New South Wales Supreme Court CITATION : Roach & Ors v Freehill Hollingdale & Page & Ors [2001] NSWSC 95 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 20950/97 HEARING DATE(S) : 8 February 2001 JUDGMENT DATE : 1 March 2001 Walter Edward Roach (First Plaintiff) Sydtech Pty Limited (In Liquidation) (Second Plaintiff) Winnote Pty Limited (In Liquidation) PARTIES : (Third Plaintiff) v Brian John Downey Page & Ors t/as Freehill Hollingdale & Page (First Defendants) Brian David Kewley & Ors t/as Freehill Hollingdale & Page (Second Defendants) JUDGMENT OF : Davies AJ at 1 Ps: Mr S J Rushton SC COUNSEL : 1Ds: Mr D E Ryan SC, Mr N J Kidd 2Ds: Mr R J Darke Ps: Garrett Walmsley Madgwick SOLICITORS : 1Ds: Allen Allen & Hemsley 2Ds: Ebsworth & Ebsworth CATCHWORDS : Practice - Leave to file affidavits out of time - no point of principle. LEGISLATION CITED : Mines Act, 1958 (VIC) Supreme Court Rules, 1970, Pt 36 r 13C CASES CITED : n/a DECISION : Order 1 as sought in Notice of Motion granted. See also paragraphs 26 and 27. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROFESSIONAL NEGLIGENCE LIST DAVIES AJ THURSDAY, 1 MARCH 2001 20950/97 - WALTER EDWARD ROACH & ORS v BRIAN JOHN DOWNEY PAGE & ORS t/as FREEHILL HOLLINDALE & PAGE & ORS JUDGMENT 1 HIS HONOUR: This is an application for leave to file three affidavits out of time. On the hearing of the motion, Mr S J Rushton SC appeared for the plaintiffs, Mr D E Ryan SC and Mr N J Kidd of counsel appeared for the first defendants and Mr R J Darke of counsel appeared for the second defendants. As I have not had previous experience of this case and as the file is voluminous, I have taken the liberty of examining the file generally, with a view to informing myself as to the nature of the case and I have not restricted myself to the materials referred to during the hearing. 2 The case has had a long history having been commenced on 15 November 1995 in the Equity Division. Due mainly to financial and other problems encountered by the plaintiffs, little progress was made until the case came before Justice Abadee early in the year 2000. On 13 March 2000, his Honour made a number of orders including an order that the plaintiffs file and serve any statements of evidence by all non-expert witnesses on or before 10 April 2000 and statements of evidence by all expert witnesses on or before 16 May 2000. 3 The matter came before Justice Abadee again on 5 May 2000. An affidavit by an expert witness which was filed on behalf of the plaintiffs said that, as a result of his investigations, he had formed the view that the best possible basis for calculating the value of the loss of opportunity to make profits from the exploitation of peat from the Swan Marsh Peat Deposit was to base the calculation upon information and data pertaining to the existing mining operation being conducted on the site. Counsel for the plaintiffs sought an extension of time, for approximately six months, for the filing of evidence of the expert witnesses, during which time the witnesses would be able to examine the activities of the current operator of the Swan Marsh Peat Deposit. 4 Abadee J refused such an extension. His Honour said, inter alia:- "Mr Sheehan, every indulgence has been given to your clients. Orders have been made. If the orders are not complied with, including the expert witness order, by 16 May, I will probably strike the action out. You have had every conceivable indulgence that I am prepared to give. I have given you every conceivable latitude. The curtain is about to drop. Today is the 5th. You have got eleven days to get your house in order, in respect of compliance with the agreed consent orders, otherwise on or after 16 May I will strike the action out - that is an anticipatory order." 5 I approve entirely of the course taken by his Honour. It was effective in ensuring that the matter would proceed. As a result of his Honour's orders, the affidavits on behalf of the plaintiffs were filed by 16 May 2000 or shortly thereafter. Subsequently, affidavits were filed on behalf of the defendants. 6 I should now say something about the issues in the proceedings. The first defendants carried on practice as solicitors in Sydney under the name of Freehill Hollingdale & Page. The second defendants carried on practice as solicitors in Melbourne under the same name. The first plaintiff proposed to enter into a venture to mine peat on land at Swan Marsh in Victoria. He engaged the first defendants to act on his behalf in obtaining the necessary leases, licences and permits for setting up the peat mining venture. It appears that much of the actual advice which was given was formulated by the second defendants in Melbourne and that much of the action taken was done by the second defendants. 7 It is alleged that the substance of the advice given during 1988 and through to 1990 was that, in accordance with what was said to be a practice of the Victorian Mines Department, peat was a "stone" as defined and, therefore, that the extraction of peat was deemed to be an extractive industry and not a mining operation affected by the Mines Act, 1958 (Vic). On the basis of this advice, Mr Roach and his then partner obtained, from the owner of the land, a lease of the peat deposit. The lease required the payment of a significant annual sum to the owner. The defendants acted in this transaction. The lease was taken by a company set up for the purposes of the venture, Winnote Pty Limited (the third plaintiff), a company which is now in liquidation. 8 The first plaintiff, Mr Roach, and his partner commenced extraction of peat from the land but, by 1993, they were dissatisfied with the results. There was a problem with the lease which had been brought about apparently by the registration by the owner of a plan of subdivision of the land. The lease could not be registered. Therefore, occupation was not fully secure. In this situation, Mr Roach and his partner became concerned about the costs of development of the peat deposit and with the ongoing costs due under the lease. 9 In early 1993, Mr Roach and his partner decided to sell Winnote's interest in the peat deposit. They formed the view that a figure of $40,000 would be a sufficient sale price. An offer to purchase Winnote's interest for $40,000 was made by Mr Alec J Groves on 29 January 1993. Mr Roach and his partner decided to accept that offer. However, before the transaction was effected, Mr Groves lodged with the Department of Energy and Minerals an application for a mining licence under the Mines Act with respect to the peat deposit. That mining licence was granted some months later and, thereafter, Mr Groves took possession of the peat deposit and commenced the extraction of peat. 10 The case put for the plaintiffs is that peat was a mineral, that its extraction required a licence under the Mines Act, that a licence under the Mines Act conferred a right to mine which overrode the rights of the owner of the land and that, therefore, a lease from the owner was not required. The plaintiffs allege that the defendants failed to exercise due skill and care. 11 I do not seek to predict on what basis, if liability is established against the defendants or any of them, damages will be assessed. No doubt, the defendants will put forward the proposition that damages should be assessed, at the latest, as at the date when Mr Groves entered into possession of the peat deposit under the mining lease. On the other hand, the plaintiffs will wish to contend that damages should be assessed as at the date of the trial and should be assessed on the basis of the estimated profits that the plaintiffs have lost because of what they say was wrong advice. 12 The expert reports filed on behalf of the plaintiffs appear to have proceeded principally on the basis of an estimated loss of profits which it is alleged the plaintiffs would have made from the mining of the peat had the venture proceeded. There is also a small claim for reliance damage. I have not sought to ascertain how this latter loss has been integrated with the loss of profits claim. 13 Affidavits of experts for the defendants have been filed and, so far as I can ascertain, these reports have challenged many of the assumptions on which the plaintiffs' experts have proceeded. One of the experts for the defendants, Mr Mark Bryant, in his challenge to the plaintiffs' case, has relied, in part, upon the actual financial performance of the enterprises which operated the Swan Marsh Peat Deposit from 1988 to 1999. On Mr Bryant's figures, sales revenue over the period was relatively small and was very much exceeded by the operating costs which were incurred. 14 That brings me to the facts which led to the present application. One of the experts relied upon by the plaintiffs, probably the principal expert for the plaintiffs, Mr B M Robertson, is a mining industry consultant. In late June 2000, after two affidavits by him had been filed in these proceedings, he was approached by Mr George Macdonald who was then involved in the company, Pacific Agriculture Limited now known as Biogreen Limited ("Biogreen"), which then held the licence to mine the peat deposit. Mr Macdonald engaged Mr Robertson to work with officers of the company in recommending a strategic plan for the future. In the course of undertaking this work, Mr Robertson obtained a great deal more information about the mining operations in the peat deposit than he had previously had had. He also obtained further information about markets which he had not taken into account. He became aware that that part of the peat deposit as contained humic peat, which was in fact the greater part of the deposit, was being mined and that there seemed to be a significant market for this type of peat. This information led Mr Robertson to revise many of the assumptions and figures which he had used in his previous reports. 15 I have not attempted to read through all of Mr Robertson's report which is now sought to be placed into evidence. However, I have gained the impression that Mr Robertson's new figures, when converted into monetary value, are very high indeed. I suspect that Mr Robertson's new calculations may have lost touch with the reality of any damages which are likely to be awarded in the case. However, that is merely an impression. I could not act upon it. There is no evidence before me that Mr Robertson's report is embarrassing in form or content or that it could not be accepted. 16 The position therefore is that, because of the work he has done as a consultant to Biogreen, Mr Robertson has altered his opinion with respect to a number of matters which were referred to in his reports given in the first half of the year 2000. In this event, it seems to me that it was obligatory on Mr Robertson to provide a further report to the plaintiffs' solicitors. Clause 8 of the Expert Witness Code of Conduct provides:- "8. An expert witness who, after communicating an opinion to the party engaging him or her (or that party's legal representative), changes his or her opinion on a material matter shall forthwith provide the engaging party (or that party's legal representative) with a supplementary report to that effect which shall contain such of the information referred to in 5(b), (c), (d), (e) and (f) as is appropriate." 17 Having been furnished with a further report, it was then the duty of the plaintiffs' solicitors to serve that report on all parties (see Part 36 rule 13C(3)(a) of the Supreme Court Rules). That rule does not apply to an expert engaged before 28 January 2000. It seems that Mr Robertson was engaged in May 2000. In any event, it is obvious that, if Mr Robertson gives evidence, which is essential to the prosecution of the plaintiffs' claim, he must give evidence which truly reflects the opinion which he holds. Accordingly, his report should be served upon all parties. 18 In association with Mr Robertson's report, it is necessary that there be filed an affidavit verifying material concerning Biogreen's operations on which Mr Robertson relies. Only a small part of that material could have been ascertained prior to the filing of the reports of the plaintiffs' experts in May and June 2000. Most of Mr Robertson's revised opinions result from investigations undertaken in and after June 2000. 19 It is also necessary to permit the filing of a further affidavit by Mr R G Humphreys, a chartered accountant, for his figures depend, in part, upon Mr Robertson's calculations. 20 Counsel for the first defendants has pointed out that those acting for the plaintiffs did not adequately investigate the current activities of the operation of the peat deposit prior to the filing of the plaintiffs' expert reports. Counsel referred to "extraordinary delay". There is much force in that point. However, it could not realistically have been expected that the new material could have been obtained in the short time that elapsed between 8 May 2000 when the orders were made by Abadee J and 16 May, the date fixed by his Honour for the filing of the affidavits by the experts. This information has now come to hand, not as a result of further investigations undertaken by the plaintiffs' solicitors, but because Mr Robertson was engaged by Biogreen as a consultant and, in that capacity, he became familiar with Biogreen's affairs. It is true to say that, if the plaintiffs had been diligent, the case should have come to trial some years ago. It is not true to say, however, that, if the plaintiffs had been diligent, they could have obtained the new information by May 2000. Much of the material was not assembled until mid to late 2000. 21 Counsel for the first defendants also placed emphasis upon the fact that the plaintiffs' solicitors did not advise the defendants that Mr Robertson was obtaining information as to the affairs of Biogreen and was likely to alter his opinions. Counsel submitted that, as a result, the reports of the experts obtained by the defendants, have been wasted. I do not, myself, see any waste in such of the reports of the defendants' experts as I have read. They all appear to me to be relevant. Mr Bryant limited his investigation of the operations on the peat deposit to the years 1988 to 1999. That material remains relevant. However, the results which were obtained by Biogreen during the year 2000 and which are being obtained at the present time are also relevant. Counsel submitted that the plaintiffs deliberately kept silent about their intention to present further reports when the circumstances were such that they should have spoken out. I do not draw that inference. It was appropriate that the orders made by Justice Abadee should be complied with. 22 Counsel for the first defendants submitted that any success that Biogreen is having selling humic peat to Taiwan at the present time, whilst the exchange rate for the Australian dollar is low, will have little or no relevance to an assessment of damages in respect of events which occurred between 1988 and 1993. That may be so, but it is not a point on which I can now rule. One of the difficulties which arises in the calculation of damages is that monetary values and exchange rates vary. This is a factor which may be taken into account by a court in determining whether damages should be assessed as at the date of breach or as at the date of trial. In the present case, such a consideration is for the determination of the trial judge. 23 Counsel for the first defendants also submitted that it is highly undesirable that the trial be further delayed. I agree with that submission. However, no trial date has yet been fixed. In my opinion, the defendants' experts should be readily able to deal with the facts surrounding Biogreen's operations and could do so between now and any date on which it might be anticipated that the case would be fixed for trial. 24 Counsel for the second defendants took a like approach and suggested that there must be a cut-off date for relevant facts and that, in the present case, that cut-off date was effectively fixed by the orders made by Justice Abadee on 5 May 2000. In my opinion, the position is that, if damages are to be assessed as at the date of the trial, then facts occurring up to the date of the trial will be relevant. 25 Accordingly, I am of the view that Order 1 as sought in the Notice of Motion should be granted. 26 Order 2 seeks an order requiring ongoing consultation between the experts for the parties. Apparently, it is considered by the plaintiffs' representatives that there should be constant communication between the experts with respect to the ongoing activities of Biogreen. In my opinion, that order should not be made. Although the affairs of Biogreen may be relevant to the assessment of the plaintiffs' damages, it is the loss suffered by the plaintiffs from events that occurred during the period 1988 to 1993 that is in issue. That is not to be equated with the present value of Biogreen's enterprise, or with the potential loss of profits to Biogreen should its enterprise be wrongfully terminated as at the date of trial. In my opinion, an order requiring ongoing consultation with respect to Biogreen's affairs would place far too much significance on Biogreen's activities and its hopes and expectations for the future. 27 Having regard to the delays which have occurred in the past, I am of the view that the plaintiffs should pay the defendants' costs of the application. ********** Last Modified: 03/05/2001 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.