Hospitality Excellence Pty. Limited & Ors. v. The State of NSW [1999] NSWSC 945

New South Wales Supreme Court CITATION : Hospitality Excellence Pty. Limited & Ors. v. The State of NSW [1999] NSWSC 945 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : No. 1636 of 1998 HEARING DATE(S) : 14th September 1999 JUDGMENT DATE : 14 September 1999

Hospitality Excellence Pty. Limited (First Plaintiff) PARTIES : David William Leary (Second Plaintiff) Ann Margaret Leary (Third Plaintiff) The State of New South Wales (Defendant) JUDGMENT OF : Hodgson CJinEq at 1

COUNSEL : Mr. M. Slattery QC with Mr. Hennessy for Plaintiffs Mr. A. Meagher SC with Mr. Smith for Defendant SOLICITORS : McLaughlin & Riodan, Sydney for Plaintiffs Dunhill Madden Butler, Sydney for Defendant CATCHWORDS : EVIDENCE - OPINION - EXPERT - NEED TO DIFFERENTIATE ASSUMED FACTS AND OPINION DECISION : See page 5 of judgment

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Tuesday 14th September 1999

NO. 1636 OF 1998 HOSPITALITY EXCELLENCE PTY. LIMITED & ORS. V. THE STATE OF NEW SOUTH WALES

JUDGMENT(On admissibility of evidence - see p20 of transcript)

1 I have heard submissions on whether I should admit parts of the affidavit of Mr Leary sworn 20 November 1998, and in particular various parts of paragraphs between 141 and 152 inclusive of that affidavit. 2 It appears that in those paragraphs Mr Leary is purporting to express an expert opinion in relation to three matters: firstly, the capacity of the plaintiff to undertake the work of the kind which became available with the privatisation of the Commonwealth Employment Service; secondly, the likelihood of the plaintiff being successful in obtaining that work; and thirdly, the likely profitability of that work. 3 Mr Meagher SC for the defendant submitted that the evidence is not admissible as expert evidence under s79 of the Evidence Act. He pointed out that that section required that there be specialised knowledge, that the specialised knowledge be based on the witness's training, study or experience, and that the opinion be wholly or substantially based on that knowledge. Mr Meagher referred me to the case of HG v R (1999) 160 ALR 554 and (1997) 42 NSWLR 451. He relied particularly on the judgment of Gleeson CJ at paragraphs 38 to 45 of that judgment. He also referred me to the judgment of Gaudron J in the High Court and Mason P in the Court of Appeal. Mr Meagher also referred me to the case of Quick v Stollen (1998) 157 ALR 615, especially 616-9, and NMFM Property v Citibank Limited (1999) 161 ALR 476 at 577. 4 Mr Meagher submitted that the evidence relied on to base the relevant specialised knowledge here was of the utmost generality and therefore of little weight. He submitted that, in the absence of detailed evidence of the circumstances of tenders in the past and of the circumstances of the granting of tenders under the new system, it was not shown that Mr Leary had specialised knowledge which would base an opinion as to the likelihood of tenders being accepted. Similarly, there was no sufficient evidence to base a finding of specialised knowledge in relation to the financial outcomes of the acceptance of such tenders. 5 Mr Slattery QC for the plaintiffs submitted that the history of successful tendering showed that Mr Leary had the experience to form a judgment as to what was likely to be a successful tender under the new circumstances, and also the profitability of undertakings pursuant to successful tendering. In relation to profitability, Mr Slattery submitted that it was an area of expertise for an experienced business person to have knowledge, in relation to a particular class of business, the costs involved in such a class of business, and the returns from it. He submitted that, on the question of the probability of acceptance, there was a significant common factor between the business previously undertaken by the plaintiff and that available under the new system, namely, case management for the long term unemployed. Mr Slattery submitted that I should prefer the more liberal approach to expert evidence, suggested by the judgments of Gaudron J in HG and Branson J in Quick, to the narrower formulation of Gleeson CJ in HG. 6 I should add that the plaintiff seeks also to rely on material in an affidavit of Mr Leary sworn today, which gives more detail in relation to the past experience of Mr Leary and the plaintiff, and in relation to the current system. This affidavit contains an assertion by Mr Leary that, in relation to past tenders, he calculated the costings, and assertions as to the percentage of successful tenders. The affidavit also contains a comparison between the previous programmes in which the plaintiff was engaged and those which are now available. 7 Those particular parts of that affidavit have been objected to by Mr Meagher. Mr Meagher has also indicated that, if this affidavit would make a difference to my ruling on the admissibility of Mr Leary's evidence on the likelihood of acceptance of tenders and the financial outcomes, then there was a need, at least, to obtain instructions on the matter, and that he may object to the reading of the affidavit on the grounds of late service and prejudice. 8 In relation to the general approach which I should take to expert evidence, it does seems to me that this evidence falls short of what Gleeson CJ stated to be the admissible form of such evidence, namely, that it differentiate between the assumed facts on which the opinion is based and the opinion in question. I think it is fair to say that Gaudron J in the same case, and Branson J in Quick, supported the view that this is not an absolute requirement, now at least, for the admissibility of expert evidence, although of course it is desirable that it be in that form. 9 In my opinion, it is necessary that one be able to identify the matter of opinion which is sought to be admitted into evidence; and in some cases that will require clear identification of the assumed facts on which it is based. In other cases, it seems to me, particularly where the facts on which the opinions are based are facts of which the expert has personal knowledge, that requirement is not absolutely essential; although the failure to clearly identify the facts on which the opinion is based may greatly affect the weight of the opinion, and may make it appropriate to reject the evidence under s135 of the Evidence Act if the failure to clearly identify the facts on which it is based makes it unfair to the other party to admit the evidence. 10 In the present case, it seems to me that there is evidence, albeit evidence of some generality, of the experience of Mr Leary in training programmes, particularly training programmes for the long term unemployed; and, in my opinion, this does support a finding that he has specialised knowledge which enables him to express an opinion on the capacity of the plaintiff to carry out work of the kind becoming available pursuant to the privatisation of the CES. 11 In relation to the other two aspects on which this evidence is led, namely, the probability of the plaintiff being successful in tenders and the profitability of that work, it seems to me that the position is different. 12 In relation to the former, there are many facts which would be part of the factual basis for such an opinion which have not been put in evidence, at least prior to the most recent affidavit of Mr Leary. Even with that affidavit, there is little detail about the circumstances of the tenders in which the plaintiff had previously been involved, and very little detail in relation to the circumstances surrounding the tendering for work becoming available under the present system. In my opinion, that has the consequence that I am unable to be satisfied that Mr Leary really does have specialised knowledge which goes to the likelihood of outcomes under the present system. The failure to set out the full factual basis on which such an opinion might be based also, in my opinion, raises questions of fairness. If I was otherwise inclined to the view that this was a proper subject of expert evidence from Mr. Leary, in my opinion I would exclude it under s135. 13 Similar considerations apply in relation to the profitability of work resulting from tenders under the new system. There is evidence that Mr Leary drew up calculations in relation to proposed tenders, and indeed that is, it would seem, the material relied on as the basis for opinion evidence as to the profitability of such work. However, apart from the most recent affidavit of Mr Leary, there is no evidence that he had been the person responsible for financial planning in relation to the previous business, and no evidence as to whether the outcomes in any way coincided with financial planning he had undertaken. 14 The most recent affidavit attempts to take the matter a little further by asserting that he calculated costings for the previous tenders, but there is no particularity given in relation to those costings. Again, it seems to me that I am not in a position to be satisfied as to Mr Leary's specialised knowledge in relation to calculating the future profitability of businesses under the new system; and it seems to me also that, even if I were so satisfied, the factual basis of both his alleged expertise and his opinions as to the future are not set out sufficiently for fairness to the other party. Again in relation to this matter, in my opinion the evidence would be disallowed under s135 even if the requirements of s79 were satisfied. 15 I should add that it will still be open to the plaintiff to submit that, from material before the Court, the Court itself can draw an inference as to whether the plaintiff would have been successful in obtaining acceptance of tenders. It may be that other evidence will enable the Court to draw some inference as to whether this business may have been profitable. However, for the reasons I have given, I do not admit Mr Leary's material as expert evidence of either of those two matters. *************