New South Wales Supreme Court CITATION : Prats v Petroni [2007] NSWSC 622 HEARING DATE(S) : 16 May 2007 JUDGMENT DATE : 21 June 2007 JURISDICTION : Common Law Division JUDGMENT OF : Associate Justice Harrison DECISION : (1) The appeal is dismissed; (2) The decision of Her Honour Quinn LCM made on 6 July 2006 is affirmed; (3) The amended summons filed 16 May 2007 is dismissed; (4) The plaintiff is to pay the defendant's costs as agreed or assessed. CATCHWORDS : Appeal - Local Court Magistrate's decision - admissibility of expert evidence Civil Procedure Act 2005 (NSW) - s 60 LEGISLATION CITED : Evidence Act 1996 (NSW) - s 79 Local Courts Act 1982 (NSW) - ss 73 & 75 Uniform Civil Procedure Rules 2005 (NSW) - Rule 31 Darbishire v Warran [1963] 3 All ER 310 Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42 CASES CITED : Kirch Communications Pty Ltd v Gene Engineering Pty Ltd [2002] NSWSC 485 Makita v Sprowles (2001) 52 NSWLR 705 Sydneywide Distributors & Anor v Red Bull Australia Pty Ltd & Anor (2002) 55 IPR 354 PARTIES : Geraldine Prats - Plaintiff Vanessa Petroni - Defendant FILE NUMBER(S) : SC 13772/2006 COUNSEL : Mr K J Manion - Plaintiff Mr M Board, SOLICITORS : CKB Partners - Plaintiff Mr B W Gower, Insight Litigation & Legal Services - Defendant LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 4477/2005 LOWER COURT JUDICIAL OFFICER : Quinn LCM LOWER COURT DATE OF DECISION : 6 July 2006 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST ASSOCIATE JUSTICE HARRISON THURSDAY, 21 JUNE 2007 13772/2006 - GERALDINE PRATS v VANESSA PETRONI JUDGMENT (Appeal - Local Court Magistrate's decision – admissibility of expert evidence) 1 HER HONOUR: This is an appeal from the Local Court concerning the assessment of damage in relation to a motor vehicle. By amended summons filed 16 May 2007, the plaintiff seeks firstly, an order that the judgment of Her Honour Ms Quinn LCM made on 6 July 2006 in proceedings 4477/2005 in relation to the second defendant be set aside; secondly, an order that judgment be entered for the plaintiff in the sum of $3,400 against the second defendant; thirdly, an order granting leave to appeal; and fourthly, in the alternative, an order that the matter be remitted to the Local Court to be heard and determined according to law. 2 The plaintiff is Geraldine Prats (defendant in the Local Court). The defendant is Vanessa Petroni (plaintiff in the Local Court). For convenience I shall refer to the parties by name. On 6 July 2006, Magistrate Quinn entered judgment in favour Ms Petroni in the sum of $6,392.37 as against Geraldine Prats. 3 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 (NSW) (the Act) permits a party who is dissatisfied with a judgment as being erroneous on a point of law to appeal to this Court. The plaintiff also sought leave pursuant s 74 of the Act. The onus lies with the plaintiff to demonstrate that there has been an error of law or that leave should be granted on a mixed question of law and fact. 4 Section 75 of the Act provides that the Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. 5 Nevertheless, the plaintiff's solicitor submitted that currently there are dozens of matters awaiting determination in the Local Court which involve the assessment of damages in motor car cases where all parties adduced evidence from expert motor vehicle loss assessor expressing opinions in relation to the reasonableness or otherwise of repair costs and methods, whether repairs costs claimed are extravagant, the pre-accident and post accidence value of motor vehicles and the like matters and that the reasoning of Magistrate Quinn is "slavishly" applied in other cases. 6 The amount in dispute in this matter is between $4,300 and $6,400. This matter came before the Local Court, where it occupied at least six days of court hearing time, and has now been appealed to this Court. In this Court, this matter (which was heard with matter No 14602/2006) took nearly an entire day of oral argument. Given the small amount in dispute, this matter should have remained in the Small Claims division of the Local Court. This matter has occupied a substantial amount of time in both the Local Court and this Court. To say the least, it has generated excessive and unnecessary legal costs and a waste of Court resources. There is meant to be some measure of proportionality between the amount of the dispute and the costs incurred in the litigation of that dispute – see s 60 Civil Procedure Act 2005 (NSW). Grounds of Appeal 7 The grounds of appeal can be summarised as follows. Firstly, that the admission of Mr Wild's opinion evidence amounted to an error of law; secondly, that Her Honour in preferring the evidence of Mr Wild over Mr Nunn failed to take into account or make findings that Mr Wild failed to observe old repairs to the vehicle, failed to observe the vehicle prior to the accident and was unaware that the repair methodology in fact adopted by the repairer was different to the methodology he approved in his initial assessment; thirdly, that Her Honour erred in basing an assessment of damages on a pre-estimate where repairs have in fact been carried out; fourthly, that Her Honour in her reasons of judgment, failed to refer to or make findings dealing with the issues of what weight should be accorded to the evidence of Mr Wild because of his failure to adopt the expert witness's code of conduct and his failure to comply with s 79 of the Evidence Act 1995 (NSW); and fifthly, that Her Honour, having held that the cost of repairs did not greatly exceed the pre-accident market value of the vehicle, and consequently awarded the plaintiff the cost of repairs, by applying the wrong test and failing to take into account the salvage value of the vehicle, erred in law. The proceedings in the Local Court 8 On 1 December 2003 there was a collision between Teresa Prats' motor vehicle (the vehicle), and a vehicle owned by Teresa Prats and driven by Geraldine Prats. Liability was admitted. Ms Petroni sought the sum of $6,392.37 being the cost of repair of her vehicle. The Prats asserted that the vehicle had a current market value of $4,100 and a salvage value of $700. They also asserted that a fair and reasonable cost for reinstating the vehicle to pre-accident condition was not greater than $4,240.04. 9 The main issues raised on appeal were firstly, whether Mr Wild's evidence was that of an expert and secondly, if he does not adhere to the expert's code of conduct, whether his evidence should have been afforded no weight by the Magistrate. Ms Prats says that the evidence of her expert Mr Nunn should have been preferred over that of Ms Petroni's expert, Mr Wild. The evidence of Mr Wild 10 Initially, Counsel for the Prats objected to the affidavit of Mr Wild being admitted into evidence (t 10:28 – 19/12/05). Some discussion occurred as to the admissibility of the affidavit of Mr Wild. Her Honour stated (t 11.1): "I note your objection to this affidavit. I note that it's not tendered as an expert report because it's an affidavit. It does not attach any expert report, it attaches I don't know what they are or what you'd call them, lists of costs, and I'll allow it subject to your objection being dealt with by Mr Gower in relation to any opinion in the affidavit to be established as Mr Wild having sufficient knowledge in relation to that opinion. I think that's the fair way to deal with this matter. It cannot be an expert report and it's not even said to be one, it's not trying to be one as I understand it." 11 Her Honour then considered the relevant rules and continued (t 11.25): "As I understand it Mr Wild hasn't prepared any report as such for the purposes of proceedings to which the expert code would apply. He may well on Mr Manion's view, and I agree with Mr Manion, be giving some evidence, some sort of expert evidence, opinion, and on that he can be asked about why he says that he has that expertise. I think that's correct is it not?" 12 Mr Manion replied "Absolutely, your Honour" (t 11. 34). 13 The Magistrate then stated: "It is a matter of weight. I may not accept any of it and I say that of course – in the end I may reject all the evidence from one side or accept all the evidence on the other, but I can only go on what's here before me at this stage. It is a matter of weight I agree." (t 12.1-7) 14 The transcript recorded that exhibit #1 the affidavit of Peter Wild was tendered and admitted without objection. Mr Wild was then asked questions about his expertise and experience. Whether the expert report is prepared in the form of a report or as an affidavit is not important. 15 It is important to understand how Mr Wild came to give evidence. After the accident occurred the vehicle was towed to Maroubra Automotive Refinishers Pty Ltd (Maroubra Automotive). At the request of Maroubra Automotive, Mr Wild attended their premises for the purpose of providing an assessment of the damage to the vehicle. 16 Mr Wild prepared an undated affidavit which provides evidence of what had occurred in January 2004. He deposed that he is a loss assessor and accident management consultant and has been involved in the motor repair industry for 32 years and currently works as a motor vehicle loss assessor. 17 At paragraphs [4]-[9] Mr Wild deposed: 4. In or about 2004, on behalf of the Plaintiff, at the request of Maroubra Automotive Refinishers Pty Limited ("Maroubra Automotive"), I attended their workplace at 41-43 Rhodes Street, Hillsdale for the purpose of assessing Accident Damage to a 1989 Toyota Corolla Sedan, registration number VEE 296 ("the motor vehicle"), which I am informed and believe is owned by Vanessa Petroni. 5. I noticed the "motor vehicle" had suffered extensive front end damage and was presented with an estimate for repairs and expenses from Maroubra Automotives dated 5 January 2004 in the sum of $6,666.20. Annexed hereto and marked with the letter "A" is a true copy of the Initial Estimate dated 5 January 2004. 6. After inspection of the car, I adjusted the estimate and concluded that, consistent with the incident and accident description, the final cost of $6,260.37 was a fair and reasonable amount for repairs. Annexed hereto and marked with the letter "B" is a true copy of the Amended Estimate dated 21 April 2004. 7. In order to establish the fair and reasonable cost of repair, I use the guidelines set out by the Motor Traders Association, & Various Insurance Companies. However, not all vehicles are scheduled by the Motor Traders Association and comparisons cannot be made to another vehicle, as all the vehicles differ in design and construction. In these instances, I rely on my previous experience in determining a fair and reasonable cost in restoring the vehicle to its pre-accident condition. 8. On inspection of the "motor vehicle", I came to the conclusion that the damage was consistent with one incident. Annexed hereto and marked with the letter "C" is a true copy of my report issue to Maroubra Automotive. 9. I am of the opinion that the sum of $6,260.37 (excluding the cost of my fee) is a fair and reasonable cost of repairing the motor vehicle to restore it to its pre-accident condition." 18 The Magistrate in her written reasons (at p 9) stated: "A Court must first consider the degree of reliability of the application of the field of expertise to the particular issue in question. Mr Wild's qualifications and experience as a loss assessor are sufficient to bring him within the exception to s.79 of the Evidence Act 1995 , that is, opinion evidence is inadmissible unless the person has the relevant experience. In evidence, Mr Wild stated that for the last 7 years he has run a business "P & R Assessments South". Prior to that time he was motor vehicle loss assessor for Royal Sun Alliance Insurance for twenty-two years. He performs some 25 vehicle assessments per week. It is clear Mr. Wild has specialised knowledge on which to base an opinion. As stated earlier, Mr Wild's assessment and opinion of the fair and reasonable costs of repair was prepared pre-litigation and based wholly on his specialised knowledge and the cost base relying on the MTA repairs guide. In ASIC .v Rich (supra) the Court makes it plain that whether or not the opinion is based on the "true factual basis" or an "asserted factual basis" approach goes only to weight not admissibility. I am satisfied that the evidence of Mr. Wild is admissible." 19 This part of the Magistrate's reasoning is correct. When does an expert become an expert witness? 20 Mr Wild provided his assessment of the damage prior to the commencement of legal proceedings. Later he prepared and signed an affidavit. He appeared in court and was cross examined extensively. 21 Section 79 of the Evidence Act 1995 (NSW) reads: "Exception: opinions based on specialised knowledge If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge." 22 Mr Wild is a loss assessor and accident management consultant. He has been involved in the motor vehicle repair industry for 32 years. He is currently employed as a motor vehicle loss assessor. He established that he has the necessary training and experience to satisfy the test for an expert witness in s 79 of the Evidence Act. 23 Pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) there is provision and requirement for an expert engaged as a witness to be provided with and to read the code of conduct. An expert is required to agree to be bound by it. If an expert's report does not contain such acknowledgments and agreement, the report is inadmissible in evidence, unless the Court orders otherwise – Rule 31.23. 24 "Expert Witness" is defined in Rule 31.18 of the UCPR as: "An expert engaged or appointed for the purpose of: (a) providing an expert's report for use as evidence in proceedings or proposed proceedings, or (b) giving opinion evidence in proceedings or proposed proceedings." 25 In Kirch Communications Pty Ltd v Gene Engineering Pty Ltd [2002] NSWSC 485Campbell J said at [11] in relation to the same Code as it was formerly in the Supreme Court Rules: "It does not seem to me that the definition of "expert witness" is able to catch the situation involved here, where an officer of a party, not engaged for any particular purpose, has, at a time before court proceedings were contemplated, expressed an expert opinion in a report, and that report is tendered in later proceedings". 26 The Magistrate applied the reasoning in Kirch and concluded that Mr Wild was not an expert witness in accordance Rule 31.23 at the time he provided his original report, as he was not engaged for the purpose of providing an expert's report for use as evidence in proceedings. I accept that it unlikely that four days after the accident any party proposed that proceedings were to be commenced. 27 However, at a subsequent time, Mr Wild was engaged as an expert witness, to attend court to give evidence, and to provide expert opinion evidence in proceedings. It is my view, that when he prepared his affidavit he became an expert witness in accordance Rule 31.18, and became an expert witness for the purposes of Rule 31.23. The test in Makita 28 The plaintiff submitted that Mr Wild failed to set out his reasoning, or the facts matters or assumptions upon which his opinions were based. 29 As Heydon JA, as he then was, said in Makita v Sprowles (2001) 52 NSWLR 705 at 743-744 [85]: "In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of "specialised knowledge"; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be "wholly or substantially based on the witness's expert knowledge"; so far as the opinion is based on facts "observed" by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on "assumed" or "accepted" facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; and the opinion of an expert requires demonstration or examination of the scientific or other intellectual basis of the conclusions reached: that is, the expert's evidence must explain how the field of "specialised knowledge" in which the witness is expert by reason of "training, study or experience", and on which the opinion is "wholly or substantially based", applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight. And an attempt to make the basis of the opinion explicit may reveal that it is not based on specialised expert knowledge, but, to use Gleeson CJ's characterisation of the evidence in HG v The Queen (at 428 [41]), on "a combination of speculation, inference, personal and second-hand views as to the credibility of the complainant, and a process of reasoning which went well beyond the field of expertise." 30 The plaintiff's Counsel referred to Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42, where McColl JA stated, at [84]: "It is not, in my view, necessary to consider for present purposes whether Heydon JA's judgment in Makita set too high a standard for the admissibility of expert opinion evidence. The critical parts of Doctor Selby Brown and Doctor Khoo's reports fell short, even by pre- Makita standards, of the standard required for admissibility. It has long been the case that a court cannot be expected to, and should not, act upon an expert opinion the basis for which is not explained by the witness expressing it: see Cross on Evidence at [29065]; R v Jenkins; Ex parte Morrison (No 2) [1949] VLR 277 at 303; R v Hally [1962] Qd R 214; Steffen v Ruban [1966] 2 NSWR 622; Perry v R (1990) 49 A Crim R 243 and, of course, the principal authorities examined by Heydon JA in Makita (at 729 - 741 [59] - [82]). " 31 The solicitor for Ms Petroni referred to Sydneywide Distributors & Anor v Red Bull Australia Pty Ltd & Anor (2002) 55 IPR 354, where Branson J in discussing the Makita principle stated that: "the requirement that an expert opinion be wholly or substantially based on the witness's specialised knowledge is not, in my view, intended to require a trial judge to give meticulous consideration, before ruling on the admissibility of the evidence of the opinion, to whether the facts on which the opinion is based form a proper (in the sense of logically or scientifically or intellectually proper) base for the opinion. Were the position otherwise the smooth running of trials involving expert evidence could be expected to be interrupted by the need to explore in detail, in the context of admissibility, matters more properly considered at the end of the trial in the context of the weight to be attributed to the evidence. It is sufficient for admissibility, in my view, that the trial judge is satisfied on the balance of probabilities on the evidence and other material then before the judge that the expert has drawn his or her opinion from known or assumed facts by reference wholly or substantially to his or her specialised knowledge." 32 Mr Wild in his affidavit exposed his reasoning process and the basis for his conclusions. Mr Wild physically inspected the damaged vehicle. He considered the items contained in the quote prepared by Maroubra Automotives. This quote comprised of a list of all the parts that required repair and the corresponding estimate of time involved in carrying out repair to that item. The quote also contained an itemised list of parts required and their estimated cost. Mr Wild made adjustments to the quote where necessary. There was only a minimal adjustment made. Mr Wild determined that the sum of $6,260.37 was a fair and reasonable amount for the repairs. 33 In evidence Mr Wild explained that he referred and applied to the guidelines set out by the Motor Traders Association and Various Insurance Companies. He noted the differences in design and construction that can occur, and in those circumstances relied on his previous experience in determining a fair and reasonable cost. He was of the opinion that the damage to the vehicle was consistent with the accident. Mr Wild's view as to the fair and reasonable cost of repair was supported by reasoning, and based on Mr Wild's knowledge and experience. Mr Wild's evidence satisfied the test in Makita. 34 Even if the Magistrate erred in relying on Mr Wild's evidence, there was, in evidence, the quote provided by Maroubra Automotives as to the cost of the repairs to the motor vehicle. There was also evidence that the repair work had actually been carried out. This evidence could have supported Ms Petroni's case. Objection to the witness's evidence 35 While initially Counsel for Ms Prats objected to Mr Wild's report being admitted into evidence, the transcript recorded that the report was admitted into evidence without objection. It appears that the Magistrate determined that if Mr Wild's evidence was considered to be expert evidence, he can be asked questions as to his expertise. It also appears that counsel for the Prats agreed to this course. Mr Wild gave evidence as to his experience and expertise. 36 During the period that Mr Wild was in the witness box giving evidence and being cross-examined, the issue that he had not adopted the code of conduct was not raised. Counsel raised this objection in submissions. By that stage it was too late to ask Mr Wild whether he knew of the Code, whether he adopted it and whether this caused him to change anything that he had written in his report. As a matter of fairness Mr Wild's possible lack of adherence to the Code should have been ventilated before the Magistrate, prior to Mr Wild giving his evidence. When it was referred to in submissions it was too late. 37 The Magistrate was entitled to accept the evidence of Mr Wild and accord it the weight that she did. I might add, that the Magistrate was entitled to prefer the evidence of Mr Wild over that of Mr Nunn. The latter expert had not benefited from the opportunity to physically examine the vehicle prior to the repairs taking place. Mr Wild had inspected the damaged vehicle. Mitigation of damage 38 It has been submitted by Counsel for Ms Prats that the Magistrate erred in fact and law by holding that Ms Petroni was entitled to recover the cost of repairs as opposed to the constructive total loss of the vehicle. 39 In her judgment, the Magistrate stated, after considering the authorities, which included Darbishire v Warran [1963] 3 All ER 310: "On balancing the weight of the evidence, I am satisfied that the plaintiff's figure for market value figure should be accepted. Mr Wild was the person who saw the car immediately after the accident and prior to repair. In my view, he was the best person competent to say what repairs were required and what category the vehicle fell into in relation to the Glasses Guide" [page 13 of decision]. 40 Ms Prats submitted that this is not a case about mitigation, as mitigation is a rule stating that the plaintiff is not entitled to recover for damages which he ought to have avoided. 41 Ms Prats submitted that Darbishire is authority for the proposition that "The basic measure of damage … is restitution. In the case of injury to a chattel, it may happen that restitution can be effected either by repair… or by the purchase of a comparable article…" and "as a rule the scrap value of the damaged chattel must be taken into account". 42 Darbishire was a case in which a car was damaged by the negligence of the defendant. The insurer paid the plaintiff £80 compensation for a car when its market value at the time was £85. An identical car could not be found, although cars of a similar vintage in a similar class could be purchased for £85-£100. Despite being advised that repair to the vehicle was uneconomic, the plaintiff had the car repaired at a cost of £192 and sued the defendant for the difference between the repair costs and the compensation he had received. The plaintiff did not attempt to find a similar car on the market. 43 In Darbishire that Court held that the plaintiff had not, as between himself and the defendant, taken all reasonable steps to mitigate the damage according to the practical business or economic point of view, as the car was not an irreplaceable article, and accordingly the damages should be assessed on the basis of the market price, not on the higher cost of repairing the damaged car. 44 In my view it was open to the Magistrate to assess damages in the manner that she did. The Magistrate was not obliged to find that the only damages recoverable was pre-accident market value plus salvage value of the vehicle. There is no error of law. Given the amount in dispute, leave should not be granted on a question of mixed fact and law. Even if I am wrong and there is an error of law in relation to expert evidence, the assessment of damages is supported by other evidence. The appeal is dismissed. The decision of Her Honour Quinn LCM made on 6 July 2006 is affirmed. The amended summons filed 16 May 2007 is dismissed. 45 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed. The Court Orders: (1) The appeal is dismissed. (2) The decision of Her Honour Quinn LCM made on 6 July 2006 is affirmed. (3) The amended summons filed 16 May 2007 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** 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.