s reports, my ruling will also permit the parties to make informed forensic judgments about the extent to which they seek to press those reports (or seek to object to them). And, it is not insignificant to remark that neither the parties in their final submissions, nor I in my eventual final judgment on the merits of this proceeding, should be troubled with having to deal with inadmissible expert opinion evidence, if a proper objection has been taken to it.
Of course, if inadmissible expert opinion is admitted, because objection has not been taken to it, then it will be necessary to deal with that opinion in my eventual final judgment by reference to the law as explained in Hughes v National Trustees Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134; Robert Bax & Associates v Cavenham Pty Ltd [2013] 1 Qd R 476 and Beaven v Wagner Industrial Services Pty Ltd [2018] 2 Qd R 542.
The structure of the remainder of this judgment.
The remainder of the body of this judgment identifies the general principles which I will apply, and the approach which I have taken to the principal issues of controversy between the parties.
The schedule to the judgment –
(a)
identifies the relevant parts of the reports to which objection was taken (in the objections first notified by the defendants);
(b)
records the objection, as ultimately expressed by the defendants (although that was to be read with written submissions advanced by the defendants);
(c)
records the response, as ultimately expressed by the plaintiffs (although that was to be read with written submissions advanced by the plaintiffs); and
(d)
in the column headed “Ruling” – and having regard to the reasons recorded in the body of the judgment – records and explains the specific ruling made in respect of the impugned parts of the reports.
As I have mentioned, I have not yet been able to rule on each item in the schedule. In those cases, the schedule states “Not yet ruled” in the final column.
Applicable general principles
Expert opinion evidence must satisfy the Makita criteria
In Makita (Aust) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [85], Heydon JA stated that for expert opinion evidence to be admissible, it must meet the following criteria:
(a) it must be agreed or demonstrated that there is a field of “specialised knowledge”; (b) there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; (c) the opinion proffered must be “wholly or substantially based on the witness’s expert knowledge”; (d) so far as the opinion is based on facts “observed” by the expert, those facts must be identified and admissibly proved by the expert; (e) so far as the opinion is based on “assumed” or “accepted” facts, those facts must be identified and proved in some other way; (f) it must be established that the facts on which the opinion is based form a proper foundation for it; and (g) finally, the expert’s evidence must explain how the field in which the expert has expertise - as established pursuant to (a), (b) and (c) – applies to the facts assumed or observed so as to produce the opinion propounded.
This passage of the reasons of Heydon JA in Makita has been applied by the Queensland Court of Appeal on multiple occasions, including R v Naidu [2008] QCA 130 at [68]; R v Kleimeyer [2014] QCA 56 at [31]; R v Mackenzie [2016] QCA 277 at [37]; Woolworths Limited v Grimshaw [2016] QCA 274 at [24] and Beaven v Wagner Industrial Services Pty Ltd [2018] 2 Qd R 542 at [44]. As will appear, his Honour developed his thinking and expressed it further in Dasreef Pty Ltd v Hawchar.
Four aspects of the Makita criteria are relevant to the disposition of the defendants’ objections to Mr Freeman’s reports.
The first relevant aspect of the Makita criteria is that the expert opinion must be on a matter which is a proper matter for expert opinion. As to this:
(a)
That is what the first three of the Makita criteria address. There must be a field of specialised knowledge, in which the witness is demonstrated to be “expert” by specified training, study or experience, and the opinion must be wholly or substantially based on the witness’s expert knowledge.
(b)
If the expert's reasoning is not, on analysis, dependent on his or her specialised knowledge, and merely expresses a process that could have been undertaken by the trier of fact (whether a judge sitting alone or a jury) without the expert’s assistance, it is not admissible as expert opinion evidence.[10]
(c)
The importance of this aspect of the law was explained by Gleeson CJ in HG v The Queen (1999) 197 CLR 414, in the following passage (footnotes omitted, emphasis added):
[10] Clark v Ryan (1960) 103 CLR 486 at 491 – 492 (Dixon J); DPP v Jordan [1977] AC 699 at 717 – 718 (Wilberforce[43] To paraphrase what was said by Dixon CJ in Clark v Ryan about the expert witness in that case, the evidence the defence sought to lead from [the expert] really amounted to putting from the witness box the inferences and hypotheses on which the defence case wished to rely.
[44] This was not a trial by jury, but in trials before judges alone, as well as in trials by jury, it is important that the opinions of expert witnesses be confined, in accordance with s 79, to opinions which are wholly or substantially based on their specialised knowledge. Experts who venture "opinions" (sometimes merely their own inference of fact), outside their field of specialised knowledge may invest those opinions with a spurious appearance of authority, and legitimate processes of fact-finding may be subverted. The opinions which Mr McCombie was to be invited to express appear to provide a good example of the mischief which is to be avoided.
(d) His Honour’s remarks, although specifically directed at the statutory expression of this common law rule, are just as applicable to the common law rule itself. (e) A failure to demonstrate that an opinion expressed by a witness is based on the witness’s specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight: Dasreef Pty Ltd v Hawchar per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [42]. (f) Notably, because demonstration of these matters could come only from the evidence given by the expert, the need to direct attention to these matters requires that the opinion be presented in a form which makes it possible to answer that question: HG v The Queen per Gleeson CJ at [39] and Dasreef Pty Ltd v Hawchar per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ at [36].
The second relevant aspect of the Makita criteria is that the facts on which the opinion is based must be identified by the expert. As to this:
(a) This is part of what the fourth and fifth of the Makita criteria address. In R v Naidu,[11] Fraser JA said that ‘[i]t is unquestionably the law that expert opinion evidence is inadmissible if the opinion is not expressed upon a state of facts both identified and proved in evidence’ (emphasis added). (b) In Dasreef Pty Ltd v Hawchar at [64] Heydon J called this the “assumption identification rule”. His Honour observed (footnotes omitted, emphasis added): [11][2008] QCA 130 at [68].
There is no doubt that the assumption identification rule exists at common law. Expert evidence is inadmissible unless the facts on which the opinion is based are stated by the expert – by way of proof if the expert can admissibly prove them, otherwise as assumptions to be proved in other
ways. Thus Dixon J said that the assumptions of fact on which an expert opinion rested had to be
“adverted to by the witness”.
(c) The previous two subparagraphs demonstrate that a failure to identify the state of facts on which the expert opinion is expressed goes to the admissibility of the evidence, not its weight. (d) Heydon J explained the purpose of the “assumption identification rule”, in these terms in Dasreef Pty Ltd v Hawchar (at [65]) (footnotes omitted): The rule facilitates the operation of the proof of assumption rule and other rules of admissibility. It helps to distinguish between what the expert has observed and what the expert has been told; to ensure that the expert is basing the opinion only on relevant facts; to ensure that experts do not pick and choose for themselves what aspects of the primary evidence they reject, what they accept, how they interpret it and what the court should find; and to ascertain whether there is substantial correspondence between the facts assumed and the evidence admitted to establish them.
(e) His Honour’s reference to the “proof of assumption rule” was to the common law rule that an expert opinion is not admissible unless evidence has been, or will be, admitted, whether from the expert or from some other source, which is capable of supporting findings of fact which are sufficiently similar to the factual assumptions on which the opinion was stated to be based to render the opinion of value: Dasreef Pty Ltd v Hawchar at [66]. When in R v Naidu, Fraser JA referred to “and proved in evidence”, I apprehend it was to this requirement.
I observe parenthetically, that there is a distinction between the assumption identification rule and the proof of assumption rule. The former requires the assumptions on which the opinion depends to be stated by the expert. The latter requires the assumptions to be proved or at least for there to be evidence sufficiently similar to the assumptions to render the opinion of value. The body of the defendants submissions relied on the former rule, yet the schedule which identified the detail of their objections relied on both rules. There is often a difficulty with applying the proof of assumption rule before all the evidence is in and before the trier of fact is in a position to evaluate all the evidence in the trial in context. Whilst it is possible that if the evidence was clearly discrete and encapsulated that I might be persuaded to apply the proof of assumption rule before my final judgment, in relation to the items in the schedule which I have examined at the time of preparation of these reasons, I have not thought it is appropriate to do so.
The third relevant aspect of the Makita criteria is that to the extent that the opinion rests on facts “observed” by the expert, they must be admissibly proved by the expert. As to this:
(a)
That is part of what the fourth of the Makita criteria addresses. Whilst it is often the case that experts will not seek themselves to prove some or all of the facts on which their opinion is founded, Makita recognises that there is no reason why that cannot occur, so long as it is done in an admissible way.
(b)
An expert might well prove, for example, a particular experiment, analysis done or set of observations made by the expert and then express an opinion based on the results of the experiment, the outcome of the analysis or the content of the observations. In that way the expert would be both a witness of fact (as to the experiment, analysis or observations) and a witness of expert opinion (as to the expert opinion properly drawn within the scope of the expert’s demonstrated expertise based on the facts so demonstrated). Sometimes the dividing line between fact and law in this respect might be unclear. For example, an expert might need demonstrated specified training, study or experience for the experiment, analysis or observations to be valid.
(c)
The important point is that insofar as a litigant seeks to prove facts on which an expert opinion is based by way of the expert’s own evidence, that proof must be done in an admissible way by that expert. If the expert witness’ own evidence of the facts is not admissible to prove them, then the most that that part of the expert’s evidence could be regarded as, is a statement of what the expert assumed to be true for the purpose of the expert formulating the expert’s opinion evidence.[12] If those assumptions are not confirmed in some other way by admissible evidence in the proceeding, then the expert opinion evidence will not be admissible.
[12] cf Beaven v Wagner Industrial Services Pty Ltd [2018] 2 Qd R 542 per Fraser JA at [4].
The fourth relevant aspect of the Makita criteria is that the expert must state, in chief, the reasoning by which the conclusion arrived at flows from the facts proved or assumed by the expert so as to reveal that the opinion is based on the expert's expertise. As to this:
(a) That is what the final of the Makita criterion addresses. In Makita (at [59]) Heydon JA had earlier observed that if an expert’s report is to be useful it must comply with the prime duty of experts in giving opinion evidence, namely to furnish the trier of fact with criteria enabling evaluation of the validity of the expert’s conclusions. His Honour’s observations in this regard have been followed in the Queensland Court of Appeal: R v Sica [2014] 2 Qd R 168 per Muir and Gotterson JJA and Applegarth J at [104]; R v Lentini [2018] QCA 299 per Sofronoff P, with Philippides JA and Henry JA
agreeing, at [55].
(b) In Dasreef Pty Ltd v Hawchar at [91], Heydon J called this rule the ‘statement of reasoning rule’, and explained that the rule is important both from the point of view of how courts must be expected to act in relation to expert opinion and from the point of view of fairness to the opposing party. (c) As to the importance of the rule from the point of view of the Court, His Honour stated (at [92] – [94], footnotes omitted, emphasis added): 92. Sir Owen Dixon, speaking extrajudicially, said: “courts cannot be expected to act upon opinions the basis of which is unexplained.” In R v Jenkins; Ex parte Morrison Fullagar J quoted that statement with approval, and added that expert scientific witnesses should be asked to “explain the basis of theory or experience” on which their conclusions rest. On appeal Rich and Dixon JJ approved what Fullagar J had said. The witness must explain the basis of theory or experience because the court is not limited to examining the conclusion or the expertise of the expert witness: it must look to the “substance of the opinion expressed.” Since choosing between conflicting experts depends in part on “impressiveness and cogency of reasoning” their “processes of reasoning” must be identified. […]
93. Function of the statement of reasoning rule. The rule protects cross-examiners by enabling them to go straight to the heart of any difference between the parties without the delay of preliminary reconnoitring. It also aids the court in a non-jury trial, because at the end of the trial it is the duty of the court to give reasons for its conclusions. And it aids jurors, because at the end of the trial they have the duty of assessing the rational force of expert evidence. If there is not some exposition of the expert’s reasoning it will be impossible for the court to compose a judgment stating, and for the jurors to assemble, reasons for accepting or rejecting or qualifying the expert’s conclusion.
“The process of inference that leads to the [expert's] conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them.”
As Lord Cooper, the Lord President, said in Davie v Magistrates of Edinburgh:
“The value of [expert opinion] evidence depends … above all upon the extent to
which [the expert's] evidence carries conviction …
[T]he defenders went so far as to maintain that we were bound to accept the
conclusions of [an expert witness]. This view I must firmly reject as contrary to
the principles in accordance with which expert opinion evidence is admitted. […]
[The] duty [of expert witnesses] is to furnish the Judge or jury with the
necessary scientific criteria for testing the accuracy of their conclusions, so
as to enable the Judge or jury to form their own independent judgment by the
application of these criteria to the facts proved in evidence. … [T]he bare
ipse dixit of a scientist, however eminent, upon the issue in controversy, will
normally carry little weight, for it cannot be tested by cross-examination nor
independently appraised, and the parties have invoked the decision of a
judicial tribunal and not an oracular pronouncement by an expert.”
94. It is sometimes said that these words deal with weight only, not admissibility. But this is contradicted by the Lord President’s use of the word “admitted”.
(d)
As to the importance of the rule from the point of view of fairness to an opposing party, citing Lewis v The Queen (1987) 88 FLR 104 at 124, Heydon J wrote that the rule required the reasoning to be stated in chief because the opposing party is not to be left to find out about the expert's thinking for the first time in cross-examination.
Proof of what a person would have done in hypothetical circumstances
There is only one remaining aspect of general principle which is relevant to the disposition of the defendants’ objections. That concerns how evidence may be adduced as to what a person would have done in hypothetical circumstances, should proof of that hypothetical fact be relevant in a proceeding.
In this regard, the plaintiffs did not dispute the following summary of principle set out in the defendants’ submissions:
(a)
A witness may give evidence of what he or she would have done in hypothetical circumstances. Such evidence is not opinion evidence, but evidence of fact.[13]
(b)
Similarly, a witness with appropriate authority may also give factual evidence of what his or her corporate employer would have done in a hypothetical set of circumstances.[14]
(c)
On the other hand, evidence of what another person would have done in hypothetical circumstances, or what a reasonable person would have done in hypothetical circumstances, is opinion evidence.[15] There are generally three circumstances in which such evidence can be given:
[13] See Allstate Life Insurance Co v ANZ Banking Group Ltd (No 5) (1996) 64 FCR 73 at 75-76; Seltsam Pty Ltd v McNeill [2006] NSWCA 158 at [118] – [123]; La Trobe Capital & Mortgage Corporation Limited v Hay Property Consultants Pty Ltd (2011) 190 FCR 299 at [53] – [55]; Vella v The Queen [2015] NSWCCA 148 at [117] – [119].
[14] See Hughes Aircraft Systems International v Airservices Australia (1997) 80 FCR 276 at 280; La Trobe Capital & Mortgage Corporation Limited v Hay Property Consultants Pty Ltd (2011) 190 FCR 299 at [56] – [58].
[15] Beslic v MLC Ltd (No 2) [2016] NSWSC 746 at [96].
(i) A suitably qualified professional expert may give evidence of the content of general practices of professionals in his or her field, or to put it another way, evidence about what professionals generally do in stated circumstances.[16] Outside the field of professional practices, an expert may give similar evidence about the content of industry practices.[17]
(ii) A suitably qualified professional expert may go beyond evidence of the content of general practices, by expressing an opinion about the practice of competent and careful professionals in specified circumstances which are recurring or typical.[18] However, evidence of what an expert would himself or herself do in hypothetical circumstances is inadmissible.[19]
(iii) A suitably qualified professional expert may go beyond evidence of the general practice of competent and careful professionals in stated circumstances, and give evidence of what, in stated circumstances which are out of the ordinary and not amenable to observations about a developed practice, a competent and careful professional would be expected to do.[20] It has been suggested that some additional and special qualification over and above the ordinary training and experience of a professional in the field is required in order to be able to express an opinion of this kind.[21]
[16] ASIC v Vines (2003) 48 ACSR 291 at [13], [20]; Lucantonio v Kleinert [2009] NSWSC 853 at [8](1); Howe v Fischer [2014] NSWCA 286 at [81].
[17] ASIC v Vines (2003) 48 ACSR 291 at [20].
[18] ASIC v Vines (2003) 48 ACSR 291 at [21]; Lucantonio v Kleinert [2009] NSWSC 853 at [8](3); MB v Protective Commissioner [2000] NSWSC 718 at [2] – [5]; Adler v ASIC (2003) 46 ACSR 504 at [617] – [620], [632].
[19] ASIC v Vines (2003) 48 ACSR 291 at [31].
[20] ASIC v Vines (2003) 48 ACSR 291 at [22] – [26]; MB v Protective Commissioner [2000] NSWSC 718 at [5] – [10]; Maronis Holdings Ltd v Nippon Credit Australia Pty Ltd (2001) 38 ACSR 404 at [380]; Weller v Phipps [2010] NSWCA 323 at [76].
[21] MB v Protective Commissioner [2000] NSWSC 718 at [9].
The plaintiffs sought to extend the principles identified in the previous paragraph, to justify the conclusion that it was permissible for an expert qualified by having specialised knowledge of the industry in which a particular identified corporate person operated, to express an opinion as to what that corporate person would have done in hypothetical circumstances.
I reject the plaintiffs’ argument. That subject matter is not a proper matter for expert opinion. The plaintiffs were not able to identify any authority which supported the argument beyond the authorities which permit experts to give evidence of the content of industry practices and of the practices of consumers or industry participants generally. In my view those cases do not permit of such an extension. As Allsop CJ observed in Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2007] 245 ALR 15 at [24] in relation to cases which authorised expert opinion evidence about how customers in the market would react in hypothesised circumstances “… it goes without saying that [the expert] cannot say what any particular individual person would have done on a particular day.”
That is not to say that an expert might not be able to give admissible factual evidence concerning practices or procedures in an industry. But the expert would have to do so in an admissible way. And, as we have seen in the principles stated at [54](c) above, in some circumstances an expert might go on to express opinion based on the expert’s admissible factual evidence. But in so doing, the expert would have to comply with the Makita criteria.
Nor is it to say that factual evidence about a corporate person’s particular past conduct or practices might not be admissible, with a view to providing an evidentiary basis for a submission that the trier of fact should draw a particular inference about that person’s likely conduct in hypothetical circumstances. But the proof of past conduct or practices would have to occur in an admissible way. And whether the trier of fact should draw the inference contended for based on the evidence of past conduct or practices is a matter for the trier of fact. It is not a proper subject for expert opinion evidence. Permitting that to occur would usurp the function of the trier of fact and would permit the party seeking to adduce such evidence to engage in precisely the type of conduct criticised by Gleeson CJ in in HG v The Queen quoted at [48](c) above.
Principal questions of controversy
The items in respect of which objection was pressed fell into three principal categories.
(a) opinion as to what the joint venture would have done in hypothetical circumstances; (b) opinion as to what Queensland Rail (QR), or the Gladstone Port Corporation (GPC, sometimes also referred to as the Gladstone Port Authority or GPA), or SunWater, or Powerlink would have done in hypothetical circumstances; (c) opinion that the joint venture could have secured port capacity with the Port of Gladstone. [60] As to opinion evidence of what the joint venture would have done in hypothetical circumstances:
(a) The joint venture agreement provided a basis for supporting a submission that joint venture decisions were to be made “in accordance with good commercial mining industry practice” (see cl 4.1(a)). Further, certain decision makers in relation to joint venture business were obliged to decide by reference to what was in the best interests of the joint venture, considering that question, amongst other things, “from the perspective of a reasonable, direct or indirect equity investor in a coal mine in Australia” (see cl. 7.6). (b) The defendants correctly suggest that there are many incidents of Mr Freeman expressing a direct view as to what the joint venture would have done in hypothetical circumstances. However my attention has not been drawn by the plaintiffs to any occasions when Mr Freeman sought to express an opinion based on either of the bases expressed in the previous subparagraph. In any event I agree with the defendants’ submission that Mr Freeman does not purport to qualify himself as an expert in the field of mining joint venture decision making or equity investor decision making. (c) As a general proposition, I agree with the plaintiffs that it is not open to Mr Freeman to give expert opinion on what the joint venture would have done in hypothetical circumstances.
As to opinion evidence as to what QR, GPA, SunWater, or Powerlink would have done in hypothetical circumstances:
(a)
Mr Freeman’s opinions in relation to QR are in a different category to the other corporations. He was at some relevant times an employee of QR. I do not think it is yet appropriate to express an evaluation as to whether the nature of his role might have been such that he could give admissible factual evidence of what QR would have done in a hypothetical set of circumstances. I would not make findings on that question at this time. If he was not in that position, then the observations I make in relation to GPA, SunWater, or Powerlink would apply. However even if he was, it would be necessary for the expression of his opinions to meet the assumption identification rule and the statement of reasoning rule.
(b)
Mr Freeman’s opinions as to what GPA, SunWater, or Powerlink would do in hypothetical circumstances are – subject to the matters I will shortly raise in relation to the plaintiffs’ alternative argument – expressions of opinion on matters which are not properly the subject of expert opinion. I have explained why at [54] to [58] above. Further, even if I was wrong on that question, it would be very important that any expression of expert opinion on such matters, pay very careful attention to the assumption identification rule and the statement of reasoning rule.
As to the opinion evidence concerning the ability of the joint venture to have secured port capacity with the Port of Gladstone, there are many items covered by the objections on which I have not yet ruled. However, at least some of them are subject to the deficiencies identified in the previous paragraph. In particular I agree with the defendants that it is not a proper matter for expert opinion evidence for an expert to review documents including confidential documents obtained on subpoena and to express conclusions on what the expert would infer from those documents.
During the course of oral argument before me, and without abandoning resistance to the objections advanced by the defendants to the general admissibility of the evidence, the plaintiffs advanced a fall back argument. That argument was that at the least the evidence to which the defendants had objected could be regarded as expressing Mr Freeman’s views as to matters which would have been considered by appropriately qualified and competent experts who were preparing a hypothetical bankable feasibility study for the Monto Coal Stage 2 Project, and as identifying what conclusions those experts, acting with reasonable care and skill, would have reached on those matters.
There is support – albeit retrospective support, because that is not how Mr Freeman’s underlying reports are in fact expressed – for reading the reports in that way to be found in the joint expert reports for offsite power supply; offsite water supply and rail. The following paragraphs appear in the joint expert report in respect of rail (and similar words appear in the other two reports):
2.2 The purpose of this JER is to set out what the experts to this report agree or disagree with respect to rail for the Monto Coal Stage 2 Project (the Project). It is important to note that this report has been prepared, as have our underlying individual reports, to address what matters relevant to rail would have been considered by appropriately qualified and competent people who were preparing a hypothetical bankable feasibility study (BFS) for the Monto Coal Stage 2 Project, and what conclusions those people, acting with reasonable care and skill, would have reached on those matters. 2.3. The plaintiffs' experts have been asked to assume that preparation of the hypothetical BFS occurred from 2002 to 2005. The defendants' experts have been asked to consider the preparation of that hypothetical BFS as at May 2005. This difference in instructions is the principal source of the differences of opinion noted in Section 4 of this JER. 2.4. When we say that something would or would not have been decided or done, or that something is or is not correct, or is or is not reasonable, that is to be read in each case as expressing a conclusion that in, our opinion, those notionally preparing the hypothetical BFS would have reached on that “something”.
I think it is appropriate to accept the plaintiffs’ submission that, at the least, I should read Mr Freeman’s expressions of opinion in relation to offsite power supply, offsite water supply and rail as expressing his opinions as to the matters relevant to offsite power supply, offsite water supply and rail which would have been considered by appropriately qualified and competent people who were preparing a hypothetical bankable feasibility study for the Monto Coal Stage 2 Project, and as identifying his views as to the conclusions which those people, acting with reasonable care and skill, would have reached on those matters, assuming the preparation of the hypothetical bankable feasibility study in the period from 2002 to 2005.
The defendants submitted that if the reports were to be read as limited in that way, they would not press reliance on the assumption identification rule or the statement of reasoning rule. The problem with that concession is that it is presently unclear to me how it affects the remaining objections which they advanced and which, at least in relation to some of the items upon which I have ruled, I would uphold, e.g. the various objections as to matters not being proper matters for expert opinion. It was not clear to me whether that objection was pressed in relation to the plaintiffs’ fall back argument and, if it was, what either side’s argument was in relation to the operation of the principles which I have identified at [54](c) above. I could imagine, as I expressed in oral argument, that even though expert opinion that SunWater would have acted in a particular way might not be admissible in Court to prove that fact (namely that SunWater would in fact have acted in that way), it might be that reasonably competent experts would nevertheless have expressed a view on that topic when preparing a hypothetical bankable feasibility study. But whether that was a proper course would depend upon the application of the principles which I have identified at [54](c) above (or the existence of some agreement that I should regard them as satisfied).
These matters must be clarified before I finalise my ruling. I take the plaintiffs’ argument to be that if, by virtue of my rulings on the defendants’ objections, the impugned parts of Mr Freeman’s reports concerning offsite power supply, offsite water supply and rail are otherwise inadmissible, they nevertheless should be admitted on the limited basis suggested at [65] above. But even on that basis, how could the various statements about what the joint venture would have done be supported? And if that is the plaintiffs’ argument, then what, if any, arguments as to inadmissibility are pressed by the defendants?
The joint expert report in respect of port does not contain comparable statements to those I have recorded in relation to offsite power supply; offsite water supply and rail. However, Mr Freeman’s report was, because of the peculiar chronology of the delivery of expert opinion in this proceeding, delivered as a response to one of the defendants’ experts, Mr Morton. Mr Morton’s relevant report states:
1 I have been instructed to consider, if I were an expert advising on the preparation of a feasibility study for the development and operation of Stage 2 of the Monto Coal Project in May 2005, issues associated with the likely availability and cost of rail and port services. …
On that basis, the plaintiffs submitted that, at the least, I should read Mr Freeman’s opinions in relation to port in the same way as Mr Morton had expressed his opinion. There are real problems with reading Mr Freeman’s expressions of opinion on port in that way. First, he does not say explicitly in his report (or in the joint expert report) that that is how it was intended to be read. And, as the defendants submitted to me, it is difficult to see how it could be that he meant his report in relation to port to be interpreted in that way, seeing that it explicitly relies on material which post-dated May 2005 and some of which was in any event only obtained on subpoena and even then subject to the producing party insisting on confidentiality in respect of the documents produced.
If I was prepared to read Mr Freeman’s opinions in relation to port in that way for the purposes of ruling on admissibility, I would still need the same matters clarified as I have sought to have clarified in relation to the other subject areas of Mr Freeman’s opinion. Accordingly the plaintiffs should clarify with precision how they contend expressions of opinion in relation to port should be read. Should I read Mr Freeman’s expressions of opinion in relation to port as expressing his opinions as to the matters relevant to port which would have been considered by appropriately qualified and competent people who were preparing a hypothetical bankable feasibility study for the Monto Coal Stage 2 Project, and as identifying his views as to the conclusions which those people, acting with reasonable care and skill, would have reached on those matters, assuming the preparation of the hypothetical bankable feasibility study in the period from 2002 to 2005? Or as at May 2005 (which was what Mr Morton addressed)?
If so, is the plaintiffs’ argument then that if, by virtue of my rulings on the defendants’ objections, the impugned parts of Mr Freeman’s reports concerning port are otherwise inadmissible, they nevertheless should be admitted on the limited basis suggested at [65] above? If that is the plaintiffs’ argument, then what, if any, arguments as to inadmissibility are pressed by the defendants?
Conclusion
For the reasons set out above and in the column headed “Ruling” in schedule 1 to these reasons, I make the following orders:
1. In relation to the defendants’ objections to –
(a) Expert Report of Jamie Freeman (P) dated 2 November 2018 [EXP.010.005.0001]; (b) Expert Report of Jamie Freeman (P) dated 22 November 2018 [EXP.010.007.0001] (c) Joint Expert Report on Offsite Water Supply of Jamie Freeman (P) and Gary Harradine (D) dated 15 July 2019 [EXP.500.004.0001_2]; (d) Joint Expert Report on Offsite Power Supply of Jamie Freeman (P) and Gary Harradine (D) dated 15 July 2019 [EXP.500.011.0001_2]; and (e) Joint Expert Report on Port of Jamie Freeman (P) and Euan Morton (D) [EXP.500.026.0001_2], I make the provisional rulings set out in schedule 1 to these reasons.
2. I give the parties leave to supplement their arguments on admissibility by reference to the alternate basis on which the plaintiffs sought to support the admissibility of the impugned evidence, referred to in my reasons at [63] to [71].
SANRUS PTY LTD & ORS V MONTO COAL 2 PTY LTD & ORS
SUPREME COURT OF QUEENSLAND PROCEEDING NO. 8609/07
Schedule expressing the Court’s ruling on the defendants’ objections to reports of Mr Freeman (P)
Report of Jamie Freeman (P) dated 2 November 2018 [EXP.010.005.0001] (2 November Report)
| Item | Page/paragraph | Objection | Response to objection | Ruling |
Item 2 from the defendants’ schedule of objections
| 1. [25] First and second | Mr Freeman provides evidence about the track record | Macarthur Coal’s “industry achievement” in relation to the | (1) I agree that the impugned sentences do not address |
sentences (‘I have of Macarthur Coal and commentary about other prompt development of coal mines is evidenced by reference to proper matters for expert opinion in the sense I have considered…’)
mining projects.
the Moorvale development:
explained that rule. Whilst I acknowledge that expertise can be gained by experience as well as by training or
Not proper matters for expert opinion. • Macarthur Coal had a 77% interest in the Moorvale Project
([MAC.518.002.8283] p. 8287); study, the matters expressed fall into the category
Facts underpinning this opinion are not stated or impugned by Gleeson CJ in HG v The Queen, quoted in
proved by admissible evidence • Moorvale was a greenfield site ([TRA.500.030.0001] T30- the body of my reasons. 69/11); (2) If the subject matter was a proper matter for expert • A feasibility study in relation to the Moorvale project was opinion, I agree that the expression of opinion has not produced on 22 February 2002 [MAC.906.001.0927];
complied with the assumption identification rule and the facts underpinning this expression of opinion have not
• mining lease applications were lodged on 22 February 2002 ([MAC.906.001.0927 at pdf p. .0942]; been stated.
(3) The objection that the facts have not been proved by
• A mining lease was obtained in December 2002 admissible evidence amounts to reliance on what Heydon ([TRA.500.030.0001] T30-69/31); J described as the proof of assumption rule. If I had not • Financing was put in place in late 2002/early 2002 found in favour of other objections, I would not have ruled ([TRA.500.030.0001] T30-69/8-9);
before judgment on the question whether the evidence identified in the plaintiffs’ response operated to prove the
• Moorvale was brought into production around the middle facts underpinning the opinion. of 2003 and the second half of 2003 ([TRA.500.030.0001] T30-69/13-14) including the construction of a new rail spur (4) For the reasons articulated, I uphold the objection. I ([TRA.500.030.0001] T30-69/16-17).
did not understand the plaintiffs to contend that the evidence was admissible factual evidence from this
Ms Hollows gave evidence that Mr Talbot considered that witness as to reputation of Macarthur Coal. The evidence Moorvale could be developed within a year (T30-74/33-34). In was not stated in that form, but I would allow the plaintiffs response to a question “that was his reputation at the time” Ms to address me further if that argument is put. Hollows said “He did it once – doesn’t, yeah …” (T30-74/33- 34). Ms Hollows also agreed that “Moorvale, as I think you have given evidence earlier, progressed quite quickly. It was being pushed hard and it came online really in the middle of 2003” (T32-84/36-37 [TRA.500.032.0001]).
More generally, the major shareholder, Managing Director and CEO of Macarthur Coal was Mr Talbot ([MAC.518.002.8283 at pdf p. .8294]). Mr Greenwood gave evidence that:
•
“Ken Talbot was very much a 100-mile-an-hour man and wanted things moving very, very quickly all the time. He certainly didn’t like pessimists. I think there was a little balance between what was pessimism and realism on this particular issue, and I did discuss that with him and with Roger Marshall on another occasion, that the programme was very challenging, indeed” (T20-55/15-19);
• “Ken was extremely optimistic and didn’t like people with
| Item | Page/paragraph | Objection | Response to objection | Ruling |
any sort of pessimism regarding the programme. And, in fact, it would not have been worth your while to have said, ‘Look, hold on; this is going to take another year’” (21- 46/35-37); and
•
in relation to the development timetable “It would have been very difficult for me to have pushed it out any further. That would not have easily been accepted by Ken Talbot” (T21-47/16-17).
Mr Wallin gave the following evidence (in cross examination)
(T9-65/35-44):“Now, you also knew, I suggest, that Mr Talbot had a track record for completing mine development at record speed and low cost?---Yes.
And, indeed, of making a success of a mine which needed to both?---Yes.
market its coal as a niche product?---Yes.
And you’d had some personal involvement in Coppabella which knowledge gained by involvement in the industry about the track record of significant participants in the industry, such as Macarthur Coal (which would have been notorious in the industry): see Cargill at [50(19)].
you’ve related in your evidence-in-chief?---Yes.”
| 2. | [59] Second sentence (‘In | Mr Freeman provides evidence about the track record | The evidence in support of Macarthur Coal’s track record and | (1) I uphold the objection for the reasons expressed in |
| any event…’) | of Macarthur Coal and commentary about other | the fact that it was a “well-established producer” includes | relation to item 1 insofar as the sentence expresses an |
mining projects. Macarthur Coal’s 4 November 2002 prospectus opinion on what Macarthur Coal being a well-established
[MAC.518.002.8283] which, in relation to Macarthur Coal: producer with a proven track record would do. I did not
Not proper matters for expert opinion. understand the plaintiffs to contend that the first clause of
• states “Quality management with a proven track record of
Facts underpinning this opinion are not stated or
developing low cost, highly productive coal mines” [at pdf the sentence should be admitted as factual evidence from
proved by admissible evidence. this witness as to the reputation of Macarthur Coal. I
p. 8287]; would allow the plaintiffs to address me further if that
• lists nine individual projects within its “coal portfolio” [at argument is put. pdf p. 8294]; and (2) I also uphold the objection because the impugned
• refers to the Coppabella Coal Mine “which had been sentence expresses an implicit view as to Macarthur operating successfully since July 1998” [at pdf p. 8294] and Coal’s ability to commit to port capacity and its timing, in which Macarthur Coal had a 50% interest [at pdf p. which involves an expression of opinion as to what a third 8296]. On 4 November 2002, in relation to the prospectus, the directors
party, namely GPC would have been prepared to do. That
expression of opinion is inadmissible because: of Macarthur Coal resolved to confirm that “all statements that
• it expresses an opinion on what a third party would do relate to knowledge, belief, intention or other state of mind of and that is impermissible for reasons expressed in the
the company are accurate and not misleading” body of my reasons; and
| Item | Page/paragraph | Objection | Response to objection | Ruling |
| ([MAC.907.001.0472] at 0487 and [TRA.500.019.0001] at | • even if such an opinion was permissible, the facts |
T19-47/19-27). underpinning it are not stated. Otherwise, refer to the final paragraph of 1 above.
| 3. | [67] Third sentence (‘Mr | Mr Freeman provides evidence about the track record | Refer to 1 and 2 above. | (1) I uphold the objection for the reasons expressed in |
| Morton’s rationale…’) | of Macarthur Coal and commentary about other | relation to item 1. | ||
| mining projects. | ||||
| Not proper matters for expert opinion. proved by admissible evidence | ||||
| 4. | [214]-[219] | Mr Freeman provides evidence about the track record | As to paragraph [214], refer to items 1 and 2 above. | (1) As to [214], I uphold the objection for the reasons |
| of Macarthur Coal and commentary about other | expressed in relation to item 1. | |||
| mining projects. | As to paragraph [215], this is an expression of Mr Freeman’s | |||
| opinion based upon his relevant expertise. | (2) As to [215], I uphold the objection because the | |||
| Not proper matters for expert opinion. | paragraph expresses an opinion on what both the Joint | |||
| As to paragraph [216]: | ||||
| Facts underpinning this opinion are not stated or | Venture and the GPA would do and that is impermissible |
• As to the first sentence: for reasons expressed in the body of my reasons. Even if
proved by admissible evidence such an opinion was admissible, the facts underpinning it
• Macarthur Coal was led by Ken Talbot
([MAC.518.002.8283 at pdf p. 8294]); are not stated.
(3) As to [216], [217], [218], I uphold the objection for the
• Mr De Lacy, a former director of Macarthur Coal, gave
evidence that on entry into the Joint Venture reasons expressed in relation to item 1 at (1). Agreement “Being able to fund these things was not an (4) As to [219], I uphold the objection for the reasons issue. We – well, we knew that we had the confidence expressed in relation to item 1 at (1) and (2). of the market” (T42-24/6-7). Mr De Lacy also gave
evidence as follows (T42-43/1-8):“Now, you said to me that had you wished to raise the
funds, there would’ve been no difficulty - - -?---Yes.
- - - in raising the funds, I think?---Absolutely.
Is that a fair summary?---Absolutely. If we have a viable project and we wanted to raise the funds, … That was always my experience with Macarthur Coal. It was – well, it was a well respected company”
•
Mr De Lacy also gave evidence that “I’m not aware of any time, when Macarthur Coal needed further capital, that we – that couldn’t raise the capital” (T42-45/41- 42);
•
As to the second sentence, this is an expression of opinion or inference by Mr Freeman.
•
As to the third sentence, the report referenced [SAN.054.001.0802] in support of this statement [see also at pdf p. 0833].
| Item | Page/paragraph | Objection | Response to objection | Ruling |
• As to the fourth and fifth sentences, these matters are consistent with Mr Wallin’s evidence set out in response to the objection to paragraph [25] above. Development of Coppabella within 14 months of discovery is referenced in [MAC.151.028.0007 at pdf p. 0016]. As to the first sentence of paragraph [217], Mr Freeman is giving evidence of his own experience relating to his expertise. As to the second sentence, it is cross-referenced to a document which is in evidence [MAC.151.028.0007].
As to paragraph [218], it is cross referenced to a document
which is in evidence [MAC.151.028.0007].As to paragraph [219]:
•
The first sentence is a summary of the matters referred to above concerning Macarthur Coal’s reputation;
•
The second sentence is based upon Mr Freeman’s first-hand experience;
•
The third sentence is based upon Mr Freeman’s first-hand experience and is a logical inference from the matters set out in paragraph [219].
Otherwise, refer to the final paragraph of 1 above.
| 5. | [226] | Mr Freeman provides evidence about the track record | As to paragraph [226(a)], the reference to the “expertise and | (1) I uphold the objection for the reasons expressed in |
| of Macarthur Coal and commentary about other | achievements of Macarthur Coal” is evidenced by the matters | relation to item 1. | ||
| mining projects. | set out in response to the other parts of this Item 2. | (2) I also uphold the objection in relation to [226(b)] | ||
| Not proper matters for expert opinion. | As to paragraph [226(b)], evidence in relation to these dates is | because it expresses an opinion as to the state of mind of | ||
| provided in [SAN.054.001.0226] which is referred to in footnote | the GPA and that is impermissible for reasons expressed | |||
| Facts underpinning this opinion are not stated or | 34 and in the report of Euan Morton [EXP.020.167.0001] at | in the body of my reasons. Even if such an opinion was | ||
| proved by admissible evidence | [98(a)(iv)] which refers to document [SYN.004.001.0713] | admissible, the facts underpinning it are not stated. | ||
| (which post-dates mid-2005). Otherwise, refer to the final paragraph of 1 above. | ||||
| 6. | [273] | Mr Freeman provides evidence about the track record | The reference to the “industry achievements of Macarthur Coal” | (1) I uphold the objection for the reasons expressed in |
| of Macarthur Coal and commentary about other | is evidenced by the matters set out in response to the other parts | relation to item 1. | ||
| mining projects. | of this Item 2. Otherwise, refer to the final paragraph of 1 above. | |||
| Not proper matters for expert opinion. proved by admissible evidence |
Item 3 from the defendants’ schedule of objections
| 7. | [66] Second sentence (‘The | Mr Freeman gives an opinion about what the Joint | This evidence is: | (1) I uphold the objection because the impugned sentence |
| Joint Venture…’) | Venture (and others) would have done in a | expresses an implicit view as to what QR and GPA would | ||
| “The Joint Venture was well progressed with discussions with | have been prepared to do if the Joint Venture had sought | |||
| Item | Page/paragraph | Objection | Response to objection | Ruling |
| hypothetical situation. | QR in late 2002 and if it had committed to further studies and a | to have them do it. That expression of opinion is | ||
| viable solution in late 2002, or early 2003, it would have been | inadmissible because: | |||
| Not proper matters for expert opinion. | able to commit to conditional rail capacity and conditional port |
| ||
| Facts or assumptions underpinning the opinion not | capacity from late 2003/early 2004.” |
proved by admissible evidence. and that is impermissible for reasons expressed in the
This is not what the Joint Venture would have done. Rather, it body of my reasons; and assumes a hypothetical and then states what would flow in • even if such an opinion was permissible (and in respect of matters observable by Mr Freeman within his relation to QR I am not presently prepared to rule on expertise. the question whether Mr Freeman might be able to The factual basis is also given, in addition to the documents give admissible factual evidence on that question), the referenced in footnote [10], A meeting of the “Stage 2 Transport facts underpinning it are not stated. Infrastructure Partnership Group” was held on 6 June 2002 [MON.002.001.0005]. The minutes identify three phases of (2) The objection that the facts have not been proved by Queensland Rail’s work (p. 0005-0006). Phase A was “a high admissible evidence amounts to reliance on what Heydon level investigation of the rail infrastructure options. Estimated J described as the proof of assumption rule. If I had not cost is $70,000” (p. 0005). Phase B was “an investigation into upheld the objection for the reasons stated, I would not the preferred corridor options determined in Stage A. Estimated have ruled before judgment on the question whether the cost is $580,000” (p. 0005) and Phase C was “preliminary evidence identified in the plaintiffs’ response operated to designs for civil, track, signalling and telecommunications to prove the facts underpinning the opinion. deliver a cost estimate of +/- 20% accuracy. The estimated cost is $145,000” (p. 0006). At the meeting, Queensland Rail were instructed to proceed with Phase A (p. 0006). Mr Greenwood gave evidence that Queensland Rail went ahead with Phase A, did not complete Phase B and did not commence Phase C ([TRA.500.021.0001] at T21-43/43-46 and T21-44/1-2).
which does not require the application of secure funding (i.e. by whatever means). For clarity, Mr objection for these reasons. specialised knowledge; Freeman does not have a view on how the Joint Venture may
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
have been looking to secure funding for the Project.”
This is not a statement about what the Joint Venture would
have acted in a hypothetical factual situation, have done in a hypothetical circumstance, rather it is a which is a question of fact; statement of fact.
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
Mr Freeman is qualified to give evidence as to what
participants in the industry would have done in the
Ports Corporation operates. circumstances.
Otherwise, basis of opinions not set out. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 142. | [3.7] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “In additional to capacity in the primary market, the experts agree that: (a) There may be potential to acquire capacity on | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | the secondary market (i.e. via agreement with another miner | |||
| to purchase its contracted capacity); and (b) There may be |
which does not require the application of potential to use capacity on an uncontracted basis (i.e. on an specialised knowledge; 'ad hoc' basis).”
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
This is evidence as to facts observable by the experts in their
have acted in a hypothetical factual situation, experience. It is not a statement of what the Joint Venture or which is a question of fact; any third party would have done in hypothetical situations.
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
Mr Freeman is qualified to give evidence as to what
participants in the industry would have done in the
Ports Corporation operates. circumstances.
Otherwise, basis of opinions not set out. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| No | Page/paragraph | Objection | Response to objection | Ruling |
| 143. | [3.9]-[3.13] [3.12] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “The experts agree that there was no formal process, procedure, or policy specifying how GPC allocated capacity. | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | The negotiation process was 'fluid'. 3.1 0. Coal Handling | |||
| Agreements (CHAs) provided the legally binding allocation of |
which does not require the application of capacity. Prior to that, there was a spectrum of arrangements specialised knowledge; which provided increasing certainty that GPC would allocate
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
capacity to the mine (e.g. agreed commercial terms, formal
exchange of letters, heads of agreement).
have acted in a hypothetical factual situation, GPC would agree commercial terms, and then there would be which is a question of fact; time allowed to finalise detailed contract negotiations and
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
execute agreements, with some of the other forms of deal
sometimes used as intermediate steps to provide increased
Ports Corporation operates. certainty.
Otherwise, basis of opinions not set out. Once the commercial principles had been agreed, if another The statements concerning taking a calculated risk party was willing to sign a ToP contract for that capacity, in the secondary market, accelerating expansions there may be a process of GPC requiring 'sign up', or 'let it and undertaking further expansions are irrelevant. go'. Further, Mr Freeman has no demonstrated GPC appeared to tolerate extended periods to finalise expertise in planning or constructing port agreements even in the face of known competing demand, expansions.
provided that it remained confident that the agreement would be signed in accordance with the agreed commercial terms, as evidenced by the protracted negotiations with Anglo for the Dawson project (although the specific circumstances around this negotiation are unknown).”
This is evidence summarising observable facts about the operations of GPC it is not evidence about what GPC would have done in a particular hypothetical circumstance.
Mr Freeman is qualified to give evidence as to what participants in the industry would have done in the circumstances.
Various coal handling agreements of the kind referred to in these paragraphs are in evidence ([GPC.001.001.1019],
[GPC.001.001.1088], [GPC.001.001.1196], [GPC.001.001.1249], [GPC.001.001.1302], [GPC.001.001.1449] and [GPC.001.001.1496]).
144. Not pressed
| 145. | [4.4] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman considers that the Monto JV could have secured | |||
| (a) Mr Freeman’s interpretation of documents | committed capacity by mid-2004. While he considers that the |
prepared by Gladstone Ports Corporation, Monto JV would have preferred this to be conditional upon:
| No | Page/paragraph | Objection | Response to objection | Ruling |
which does not require the application of (1) FlD by the Monto JV; and (2) an approved mining lease, specialised knowledge; he considers that the Monto JV could have been willing to sign
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
an unconditional contract if GPC would not accept these
conditions given the market of high demand (Response Report
have acted in a hypothetical factual situation, paragraph 266).” which is a question of fact; This is predominately statements of facts observable in Mr
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
Freeman’s experience. Otherwise it is about what the Joint
Venture could have done, which is a matter relevant to the
Ports Corporation operates. content of a feasibility study.
Mr Freeman is qualified to give evidence as to what
Otherwise, basis of opinions not set out. participants in the industry would have done in the The statements concerning taking a calculated risk circumstances. The basis for this opinion is set out in the 2 in the secondary market, accelerating expansions November Report at paragraph [266] [EXP.010.005.0001 at and undertaking further expansions are irrelevant. pdf p. 0088]. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 146. | [5.5] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman contends that the Project may have accepted a | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | calculated risk taken to rely on ad hoc or secondary market | |||
| capacity should capacity in the primary market fall short of |
which does not require the application of the required 10 mtpa.” specialised knowledge; This is about what the Joint Venture could have done, which
is relevant to the content of a feasibility study.
(b) Speculation as to how Gladstone Ports
Corporation (and the Joint Venture) would Mr Freeman is qualified to give evidence as to what have acted in a hypothetical factual situation, participants in the industry would have done in the which is a question of fact; circumstances. (c) Mr Freeman’s observations, as a non- Ports Corporation operates.
Otherwise, basis of opinions not set out. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 147. | [5.12] second sentence | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | "Despite this, Mr Freeman considers that had the demand | |||
| (a) Mr Freeman’s interpretation of documents | profile required earlier additional capacity, then GPC would |
prepared by Gladstone Ports Corporation, have accelerated expansions or initiatives per Appendix 5
| No | Page/paragraph | Objection | Response to objection | Ruling |
which does not require the application of paragraphs A5.11 and A5.17.” specialised knowledge; This is opinion evidence about general industry practices
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
based on facts observed by Mr Freeman in the course of his
experience and what participants in the industry (with whom
have acted in a hypothetical factual situation, he has dealt) would be likely to do in particular circumstances. which is a question of fact;
(c) Mr Freeman’s observations, as a non- Ports Corporation operates.
Otherwise, basis of opinions not set out. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 148. | [5.15] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Beyond the planned expansion of RGTCT to 65mtpa, Mr Freeman claims that there were additional opportunities for | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | GPC to expand RGTCT to 75-80mtpa through operational | |||
| improvements or to 100 mtpa through infrastructure |
which does not require the application of investment. Mr Freeman considers that, had there been specialised knowledge; sufficient demand for such capacity, by mid2005 GPC would
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
have investigated and ultimately committed to such
expansions, and that this could have occurred by mid-2007 in
have acted in a hypothetical factual situation, conjunction with GPC's other planned expansions. Mr which is a question of fact; Freeman has reviewed the additional and unredacted GPC
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
documents made available in June 2019 and prepared a
supporting analysis of how GPC has considered expansions
Ports Corporation operates.
or available capacity. In doing so, Mr Freeman remains of the view that GPC had opportunity for further expansions in 2005
Otherwise, basis of opinions not set out. (refer Appendix 5, paragraphs A5.11 to A5.12).” The statements concerning taking a calculated risk To the extent that this evidence is based on Mr Freeman in the secondary market, accelerating expansions summarising and drawing inferences from the documents in and undertaking further expansions are irrelevant. exercising his expertise, it is admissible. Further, Mr Freeman has no demonstrated expertise in planning or constructing port Mr Freeman is qualified to give evidence as to what expansions.
participants in the industry would have done in the circumstances. Mr Freeman is qualified to give evidence based on facts observed in his experience. Otherwise, Mr Freeman is qualified to provide background information drawn from documents to support his reasoning and to draw inferences from those documents based on his expertise.
The basis for the first sentence of this paragraph is set out in
| No | Page/paragraph | Objection | Response to objection | Ruling |
| the 2 November Report [EXP.010.005.0001] at [254(a)] and [254(b)] pdf pp 0082-0083]. | ||||
| 149. | [5.17] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “The experts disagree as to the application, and weighting, of | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | factors that may have been considered by GPC in allocating | |||
| capacity to coal customers.” |
which does not require the application of This goes to matters of fact observable by Mr Freeman in his specialised knowledge; experience.
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
Mr Freeman is qualified to give evidence as to what
participants in the industry would have done in the
have acted in a hypothetical factual situation, circumstances. which is a question of fact;
(c) Mr Freeman’s observations, as a non- Ports Corporation operates.
Otherwise, basis of opinions not set out. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 150. | [5.18] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman considers that GPC would allocate capacity based on customer's willingness to sign a ToP contract and | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | does not consider that GPC, nor its shareholding ministers, | |||
| would get too concerned about project bona fides in executing |
which does not require the application of a contract. Mr Freeman has reviewed the additional and specialised knowledge; unredacted GPC documents made available in June 2019 and
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
prepared a supporting analysis of how GPC behaved with
competing mines and Monto during 2002-2006 (refer
have acted in a hypothetical factual situation, Appendix 5 - Mr Freeman's Supporting A) . In doing so, Mr which is a question of fact; Freeman remains of the view that Monto could have secured
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
the capacity by entering either a conditional port contract
from mid-2004, or HOA if that was GPC's preferred
Ports Corporation operates. mechanism. Refer Appendix 5 paragraphs A5.1 to A5.1 0.”
Otherwise, basis of opinions not set out.
This is evidence of facts observable by Mr Freeman in his experience. It is also is based on Mr Freeman summarising
The statements concerning taking a calculated risk and drawing inferences from the documents in exercising his in the secondary market, accelerating expansions expertise and is admissible. and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated
Mr Freeman is qualified to give evidence as to what participants in the industry would have done in the
| No | Page/paragraph | Objection | Response to objection | Ruling |
| expertise in planning or constructing port | circumstances. | |||
| expansions. | ||||
| 151. | [5.22] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “While Mr Freeman acknowledges that there was a 'window' within which there was sufficient available developable | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | capacity for 10 mtpa in 2003-04, he maintains that there were | |||
| still opportunities between mid-2004 and mid-2006, albeit |
which does not require the application of with increased risk that Monto could be 'pipped at the post' by specialised knowledge; other customers signing ToP agreements. Mr Freeman stated
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
in his Response Report that the contract would likely be
negotiated over 2003-04 (paragraph 261 and 270), with
have acted in a hypothetical factual situation, conditions that would include relevant approvals to proceed which is a question of fact; with the development of Stage 2. Mr Freeman has reviewed
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
the additional and unredacted confidential GPC documents
made available in June 2019 and prepared a supporting
Ports Corporation operates.
analysis of how the Port behaved toward competing mines and Monto during 2002-2006. In doing so, Mr Freeman remains
Otherwise, basis of opinions not set out. of the view that Monto could have secured the capacity by The statements concerning taking a calculated risk entering either a conditional port contract from mid-2004, or in the secondary market, accelerating expansions Heads of Agreement (HOA) if that was the Port's preferred and undertaking further expansions are irrelevant. mechanism. Refer Appendix 5 paragraphs A5.1 to A5.1 0 and Further, Mr Freeman has no demonstrated A5.33 to A5.36.” expertise in planning or constructing port This is evidence of facts observable by Mr Freeman in his expansions.
experience. It is also is based on Mr Freeman summarising and drawing inferences from the documents in exercising his expertise and is admissible. It is not evidence about what a third party would have done in hypothetical circumstances.
Mr Freeman is qualified to give evidence as to what participants in the industry would have done in the circumstances.
As to the availability of capacity, this is addressed in paragraphs [242]-[250] of the 2 November Report [EXP.010.005.0001 at pdf pp 0077-0081].
| 152. | [5.25] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman considers that no other mine project would have been given preference ahead of Monto in securing capacity. | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | Monto would have been allocated capacity on the basis that it | |||
| was established with GPC through negotiations of Stage 1 and |
which does not require the application of Stage 2 tonnage and would have signed a ToP contract (with specialised knowledge; conditions) in mid-2004. Mr Freeman has reviewed the
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
additional and unredacted GPC documents made available in
June 2019 and prepared a supporting analysis of how GPC and Shareholding Ministers considered capacity during 2002-
| No | Page/paragraph | Objection | Response to objection | Ruling |
have acted in a hypothetical factual situation, 2006. In doing so, Mr Freeman remains of the view that Monto which is a question of fact;
could have secured the capacity by entering either a conditional port contract from mid-2004, or Heads of
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
Agreement (HOA) if that was GPC's preferred mechanism to
plan and allocate capacity. Refer Appendix 5 paragraphs
Ports Corporation operates. A5.13 to A5.19.”
Otherwise, basis of opinions not set out. To the extent that this evidence is based on Mr Freeman The statements concerning taking a calculated risk summarising and drawing inferences from the documents in in the secondary market, accelerating expansions exercising his expertise, it is admissible. and undertaking further expansions are irrelevant. Mr Freeman is qualified to give evidence as to what Further, Mr Freeman has no demonstrated participants in the industry would have done in the expertise in planning or constructing port circumstances. Mr Freeman is qualified to give evidence expansions.
based on facts observed in his experience. Otherwise, Mr Freeman is qualified to provide background information drawn from documents to support his reasoning and to draw inferences from those documents based on his expertise. Monto’s status as being established with GPC is addressed in paragraph [215] of the 2 November Report [EXP.010.005.0001 at pdf p. 0069].
| 153. | [5.31] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman considers that Stage 1 tonnages are relevant as it would have enabled Monto to establish a relationship with | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | GPC and have access to information on 'who else' wanted | |||
| capacity and their readiness to sign a contract with GPC. Mr |
which does not require the application of Freeman notes that Mr Talbot of Macarthur was known within specialised knowledge; the Blackwater Corridor having set up Jellinbah mine prior to
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
Coppabella, and given the industry and supply chain is small,
the parties would have been aware of his achievements and
have acted in a hypothetical factual situation, reputation.” which is a question of fact; This evidence is statements of fact observable by Mr Freeman
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
in his experience, as well as assumptions made by him and
comments about the track record of significant participants in
Ports Corporation operates. the industry, such as Macarthur Coal (which would have been
Otherwise, basis of opinions not set out. notorious in the industry): see Cargill at [50(19)]. The statements concerning taking a calculated risk Mr Freeman is qualified to give evidence as to what in the secondary market, accelerating expansions participants in the industry would have done in the and undertaking further expansions are irrelevant. circumstances. Mr Freeman is qualified to give evidence Further, Mr Freeman has no demonstrated based on facts observed in his experience. expertise in planning or constructing port expansions.
As to the first sentence, Monto’s relationship with GPC as a result of Stage 1 is addressed in paragraph [215] of the November Report [EXP.010.005.0001 at pdf p. 0069].
As to the second sentence, the reputation of Mr Talbot and Macarthur Coal is addressed in response to the objections to
| No | Page/paragraph | Objection | Response to objection | Ruling |
paragraphs [25], [59], [67] and [214]-[219] of [EXP.010.005.0001] as set out above.
| 154. | [5.34] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman maintains that it is likely that GPC would have accepted a ToP agreement from Monto subject to mining lease | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | approval, and possible that GPC would have accepted a ToP | |||
| agreement from Monto subject to final investment decision. Mr |
which does not require the application of Freeman has reviewed the additional and unredacted GPC specialised knowledge; documents made available in June 2019 and prepared a
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
supporting analysis of the risk position GPC had in relation to
timing and volumes. In doing so, Mr Freeman remains of the
have acted in a hypothetical factual situation, view that GPC would agree to conditions precedent, for which is a question of fact; achievement of ML and financial investment decision. Refer
Appendix 5 paragraphs A5.22 to A5.32.”
(c) Mr Freeman’s observations, as a non-
participating onlooker, of how Gladstone To the extent that this evidence is based on Mr Freeman Ports Corporation operates. summarising and drawing inferences from the documents in Otherwise, basis of opinions not set out. exercising his expertise, it is admissible. The statements concerning taking a calculated risk Mr Freeman is qualified to give evidence as to what in the secondary market, accelerating expansions participants in the industry would have done in the and undertaking further expansions are irrelevant. circumstances. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 155. | [5.37] | Not proper matters for expert opinion. | This evidence is: | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | “Mr Freeman argues that commercial terms between Monto and GPC could have been locked in during 2003. Therefore, | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | he maintains that prices would have reflected charges that | |||
| prevailed in 2003 and then escalated to 2005 dollars. Mr |
which does not require the application of Freeman has reviewed contracts and other documents specialised knowledge; released by GPC in June and maintains his position that the
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
price during the negotiation period would have been
incorporated into the agreement. This is addressed this further
have acted in a hypothetical factual situation, in Appendix 5 paragraphs A5.37 and A5.38.” which is a question of fact; This is evidence of facts observable by Mr Freeman in his
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
experience. It is also assumptions made by him. Moreover, to
the extent that this evidence is based on Mr Freeman
Ports Corporation operates. summarising and drawing inferences from the documents in
Otherwise, basis of opinions not set out.
exercising his expertise it is admissible. It is not evidence about what a third party would have done in a hypothetical
The statements concerning taking a calculated risk situation. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Mr Freeman is qualified to give evidence as to what Further, Mr Freeman has no demonstrated participants in the industry would have done in the
| No | Page/paragraph | Objection | Response to objection | Ruling |
| expertise in planning or constructing port | circumstances. | |||
| expansions. |
| 156. Appendix 3 paragraphs in the Mr Freeman’s column at pp.30- | Not proper matters for expert opinion. | Refer to report. | Not yet ruled |
| Rather, Mr Freeman’s opinions are based on: | This evidence summarises Mr Freeman’s opinions. |
33
(a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation,
Mr Freeman is qualified to give evidence as to what
participants in the industry would have done in the which does not require the application of
specialised knowledge;
circumstances. Mr Freeman is qualified to give evidence based on facts observed in his experience. Otherwise, Mr
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would
Freeman is qualified to provide background information
have acted in a hypothetical factual situation, drawn from documents to support his reasoning and to draw which is a question of fact; inferences from those documents based on his expertise.
(c) Mr Freeman’s observations, as a non- participating onlooker, of how Gladstone
As to the entry on page 30, the possibility of a secondary
market for port capacity was addressed in Mr Stephan’s
Ports Corporation operates.
evidence ([TRA.500.029.0001] at T29-56/9-21). Otherwise, the bases for these matters are set out in the 2 November
Otherwise, basis of opinions not set out. Report as cross-referenced in Appendix 3 [EXP.010.005.0001 The statements concerning taking a calculated risk at pdf p. 0146]. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated expertise in planning or constructing port expansions.
| 157. | Appendix 5 | Not proper matters for expert opinion. | Refer to report. | (1) I uphold the objection. The appendix is not an expression of admissible expert opinion. It is simply an |
| Rather, Mr Freeman’s opinions are based on: | This evidence is based on Mr Freeman summarising and | |||
| drawing inferences from the documents in exercising his | identification of the inferences which Mr Freeman would | |||
| (a) Mr Freeman’s interpretation of documents prepared by Gladstone Ports Corporation, | expertise and is admissible. | draw from the documents. In so doing he is not | ||
| expression opinions on matters which are proper matters |
which does not require the application of for expert opinion. See in particular the body of my specialised knowledge; reasons at [48] and [58].
(b) Speculation as to how Gladstone Ports Corporation (and the Joint Venture) would have acted in a hypothetical factual situation, which is a question of fact; (c) Mr Freeman’s observations, as a non- Ports Corporation operates.
Otherwise, basis of opinions not set out. in the secondary market, accelerating expansions and undertaking further expansions are irrelevant. Further, Mr Freeman has no demonstrated
| No | Page/paragraph | Objection | Response to objection | Ruling |
| expertise in planning or constructing port expansions. |
between expert witnesses called by the plaintiffs and those called by the defendants by inserting post-nominals “P”
and “D”, respectively.
not need presently to be considered.
with precision.
that minor degree of lateness.
L); ASIC v Rich (2005) 53 ACSR 110 at [280]; Honeysett v The Queen (2014) 253 CLR 122 at [43] – [46]; R v Butler
[2010] 1 Qd R 325, [60] (Keane JA).
10
11
0