Young & Anor v Coupe & 4 Ors [2004] NSWSC 546

New South Wales Supreme Court

CITATION : Young & Anor v Coupe & 4 Ors [2004] NSWSC 546 HEARING DATE(S) : 09/06/04-18/06/04 JUDGMENT DATE : 22 June 2004

JUDGMENT OF : White J DECISION : See Para 29 of Judgment

CATCHWORDS : Admissibility of evidence of valuation report when valuer not available for cross-examination - Limitation of use of report - Not as evidence of the truth of the facts stated in report or evidence of facts about the existence of which opinions stated in report. LEGISLATION CITED : Evidence Act 1995 (NSW) Roach & Ors v Page & Ors (No 11) [2003] NSWSC 907 Ringrow Pty Ltd v BP Australia Limited [2003] FCA 933 Ordukaya v Hicks [2000] NSWCA 180 CASES CITED : R v Papakosmas (1999) 196 CLR 297 Bakerland Pty Limited v Coleridge [2002] NSWCA 30 ACCC v Australian Safeway Stores Pty Ltd [1999] FCA 1,269 Quick v Stoland Pty Ltd (1998) 87 FCR 371 Rawlinson's Australia Construction Handbook Kevin Young & Another PARTIES : v Paul Coupe & 4 Others FILE NUMBER(S) : SC 2947/02 Plaintiffs: I M Khan & P Menadue COUNSEL : Defendants 1-2: G Ellis Defendants 3-5: S Epstein SC & C Dimitriadis Plaintiffs: David Geddes SOLICITORS : Defendants 1-2: Colin Biggers & Paisley Defendants 3-5: Baron & Associates

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Tuesday, 22 June 2004

2947/02 KEVIN YOUNG & Another v PAUL COUPE & 4 Others JUDGMENT – Admissibility of Exhibit 3D6 1 HIS HONOUR: Exhibit 3D6 is a valuation report dated 27 September 2001 prepared by Mr Andrew Parkinson, a certified practising valuer, of LandMark White (NSW) Pty Limited for Securcorp Limited. The report is a valuation as at 27 September 2001 of the property at 21-69 Regent Street Redfern. In the report Mr Parkinson assessed the market value "as is" of the property with existing DA consent exclusive of GST as being $5,000,000. 2 The report was tendered on 9 June 2004 on the hearing of the separate question of whether the plaintiff was entitled to the relief claimed in paragraphs (a) and (b) of its claim for relief against the third defendant. On that question it was relied upon by the third defendant. The report had as part of its annexures a photocopy of the contract for sale of the property signed by the vendors. In various places it referred to the existence of a contract for sale of the property dated 19 June 2001. It was relied upon by the third defendant to show that the purchasers had received the signed contract of sale from the vendors, which corroborated the evidence that contracts had been exchanged. It was also relied upon to show that the purchasers had evinced the intention to be bound by the contract. 3 The correctness of the valuation was not in issue on the separate question. 4 After I announced my decision on the separate question, I directed that the evidence led on that question would also be evidence on the remaining issues. I reserved the right to the parties to make objections on the remaining issues to the evidence which had been so led. 5 On the remaining issues the plaintiffs read an affidavit of Mr Parkinson sworn on 18 June 2003 to which his report was exhibited. No objection was taken to the report. 6 No expert evidence from another valuer was adduced by any of the defendants. Nonetheless the issue of the value of the property as at 19 June 2001 is an important issue in the remainder of the proceedings. It is clear that the defendants contest the proposition that the land had a value of only $5,000,000 as at that date. There is in evidence a document described as a feasibility study prepared by Mr Coupe in respect of the proposed development. It projects that using the land purchase price of $7,700,000, the development would show a profit excluding GST of in excess of $5,500,000. Evidence has been adduced that the property was sold in October 2002, apparently after the development consent had expired, for $7,100,000. (Exhibit 3D19). It appears from a letter dated 3 September 2001 from Mr Abbott, to Herron Todd White (Ex 1D20) that that organisation had valued the site at $6,000,000. However that valuation is not in evidence. Mr Abbott expressed the view that the valuation of $6,000,000 was too low and that $7,700,000 was a fair price. 7 On the afternoon of 16 June, 2004, after the affidavit had been read, counsel for the plaintiffs advised that Mr Parkinson was not available for cross-examination. The only reason given for his non-availability was that he had left the firm where he was when he prepared the valuation, that he had indicated to the plaintiffs' solicitor that he was not happy to come to court to give evidence and that if the plaintiffs wanted somebody to give evidence in respect of his valuation they should contact his former firm. There was no satisfactory reason given as to why a subpoena was not served on him to give evidence. 8 Because Mr Parkinson was not available to be cross-examined, the defendants initially submitted that an order should be made pursuant to s 136 of the Evidence Act 1995 (NSW) to limit the use to which the report could be put. The limitation initially sought was that the report not be evidence of the truth of the facts asserted in it or the validity of the opinions expressed in it. 9 In Roach & Ors v Page & Ors (No 11) [2003] NSWSC 907 Sperling J made orders limiting the use to which certain passages in reports could be put where the authors were not available for cross-examination. The limitation was that insofar as the document contained representation of fact and expressions of opinion, they would not be used as evidence of the truth of facts stated in them or as evidence of facts about the existence of which opinions were stated in them. This is a more accurate statement of any limitation which should be put on the use of the report. 10 Subsequently the third to fifth defendants submitted that the report should be excluded altogether on the hearing of the remaining issues pursuant to s 135. Counsel could not however point to any difference to the third to fifth defendants' position if the report was excluded under s 135 or if the use to which it could be put was limited in the way sought pursuant to s 136. 11 The delivery of the report and its receipt by the plaintiffs is itself part of the matrix of facts relevant to the remaining issues. The correspondence in exhibit 3D5 pages 62, 64 and 68 refers to the valuation, or a similar valuation. The fact that the valuation was given and received by the plaintiffs is relevant to the issue of whether the plaintiffs' damage, being arguably the loss of the 5% deposit and their liability to pay liquidated damages equivalent to a further 5% of the purchase price, was caused by their reliance on the alleged misrepresentations as to value. Being admissible for non-hearsay purposes, the hearsay rule does not apply (s 60). Nor does the opinion rule apply as the report is relevant otherwise than as proof of the facts about which the opinions are expressed (s 77). 12 In any event I am of the view that the report would be admissible as a business record of LandMark White or of Securcorp Ltd. Counsel for the third to fifth defendants accepted that s 69(1) was satisfied. It was initially submitted that s 69(2) was not satisfied because the relevant representations in the document were not representations of asserted fact. This question was considered by Hely J in Ringrow Pty Ltd v BP Australia Limited [2003] FCA 933. That case also concerned the tender of valuations by valuers who were not to be called as witnesses. His Honour held that s 69 of the Evidence Act was intended to have a facilitative effect and to be construed broadly. A reference to "asserted facts" in the section extended to an opinion in relation to a matter of fact. As the asserted facts consisted of opinions of the valuers which they themselves had formed and expressed, the requirement that the person who makes the representation have personal knowledge of the asserted fact was satisfied [at 13-19]. 13 Counsel did not submit that I should not follow the decision of Hely J in Ringrow Pty Ltd v BP Australia Ltd. I think I should do so. 14 In any event, the consequence of a different construction of s 69 would not be that the report was inadmissible. The exception in s 69 against the preclusion of hearsay, mirrors the hearsay rule itself in s 59. If a statement of opinion is not a statement of an asserted fact under s 69, the consequence is not that it is inadmissible as hearsay. It would not fall within the hearsay rule in the first place. 15 Mr Dimitriadis, who appeared for the third to fifth defendants with Mr Epstein SC, submitted that although the report was hearsay, it was not admissible under s 69 because I should infer that it was prepared or obtained in contemplation of legal proceedings. (s 69(3).) There is nothing in the report itself which provides support for that submission. To the contrary, the report states that it was made on the request of Securcorp Pty Limited, a proposed lender to the plaintiffs, who had approved a loan to the plaintiffs subject to the receipt of a satisfactory valuation. The valuation was requested by Securcorp on 20 September 2001. 16 Counsel pointed out that settlement under the contract of 19 June 2001 was due to take place on 17 September 2001. On 12 September 2001 the vendor's solicitors advised the purchasers solicitors that if they failed to settle on that date a notice to complete would be issued. (Exhibit 3D5 page 35). On 19 September the vendors served a notice to complete requiring completion on 4 October 2001. On 3 October 2001 the purchasers proposed that the existing contract dated 19 June 2001 be "extinguished" subject to the execution of the new unconditional contract for a sale price of $5,200,000 with the new contract to provide that the vendor would receive the retail component of the completed development in lieu of the balance of $2,500,000 of the monies which would otherwise be payable pursuant to the contract of 19 June 2001. (Exhibit 3D5 pages 60-63.) This proposal was rejected on 4 October 2001 (Exhibit 3D5 pages 65, 66). On 5 October the purchasers gave notice that they terminated the contract on the ground that they were induced to enter into it by false representations as to the value of the property. 17 It was submitted that I could infer that although the valuation was addressed to the proposed lender, it was obtained at a time when the plaintiffs contemplated that if their proposal to renegotiate the contract was rejected they would purport to terminate the contract on the basis of its value having been misrepresented to them. It was submitted that the valuation might have been obtained to support such a case as that which they have brought. 18 There is no direct evidence to support the proposition that this was the purpose for which the valuation report was prepared. The report itself states a different purpose. Mr Young was not asked about the purpose of the report. The suggestion that the report was prepared to bolster the plaintiffs' contemplated legal proceedings is speculative. I do not find that the report would not be admissible under s 69 because of s 69(3). Accordingly the report although it is hearsay, is admissible as evidence of the facts asserted in the report including the asserted value of the property as at 27 September 2001, unless it is excluded or its use limited pursuant to ss 135 or 136. 19 Because the report is relevant for a purpose other than proof of the value of the property, it would not be appropriate to exclude the report pursuant to s 135 of the Evidence Act. The question is whether the use which may be made of the report should be limited in accordance with s 136. That section provides as follows: "- SECT 136 General discretion to limit use of evidence