New South Wales Supreme Court CITATION : Lakatoi Universal Pty Ltd & Ors v Langley Alexander Walker & Ors [2000] NSWSC 633 FILE NUMBER(S) : SC 50035/98; 50109/98; 50110/98; 1798/98 DC HEARING DATE(S) : 5/11/99 JUDGMENT DATE : 5 November 1999 50035/98 Lakatoi Universal Pty Ltd & Ors v Langley Alexander Walker & Ors PARTIES : 50109/98 Ensile Pty Ltd v Walker Consolidated Investments Pty Ltd 50110/98 Ensile Pty Ltd v Walker Consolidated Investments Pty Ltd 1798/98 Ensile Pty Ltd v Walker Consolidated Investments Pty Ltd (District Court) JUDGMENT OF : Einstein J COUNSEL : RJ Ellicott QC, VRW Gray, AE Galasso, SD O'Campo (Plaintiffs) AB Shand QC, DPF Officer QC, RJ Powell, CJ Leggat (Defendants) SOLICITORS : Gye & Associates (Plaintiffs) Perkes & Stone (Defendants) CATCHWORDS : Evidence - Expert evidence - requirements of admissibility - Necessity for expert evidence to be within relevant field of expertise - Necessity for expert witness to state with precision the assumptions upon which their evidence rests - Necessity for expert evidence to be in a form comprehensible to the Court. - Discretion of Court to reject evidence - Discretion to reject evidence on the ground that its probative value is substantially outweighed by the danger of unfair prejudice - Unfair prejudice consisting of forensically awkward position. LEGISLATION CITED : Environmental Planning and Assessment Act 1979 Evidence Act 1995 CASES CITED : Frye v United States - 293F 1013 (1923) Trust Company of Australia Limited v Perpetual Trustees WA Limited (unreported, Supreme Court of New South Wales, McLelland CJ in Equity, 18 September 1996) DECISION : Evidence allowed in part. THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION - COMMERCIAL LIST EINSTEIN J Friday, 5 November 1999 Revised 12 July 2000 50035/98 - LAKATOI UNIVERSAL PTY LTD & ORS v LANGLEY ALEXANDER WALKER & ORS 50109/98 - ENSILE PTY LTD v WALKER CONSOLIDATED INVESTMENTS PTY LTD 50110/98 - ENSILE PTY LTD v WALKER CONSOLIDATED INVESTMENTS PTY LTD JUDGEMENT on Smyth's Expert Evidence 1 HIS HONOUR: Objection has been taken to the reading of certain segments of the statements made by Mr Richard Smyth. The first objection raises a question of principle and is thrown up by paragraphs 4.2 and 14.18 of Mr Smyth's statement of 11 February 1999, by paragraph 3 of Mr Smyth's statement of 22 April 1999 and by paragraphs 137 through to 140 of Mr Smyth's statement of 9 September 1999. 'Prior to the commencement of the Evidence Act 1995, to be admissible the opinion of an expert needed to satisfy the following tests: (1) the opinion had to be relevant to a fact in issue; (2) there had to be evidence capable of proving the facts upon which the opinion was based; (3) the witness had to disclose the facts upon which the evidence was based; (4) there had to be a relevant field of expertise, which was sufficiently organised or recognised to be accepted as a reliable body of knowledge or experience; (5) the witness had to be an expert in that field; (6) the opinion could not be related to a matter of common knowledge; (7) the opinion could not concern the ultimate issue, that is, the expert was not permitted to give an opinion on the very issue of fact or law which the court had to determine. 2 The current rules for the admissibility of expert evidence are: (1) the evidence must be relevant (s 55) and have sufficient probative value (s.135 and in criminal proceedings s.137); (2) the witness must have specialised knowledge based on training or experience (s 79); (3) the opinion expressed by the witness must be based wholly or substantially on that knowledge (s 79). 3 It is to be noted absent the making of a limiting order, s 79 will apply in terms. The section provides that "If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to an opinion of that person that is wholly or substantially based on that knowledge". 4 Section 79 is a direct rejection of the American Frye Test [Frye v United States -293 F 1013 (1923)]. The Frye test had required that an expert's opinion be related to a recognised field of expertise or result from the application of theories or techniques accepted in that field. 5 It is important to note that an expert witness should not be allowed to stray outside the witness' area of expertise. It is for this reason that the opinion expressed by the witness must be based wholly or substantially on the witness' specialised knowledge, which is in turn specialised knowledge based on training, study or experience. 6 At common law, the field of expertise prerequisite required a court in determining the admissibility of expert evidence, to assess the reliability of the knowledge and experience on which the opinion was based. A question may be suggested as arising as to whether a similar exercise is required under the Evidence Act. 7 The Australian Law Reform Commission did not enter the difficult field of determining what were the criteria which were required to be shown before the field of expertise would be treated as a recognised or accepted field of expertise. The Commission recommended that there be no field of expertise test. The Commission's position was that: "there will be available the general discretion to exclude evidence when it might be more prejudicial than probative, or tend to mislead or confuse the tribunal of fact. This could be used to exclude evidence that has not sufficiently emerged from the experimental to the demonstrable." [ Australian Law Reform Commission, Evidence, ALRC 26 (Interim) Vol.1 (AGPS, Canberra, 1985) at para 743] 8 This position is reflected in section 79 of the Evidence Act, which requires only that the expert have "specialised knowledge", with the exclusionary rules regarding irrelevant, prejudicial or misleading evidence presumably operating to exclude the opinions of specialists in unreliable and unacceptable fields of expertise. [See generally Article by Peter Berman "Fundamentals of Expert Experience: part 2" (1996) 3 Criminal Law News 55-56] 9 It is appropriate then that a trial Judge examine evidentiary reliability under section 79, section 56 and/or section 135, and when doing so, exercise the court's appropriate discretion to ensure that the manner in which evidence is adduced by an expert not have a quite often unforeseen consequence, which by dint of s 60 and/or s 77 of the Act would otherwise result, namely that evidence which neither party intended to be evidence of the fact, becomes evidence of the fact. That situation can very easily arise if the court is not astute to limit the precise purpose for which assumptions relied upon by experts in their reports or matters stated in those reports as facts are admitted into evidence. 10 Section 60 of the Evidence Act provides as follows : 'The hearsay rule does not apply to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of the fact intended to be asserted by the representation'. 11 Plainly enough the provision does not reflect the common law. Under the common law, where evidence of a previous representation is admitted for a non-hearsay purpose, it may only be used for that purpose. 12 Section 77 repeats the section 60 formula 'evidence relevant for a purpose other than . . '. Section 77 provides as follows: 'The opinion rule does not apply to evidence of an opinion that is admitted because it is relevant for a purpose other than proof of a fact about the existence of which the opinion was expressed.' 13 An opinion may be relevant, for example: * if the conveying of the opinion was a fact in issue * to a person's state of knowledge * to show the basis of other opinion evidence given by an expert 14 If the opinion is admitted as relevant for one of these purposes it can also be used as evidence of the facts about which it is expressed. 15 Clause 76 in the Evidence Bill 1993 was the equivalent provision to s.77 of the Act expressed in identical terms. The Bill contained the following example of the way in which the provision was intended to operate: 'W, who has been fraudulently holding himself out to be a doctor, diagnoses D to be HIV negative. D is charged with knowingly transmitting the virus to V. At the trial of D, the court admits W's evidence about the diagnosis to show that it was made. Despite the Opinion Rule, that evidence becomes admissible to prove that the diagnosis was made.' 16 The example was not carried over into the Act. 17 Justice Beazley has commented : "It is of course one thing to provide that hearsay evidence may be used as evidence of the facts asserted. It is another matter to provide that evidence of an opinion may become evidence of the facts about which it is expressed. . . . It cannot be expected that evidence of this nature will, as a matter of course, be left unchallenged. It may be that the legislature, in its attempts to smooth the road to admissibility, has created instead a fertile field of litigation." [Hon. Justice Beazley , "Hearsay and Related Evidence - A New Era?" (1995) 18 UNSWLJ 39 at 57] 18 'In Trust Company of Australia Limited v Perpetual Trustees WA Limited (unreported, Supreme Court of New South Wales, McLelland CJ in Equity, 18 September 1996), his Honour dealt with an objection to a report purporting to be an expert's report. The objection was based substantially on the ground that the matters in respect of which the expert purported to express opinions in his report, comprised or included matters going beyond a field of expertise in which the expert had been shown to be qualified to give opinion evidence. 19 McLelland CJ in Equity dealt with the matter as follows: (a) by first defining the extent to which the expert had been shown to have specialised knowledge based on his training and experience; (b) by then identifying, by description, the matters upon which the expert was qualified to express opinions; (c) by holding, in relation to opinions expressed in the report going beyond those descriptions, that assuming, without deciding, that they would be admissible under section 79, they would not be admitted in the exercise of the Court's power under section 135, in particular in reliance on sub-paragraph (c). 20 As it was difficult, if not impossible, having regard to the form of the report, to physically sever the opinions from those which should not be admitted, counsel were invited by the court to agree that certain sections of the report before his Honour should be admitted, possibly with an appropriate qualification by way of a section 136 direction. 21 His Honour stated that if no such agreement could be reached it would be necessary for the report to be either recast or for the expert to give oral evidence in lieu thereof within the limitations indicated. 22 It is necessary to refer briefly to the plaintiffs' case which throws up the relevant issues sought to be addressed by Mr Smyth's evidence. 23 The plaintiff's case is that prior to 23 November 1983 Mr Walker represented and warranted to Mr Hogarth that Mr Walker was in a position to provide political contacts, resources and expertise to secure the rezoning of the Ensile land to permit its use for residential development within twelve months of an agreement being reached for Mr Walker to provide such political contacts, resources and expertise. [para 20] 24 Mr Walker would provide political contacts, resources and expertise to ensure the securing of the rezoning of the Ensile land. [para 22(e)] 25 The plaintiffs further assert that during October and November 1993 and prior to 22 November 1993 Mr Walker on behalf of himself and Walker Consolidated and/or Walker Corporation made the following further representations to Mr Hogarth: (a) that in the opinion of Mr Walker and Walker Consolidated the Lady Carrington Estate was immediately suitable for rezoning for residential purposes; (b) that Walker Consolidated and/or Walker Corporation was a company experienced in developing broad acre land into residential subdivisions and obtaining all the necessary approvals and in developing residential town land into residential strata unit development; (c) that the securing of the rezoning of the lands would be jeopardised if Mr Hogarth continued to have any involvement in the process and that Mr Hogarth must take a back seat in relation to the rezoning process; (d) that if Mr Hogarth entered into a joint venture in relation to the Ensile land neither Mr Walker nor Walker Corporation nor any of its subsidiaries or associated companies would during the term of the joint venture undertake any land development activities in and around Helensburgh except on the basis that such lands would form part of the lands to be subject to the joint venture. [para 31 J] (e) he, Mr Hogarth, would not be involved in the processes necessary for obtaining the rezoning and subdivision of the land and that in consideration thereof; (f) Mr Walker and/or Walker Consolidated and/or Walker Corporation would procure the rezoning of the land promptly. [para 32(b) and (c) J] 26 The contentions then assert that Mr Walker and Walker Consolidated failed to use their best endeavours to procure promptly or at all the rezoning of the Ensile land and in particular the Lady Carrington Estate so as to enable the residential subdivision thereof as promised. (i) At a Commission of Inquiry over which Dr Mark Carleton presided which conducted hearings between 5 July 1994 to 15 November 1994, Walker Corporation or Walker Consolidated conducted the representation of Rosamond and relied almost exclusively on material originally prepared for Lady Carrington Estates Pty Limited and provided by Lakatoi to Walker Consolidated under the HUTA. (ii) The Commission of Inquiry Report dated December 1994 recommended no change in existing City of Wollongong LEP zonings until further studies were undertaken as to the effectiveness of the water settling ponds proposed by Lady Carrington Estates Pty Limited to maintain water quality. (iii) Since that date Walker Corporation and Walker Consolidated have done nothing to establish further studies to establish the effectiveness of water settling ponds to maintain water quality or to procure the rezoning of the Ensile Land. 27 Evidence has been adduced in extensive detail in relation to the dealings between the parties which led in due course to events in mid-February 1994 including the formal announcement by the Minister for Planning, Mr Webster, that there would be a Commission of Inquiry into the appropriate land uses and zonings in the vicinity of Helensburgh. 28 By letter of 9 February 1994, the Minister for Planning and Housing wrote to the General Manager of the Wollongong City Council in the following terms: 'I refer to your letter requesting that I make the Council's draft local environmental plan, for environmental protection zones at Helensburgh. As you are aware, the numerous planning proposals for Helensburgh in recent years, involving both development and conservation have generated considerable controversy. When the Director of Planning issued the Certificate under Section 65 of the Environmental Planning and Assessment Act 1979 on 20 May 1992, to enable the draft plan to be publicly exhibited she noted that there were a number of development proposals under consideration. She then urged your Council to give full and proper consideration to these proposals. The Director also noted that, after the public exhibition of the draft plan, it might be appropriate to consider holding a Commission of Inquiry to assist in resolving the planning issues. After considering a report by the Department of Planning, I am of the view that full and proper consideration has not been given to the range of planning proposals at Helensburgh and that a Commission of Inquiry is warranted to assist me in my decision on the draft plan. I have therefore directed under section 119(1)(a) of the Act that a Commission of Inquiry be held into appropriate land-uses and zonings in the vicinity of Helensburgh. In view of the long history of planning proposals in Helensburgh and extensive controversy that debate has generated I am sure that you will agree that an inquiry is the most appropriate way of ensuring that all points of view are heard and considered in an independent and impartial way. When I receive the report of the Commission of Inquiry I shall refer it to the Council to consider. I have given an undertaking to the Lord Mayor that I shall not use my powers to rezone the lands in Helensburgh against Council's decision after it considers the report of the Commission of Inquiry. I look forward to the Council's support and cooperation in the process.' [8/58] 29 As a result of the sending of this letter, the issues tendered for determination extend beyond the question of whether, and if so how, the Walker Interests by having, as it is submitted they ought to, approach the preparation and presentation to the Commission of Inquiry in altogether a different manner, the Commissioner's recommendations may have been different. The further issues tendered for determination is as to whether and if so how, regardless of what further or other recommendations the Minister may ultimately have determined to include in his report, those recommendations may nevertheless have had no material result by reason of the giving of the Minister's undertaking to the Lord Mayor of the Wollongong Council, set out in his letter of 9 February 1994. In short, the case includes questions going to whether and if so, in what ways the types of success before the Commission which the plaintiffs contend could have been achieved would or could have led to a rezoning in circumstances in which the Minister's undertaking had been given and in circumstances in which focus would require to be addressed to the lobbying of Wollongong City Council to open the way for rezoning, had the Commission recommended in favour of rezoning. 30 I turn then to Mr Smyth's situation. It is first necessary it seems to me to address the extent to which Mr Smyth has been shown to have specialised knowledge based on his training and experience. 31 Mr Smyth's CV is appended to this judgment. 32 Mr Smyth has been shown in [his] CV to have specialised knowledge based on his training and experience: (a) In relation to the Commission of Inquiry process, including; · the manner in which recommendations may be made to the Minister to establish Commissions of Inquiry; · the presentation of evidence and to the Commission of Inquiry; · the provision of resources, including political contacts and the media, to advance their cases before Commissions of Inquiry; · what best practice in the advancement of a "case" before a Commission of Inquiry would require for optimal results, both in terms of formal presentation to the Commission and in terms of utilizing other resources or avenues to advance the case within the wider sphere. [The word 'case' is used advisedly. Naturally a Commission of Inquiry differs markedly from a court case heard in an adversary system]. (b) In relation to environmental planning, natural resource management, environmental protection, environmental impact assessment, project development and management of approval processors. (c) In relation to public, media and political relations. (d) In relation to advice given to Ministers and to Government pertaining to environmental issues. (e) In relation to the development and implementation of Government policies going to environmental related issues. (f) In relation to the processes and procedures available to applicants seeking a re-zoning of land. 33 Mr Smyth is plainly qualified to express opinions on a wide spectrum of areas falling within his above described specialised knowledge. This extends to giving evidence as to: (a) the operation in practice of Commissions of Inquiry into environmental issues; (b) the forensic tools available to parties interested in such inquiries; (c) The wider field of the political and media resources available to parties interested in achieving a particular result from a Commission of Inquiry, or through the further processes and procedures of Local Government and State Government, of which processes and procedures, the inquiry forms only one stage. 34 In addressing the subject objections and the wider question of the admissibility of the opinions sought to be expressed by Mr Smyth (see section 79 of the Evidence Act) it is necessary also to bear in mind the clearly established principle that expert witnesses are not permitted to express opinions on the basis of unstated assumptions of fact which are disputed and are to be determined by the tribunal. In short, particular precision requires to be addressed to making explicit those assumptions upon which expert witnesses rely for the purpose of expressing their opinions. 35 It is of course plain that a basic objection to any evidence which an expert seeks to give, is that such evidence must be able to be understood in terms. If the evidence is, as a matter of form, simply not able to be understood, then the evidence, for that reason, requires to be rejected. 36 To my mind Mr Smyth has been shown to have specialised knowledge based on his training and experience and to be qualified to express an opinion as to the prospects of persuading the Commission of Inquiry to hand down recommendations different in kind or result or emphasis to those in fact handed down. Naturally, in order to express any such opinion, Mr Smyth would require to identify with precision, the assumptions upon which the giving of such opinion rests. In short Mr Smyth, in order to justify his opinion, would require to set out in detail precisely what further or different or other assumed submissions and/or materials he takes into account as submissions or material which could and should in his view have been put before the Commission of Inquiry. It would also be necessary for Mr Smyth with precision to identify precisely what are the further and additional or other recommendations to which he is referring as recommendations in respect of which he seeks to opine as having had any, and if so what, chance of coming forward. 37 I come then to whether Mr Smyth is qualified to deal with: (a) The question of whether and if so to what extent the Minister's undertaking given to the council would have reduced the prospects of achieving a re-zoning within a reasonable timeframe. (b) The question of the impact of the Minister's undertaking in terms of the suggested requirement that Wollongong City Council would have had to be lobbied to try and open the way for re-zoning, and could have been lobbied to achieve that result. 38 The difficulties which I have are with Mr Smyth's endeavour to give opinions which are underpinned by his references to Minister Webster's undertaking. That undertaking may be regarded as curious in the circumstances. This is of course a matter for final submissions and possibly for evidence. It is important to recall that at the time this interlocutory judgment is being handed down, the plaintiff's evidence has not been completed and the defendants' case has not commenced. The plaintiffs, I note, submit that the undertaking was effectively "writ in water", as it was not possible for the Minister to fetter his discretion in this way. 39 The difficulty is that Mr Smyth's endeavour to express opinions as to the effect of the undertaking, in terms of the suggested reduced chances of achieving a re-zoning within a reasonable timeframe, fail a simple basic test of the requirement that the expert make plain what he or she is in fact wishing to say. If Mr Smyth's evidence is that taking into account the existence of that undertaking, then regardless of what different form of recommendations may have been forthcoming from the Commissioner, it would have taken some, and if so what, effort and some, and if so what, time to persuade any, and if so which relevant officers within the Wollongong City Council, to accept the recommendations, then Mr Smyth it seems to me could give such evidence. But when Mr Smyth says that in his opinion "the Minister's undertaking reduced the chances of achieving a re-zoning within a reasonable timeframe to the order of 50 percent", I fail to understand in what sense he is referring to or seeking to take into account, the Minister's said undertaking. 40 To my mind Mr Smyth has not been shown as qualified within the parameters laid down by section 79 of the Act to give evidence as to the circumstances in which ministers' undertakings given to local councils are withdrawn or breached or successfully challenged in Court proceedings. His specialised knowledge based on his training, study and experience, even including his experiences in the inquiries referred to in Annexure A to his CV, do not extend to embrace these further parameters on which he seeks to express opinions. The opinions which he seeks to express on those matters to my mind cannot be said to be wholly or substantially based on his specialised knowledge. 41 In the event that I be wrong in this holding and assuming that Mr Smyth would be entitled to give admissible evidence under section 79 in relation to these questions going to the Minister's undertaking, in my view opinions of that nature ought to be rejected pursuant to section 135 of the Evidence Act, for the reason that the probative value of that evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the defendants, misleading or confusing or cause or result in undue waste of time. 42 The probative value of evidence is defined in the dictionary of the Evidence Act as "the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue". 43 Given the definition of "relevant evidence" in section 55 (1) of the Act, "probative value", in substance, means degree of relevance. But there is I accept a potentially significant difference between the definition of relevance and the definition of probative value. 44 In terms of section 135 (a) of the Act, to my mind the concept of "unfair prejudice" to the defendant which here arises is because the defendants, against whom the evidence is sought to be tendered, would be based forensically in an awkward or impossible situation in terms of the evidence in the form in which it now appears. The difficulty is essentially that the Court is simply unable to cope with evidence of this nature. 45 To my mind the reasons earlier given appropriately address the somewhat difficult parameters where an expert is brought forward to deal with areas involving political processes, lobbying, and matters which would not generally be accepted as appropriately the subject of expert evidence. 46 In the result, the rulings of the Court are as follows: 47 The first sentence of paragraph 4.2 is rejected. 48 Evidence would be allowed, were this able to be given in admissible form, as to the chances of achieving different recommendations from the Commissioner, provided that the words "reasonable period of time" and "competently and professionally" were first clarified. The sentence in its present form may be admissible by being further addressed in chief if the witness was to explain the precise stages which the witness has in mind in endeavouring to use the word "rezoning". The sentence in its present form does not make explicit those stages. 49 The second sentence in paragraph 4.2 is allowed. 50 The third sentence in paragraph 4.2 is rejected. 51 So much of the final sentence of paragraph 4.2 as commences with the words "and increase" is rejected. The balance of the final sentence of paragraph 4.2 is allowed. 52 As to paragraph 14.18, the first sentence is allowed. The second sentence is rejected. I grant leave to the plaintiffs to adduce further evidence-in-chief from Mr Smyth, if he is able to give it in admissible form, to the effect that if the council had not recommended such a rezoning to the Minister following the posited Commissioner's recommendation in favour of the rezoning, the Minister would have been justified in taking the necessary action to have the land rezoned. It would again be necessary to include in the evidence precise detail of the stages said to be taken into when the witness uses the word "rezoning". 53 As to paragraph 14.19, that paragraph is rejected. I grant leave to the plaintiffs to adduce further evidence from Mr Smyth in chief, if this can be done in an admissible fashion. The words 'by now have been rezoned" plainly refer to a series of assumed steps and results, and would require to be stated to make explicit what are the assumptions taken into account by the witness, or sought to be taken into account in expressing this opinion. 54 I turn then to paragraph 3 in Mr Smyth's report of 18 April 1999. That paragraph is rejected. The reasoning processes of the witness are not stated. The assumptions are not stated. 55 I turn then to page 23 and 24 of Mr Smyth's statement in reply of 9 September 1999. I reject paragraph 137. 56 I reject paragraph 138 up to and including the words "estimated fees based in short from my accumulated experience". The balance of the paragraph is allowed as evidence of the witness' expertise. 57 I reject paragraph 139. I reject paragraph 140. I reject paragraph 141. To my mind the circumstances sought to be relied upon by Mr Smyth in endeavouring to extrapolate from his experiences with Leichhardt Council cases in the fashion dealt with in these paragraphs gives insufficient material to permit such an extrapolation, and does not satisfy the s79 parameters. If I am incorrect in this, to my mind that evidence ought be rejected pursuant to s135 of the Evidence Act for the reasons that the probative value of that evidence is substantially outweighed by the danger that evidence might be unfairly prejudicial to the defendants, misleading, or confusing, or finally cause or result in an due waste of time. I certify that paragraphs 1 - 57 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 5 November 1999 and revised on 12 July 2000 ___________________ Susan Piggott Associate 12 July 2000 Last Modified: 09/27/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.