Street & 7 Ors v Luna Park Sydney Pty Limited & 3 Ors

[2007] NSWSC 691

CITATION:	Street & 7 Ors v Luna Park Sydney Pty Limited & 3 Ors [2007] NSWSC 691
HEARING DATE(S):	27 June 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	27 June 2007
DECISION:	Rulings on evidence: see paragraphs 4, 19, 24
CATCHWORDS:	EVIDENCE – Opinion – expert – quantity surveyor – Makita v Sprowles – whether rationale sufficiently disclosed – EVIDENCE – Opinion – expert – valuation – Makita v Sprowles – arguable errors in reasoning are not failure to explain reasoning – report does not address relevant issues because assumes incorrect approach to measure of damages – EVIDENCE – opinion – expert – noise – where apparently subjective opinion is defined by terms elsewhere in report
LEGISLATION CITED:	(CTH) Trade Practices Act 1974 ss 52, 82, 87 (NSW) Evidence Act 1995 s 136
CASES CITED:	Joan Street v Luna Park Sydney Pty Ltd [2007] NSWSC 588 Joan Street v Luna Park Sydney Pty Ltd [2007] NSWSC 594 Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 Potts v Miller (1940) 64 CLR 282
PARTIES:	Joan Street (first plaintiff) Ros Dwyer (second plaintiff) Michael Hesse (third plaintiff) Glen Eight Pty Ltd (fourth plaintiff) Susan Hesse (fifth plaintiff) Robert Simkin (sixth plaintiff) Glen Federick Billington (seventh plaintiff) Fiona Jeanette Billington (eighth plaintiff) Luna Park Sydney Pty Ltd (first defendant) Metro Edgley Pty Ltd (second defendant) Peter Hearne (third defendant) Warwick Doughty (fourth defendant)
FILE NUMBER(S):	SC 2267/05
COUNSEL:	Mr T Alexis SC w Ms P M Sibtain (plaintiffs) Mr T G Parker SC w Mr J A Potts (first & second defendants) Mr J R Clarke (third & fourth defendants)
SOLICITORS:	Wise Legal (plaintiffs) Clayton Utz (first and second defendants) Esplins (third and fourth defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Wednesday, 27 June 2007

2267/05 Joan Street & 7 Ors v Luna Park Sydney Pty Ltd & 3 Ors

JUDGMENT (ex tempore)
(on admissibility of paragraphs 9 and 10 of the report of Graham Whiteley dated 10 October 2006; transcript p 647)

1 HIS HONOUR: It seems to me that the basis upon which the opinion expressed in paragraph 9 of the report was reached is explained in Annexure F, referred to in paragraph 10 of the report. It is true that there are, at least at first sight, apparent discrepancies between the quantities listed in Annexure F, and the quantities that the witness says he has assumed would be required as set out in Annexure C as referred to in paragraph 6(g) of his report. That discrepancy might be the result of error, or there might be some explanation for it; it is not possible to say which at this stage.

2 It is important to appreciate that the approach to expert evidence counselled by the judgment of Heydon J in Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705, necessarily involves questions of degree. It cannot be that an expert, in providing a report containing opinions, has to set out every single piece of learning and knowledge that he or she has applied, directly or indirectly, in reaching the conclusion. The test is whether the report sufficiently discloses the basis and rationale of the expert’s opinion as to enable it to be understood and appreciated and fairly challenged.

3 As things stand at the moment, in the absence of explanation for the differences between what is assumed in Annexure C and what is set out in Annexure F, the Court would be inclined to conclude that, absent explanation for a departure from what is said to be assumed, there has been an error, and the figures in Annexure C should be substituted for those in Annexure F. Viewed that way, I do not think that the position of the defendants is unduly prejudiced by the absence of an explanation at this stage for any difference.

4 I admit paragraphs 9 and 10 of the report.

At 12.21 pm (on admissibility of affidavit of Phillip Edmonds, sworn 7 June 2006; transcript p 658)

5 HIS HONOUR: The plaintiffs seek to read an affidavit of Phillip Edmonds, a real estate valuer, sworn 7 June 2006, primarily for the purpose of tendering his reports comprised in tabs 1, 2 and 3 of Exhibit PE to that affidavit, which comprise valuations respectively of Mr Simpkin and Ms Dwyer’s property at Unit 2, The Cavill, 6 Cliff Street, Milsons Point; Mr and Mrs Hesses’ property at 1601, The Colonades, 30 Glen Street, Milsons Point; and Mr Billington and Ms Mather’s property, Unit 801, Pavilions on the Harbour, 12 Glen Street, Milsons Point. The defendants object, essentially on three grounds. Although they were not advanced in this sequence, the first is a Makita objection as to the sufficiency of Mr Edmonds’ disclosure of his rationale; the second is a relevance objection, that the valuations which he proffers are not relevant to any issue in the proceedings; and the third is that as the valuations proffered depend on the assumption of the accuracy of evidence that has been either rejected or admitted only for a limited purpose – which does not include the use that Mr Edmonds seeks to make of them – assumptions fundamental to his opinion cannot be made good.

6 In each of the three reports presently under consideration, Mr Edmonds proffers three valuations. The first he calls Current Market Value Scenario A, and is a valuation of the subject property upon the assumption that there are only children’s rides located and operated in the area north of Coney Island during children’s hours - that is, that the situation was “as represented”, rather than “as is”. The second, which he calls Current Market Value Scenario B, is the current market value “as is”, with the Ranger, the Spider and the other thrill rides operating in the area to the north of Coney Island. The third is a retrospective market value as at the date of purchase of the subject property by the relevant plaintiff, upon assumption that the purchaser was aware that the Ranger, the Spider and the other thrill rides would be located and operated in the area to the north of Coney Island and that they were adult thrill rides, not children’s rides.

7 Two preliminary aspects can be shortly disposed of. The first is that tab 2, being the valuation of the Hesses’ apartment, could not be relevant. The case advanced by the Hesses, who have sold their property, is limited to a claim for damages under the (CTH) Trade Practices Act 1974, s 82; they bring no claim for injunctive relief. Their property having been sold, there is a known price at which it was sold, which, if it were relevant, would quantify its value at the time of sale. I therefore cannot see how, on any basis, Mr Edmonds’ current market valuations on scenarios A and B of the Hesses’ apartment could be relevant.

8 The second preliminary aspect is that each of the retrospective market values assumes knowledge, on the part of the purchaser, that adult thrill rides would be located and operated in the relevant area north of Coney Island. In my judgment of 7 June 2007 ([2007] NSWSC 588), I explained (at [10]) that the relevant question was, what the willing purchaser would have paid for the property in the absence of the misleading conduct on which the plaintiffs say they relied, and that that would involve evaluation of the impact on the price such a purchaser would be prepared to pay of knowledge that there was a risk or potential for noisy thrill rides to be located in the relevant area, but not attributing to such a purchaser knowledge of the actual level of that noise and its impact on residents as has actually transpired. The retrospective market values proffered by Mr Edmonds contravene that approach. Mr Alexis SC for the plaintiffs has indicated that he does not propose to argue, in final submissions, that the approach I indicated on 7 June 2007 is incorrect. That being so, it seems to me that Mr Edmonds’ retrospective market values are on a basis which would not inform the assessment of damages on the proper approach to the measure of damages and, accordingly, ought not be admitted.

9 That leaves for consideration Mr Edmonds’ current market values on scenarios A and B of the property of Mr Billington and Ms Mather, and that of Mr Simpkin and Ms Dwyer.

10 I would not reject Mr Edmonds’ current market valuations in those cases on the basis of the Makita objection. What Mr Edmonds has done, on the face of his report, is to identify properties which he considers or assumes to be comparable to the subject property including as to affectation by noise at present for the purpose of his Scenario B, and properties that are otherwise comparable to the subject property but not exposed to noise from the thrill rides in the area to the north of Coney Island for the purposes of his Scenario A. To do so, he has, in part, formed his own opinion as to the exposure of the comparable properties to noise, and he has, in part, assumed the accuracy of evidence given by the occupants of the plaintiffs’ properties. Although it is true that he does not profess expertise in noise, purchasers of properties, for the most part, do not have expertise in noise, but upon being exposed to it on an inspection may or may not be influenced in their decision whether or not to purchase and if so how much they will pay by their impression of the noise exposure. I do not think one needs to be a noise expert as well as a valuer to express an opinion to the effect that a property is inferior because of exposure to noise, or that two properties have similar exposure to noise. Nor do I accept that a valuer has to inspect each comparable internally to form a view that it is comparable, although if challenged, absence of such an inspection may well affect the weight of the opinion.

11 It may well be, as Mr Parker SC has foreshadowed, that other evidence will show that some of the properties identified by Mr Edmonds as comparable in respect of noise exposure are not so comparable, or not comparable at all, to the subject properties. If so, that will demonstrate error in his assumptions or his conclusions as to comparability, but it does not mean there is a failure to explain the basis on which he has reached his conclusions. What Makita requires is an explanation of the basis of reasoning on which a conclusion is reached, not that every step in that basis of reasoning be demonstrably and indisputably correct. As I see it, the present objection is more to the accuracy of steps in Mr Edmonds reasoning process, than to insufficiency of exposure of that process for scrutiny.

12 Accordingly, as I have said, I would not reject the balance of Mr Edmonds’ report on the basis of the Makita objection.

13 I come then to the relevance objection. For reasons that I explained in my judgment of 7 June 2007, the difference between the current value of the subject property and the value which the property would have had if it had been as represented is not the relevant measure of damages. Mr Alexis, however, submits that an order might be made under Trade Practices Act, s 87, for the payment of compensation according to that measure, and further, that demonstration that the current values of the properties are adversely affected by exposure to noise may bear on the discretion to grant injunctive or other relief under s 87.

14 In this context, it is important to appreciate that fundamental to Trade Practices Act, s 87, is the concept of damage suffered or likely to be suffered “by conduct of another person that was engaged in ... in contravention of”, relevantly, s 52. That damage is the same damage as is referred to in s 82. As I explained in the judgment of 7 June 2007, it corresponds with the detrimental change of position of the person deceived in reliance on the conduct complained of. In a case such as that of the plaintiffs with whom we are presently concerned, it is ordinarily the difference between the price actually paid for the property, and its true value, ordinarily determined as at the time of purchase: that is the rule in Potts v Miller (1940) 64 CLR 282, to which I adverted in that judgment.

15 What the present argument seeks to do is to have admitted, by a side wind, evidence of “damage” assessed on a different basis and at a different time. In short, it is not evidence of the damage suffered or likely to be suffered by the alleged contravening conduct, but evidence of the quite different subject matter of the present difference between the value of the property “as is” today, and the value it would have had “as represented” today. This would invite the Court to embark on an irrelevant inquiry and open up issues which simply do not need to be addressed in this case. In my view, the fundamental question to which Mr Edmonds’ current market values scenarios A and B are addressed is irrelevant.

16 I turn then to the third objection. Mr Alexis concedes that Mr Edmonds has assumed the accuracy of the evidence of Mr Simpkin and Ms Dwyer and of that of Mr Billington and Ms Mather, as to the impact of noise on their apartments, and I agree that that assumption is an essential assumption in each of his reports, such that without it, the ultimate opinion could not stand. However, the evidence of those witnesses on that subject has been admitted, pursuant to (NSW) Evidence Act 1995, s 136, on the limited basis that it was evidence only in Glen Eight’s claim for damages in respect of the Azure, as informing an assessment of the impact of noise on the value of units in the Azure, for the purpose of determining the value of the Azure “as is” – not its value “as represented”. That, of course, is an entirely different basis from that on which Mr Edmonds has sought to use that evidence. Recognising this, Mr Alexis has foreshadowed that he would seek leave to extend the basis upon which that evidence has so far been admitted, conceding that it would then be necessary to offer to make the relevant witnesses available for further cross-examination.

17 While any such application might have called for more careful consideration if I had been of the view that the evidence was relevant to the s 87 case, as things stand, it reinforces my decision to reject the evidence. Almost three weeks into the trial, when the lay noise evidence, after having twice been rejected, was admitted on the limited basis explained in my judgment of 8 June, ([2007] NSWSC 594), and since then has been consistently admitted on that basis – even to the point that I have referred earlier today to the limited basis on which it has been admitted as “the usual s 136 lay noise evidence order”, I think it is too late to revisit that issue – especially in circumstances where almost all of the witnesses who have given that evidence have been cross-examined – or, more significantly, not cross-examined on what they have said about noise – on the basis that the evidence has so far been admitted for that limited purpose, and would have to be recalled for further cross-examination if that position were now to change.

18 Accordingly, although I would not reject Mr Edmonds’ reports on the basis of the Makita objection, I hold that the opinions of value which he proffers are irrelevant and, therefore, ought not be admitted, and, in addition, that on the current state of the proceedings, assumptions essential to his conclusions cannot be made good.

19 I therefore reject the affidavit of Phillip Edmonds sworn 7 June 2006, in toto.

At 3.11 pm (on admissibility of report of Renzo and Associates dated 26 May 2005; transcript p 673)

20 HIS HONOUR: The plaintiffs tender a report of Renzo & Associates dated 26 May 2005. The ultimate point of the report is the opinion of Dr Tonin, a noise expert, that the operation of the thrill rides in the area north of Coney Island is an unacceptable noise intrusion on the residents of nearby properties and constitutes an offensive noise.

21 At first sight, the characterisation of noise as “unacceptable” or “offensive” has the appearance of a personal as distinct from an expert opinion, and as such would be not only unhelpful but irrelevant. However, I think those opinions in Dr Tonin’s report have to be understood in the light of his explanation, in Part 7.1 of his report, of what is meant by “offensive noise” and “intrusive noise”. So understood, his opinion that noise is offensive amounts to an opinion, as explained in paragraph 115 of his report, that the noise is, or is likely to be, harmful to a person outside the premises from which it is emitted, or that it is or is likely unreasonably to interfere with the comfort or repose of such person, and an opinion that noise is intrusive is an opinion that it exceeds the background noise over a 15 minute period by more than five decibels, as explained in paragraph 133.

22 The potential significance of such an opinion is that it might be thought that the purchaser of premises exposed to offensive or intrusive noise, as so understood, might be disinclined to pay as much for that property as if the property were unaffected by such noise.

23 Those parts of Dr Tonin’s report as I propose to admit are, in my view, to be understood as explaining the basis upon which he reaches the conclusion that the subject noise is intrusive or offensive. It may well be that it will ultimately be shown that his approach is entirely inappropriate and that, for example, the application of a range of 52 to 61 decibels, as referred to in paragraph 117, or of the “background plus 5 rule”, as referred to in paragraph 147, is entirely inappropriate or irrelevant. If so, Dr Tonin’s opinion will fall. The possibility that his rationale will be destroyed, however, does not make his opinion inadmissible.

24 I propose to admit pars 1-11 of the report. Paragraph 12 is not read. I admit paragraphs 13-18. I reject paragraphs 19-48, being the entirety of Part 3, and paragraphs 49-80, being the entirety of Part 4. I admit paragraphs 81-83. Paragraphs 84-86 are not read. I reject paragraphs 87-101 inclusive. I admit paragraphs 102-108. I reject paragraph 109. I admit paragraphs 110-153. I reject paragraphs 154-189, being the entirety of Part 8 of the report. I admit paragraphs 190-253. I reject paragraphs 254-263, being the entirety of Part 9. I admit paragraphs 264-271.

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