New South Wales Supreme Court CITATION : Sharkawy v Toman [2007] NSWSC 621 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 21 August 2006 is affirmed; (3) The summons filed 18 Sepotember 2006 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 : Therese Sharkawy - Plaintiff Raymon Toman - Defendant FILE NUMBER(S) : SC 14602/2006 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) : 6955/2005 LOWER COURT JUDICIAL OFFICER : Quinn LCM LOWER COURT DATE OF DECISION : 21 August 2006 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST ASSOCIATE JUSTICE HARRISON THURSDAY, 21 JUNE 2007 14602/2006 - THERESE SHARKAWY v RAYMON TOMAN 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 summons filed 18 September 2006 the plaintiff seeks firstly, an order that the judgment of Her Honour Quinn LCM made on 21 August 2006 in proceedings 6955/2005 in the Downing Centre Local Court in relation to the second defendant be set aside; secondly, an order that the plaintiff be granted leave to appeal; thirdly, an order that judgment be entered for the plaintiff in the sum of $1,682.80 against the second defendant; 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 Therese Sharkawy (the defendant in the Local Court). The defendant is Raymon Toman (the plaintiff in the Local Court). For convenience I shall refer to the parties by name. On 21 August 2006, Magistrate Quinn entered judgment in favour of Mr Toman in the sum of $7,983.62 as against Therese Sharkawy. Mr Toman's claim against Hossam Sharkawy was dismissed. 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 on 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 $1,682 and $7,900. This matter came before the Local Court, where it occupied at least two days of court hearing time, and has now been appealed to this Court. In this Court, this matter (which was heard with matter No 13772/2006) 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 in dispute and the costs incurred in the litigation of that dispute – see s 60 Civil Procedure Act 2005 (NSW). Grounds of Appeal 7 The plaintiff's grounds of appeal are firstly, that the Magistrate erred in law in according any weight to the evidence of Mr Wild, as to the fair and reasonable cost of repairs, he having failed to disclose his reasoning and not having complied with the expert code of conduct; secondly, the Magistrate erred in law and in fact in preferring the evidence of Mr Wild over that of Mr Nunn, a loss assessor called by the defendant; thirdly, the Magistrate erred in basing her assessment of damages on a pre-estimate where repairs have in fact been carried out, and in circumstances where there has been a changed methodology of repair, such an approach amounts to an error of law; fourthly, the Magistrate failed to give reasons or to make findings on the evidence as to matters in issue in the quantum case as it related to repairs actually carried out; fifthly, the Magistrate erred in law in awarding damages to the plaintiff for the hire of a vehicle when no claim for such damage had been advanced in the pleadings and no evidence was given to support the claim; sixthly, the Magistrate erred in fact and in law in holding that the plaintiff was entitled to recover from the defendant damages calculated on the basis of repair of the vehicle as opposed to assessing damages on the basis of a constructive total loss; and seventhly, because the Magistrate has used the language of mitigation she has fallen into error as to onus in holding that it fell on the defendant. The proceedings in the Local Court 8 On 5 November 2004 there was a collision between Mr Toman's motor vehicle (the vehicle) and a vehicle owned and driven by Therese Sharkawy. Liability was admitted. The issue before the Magistrate was the assessment of damages. Mr Toman sought the sum of $7,945.14 being the cost of the repair of his vehicle. Ms Sharkawy asserted that the vehicle was damaged beyond economic repair, the market value of the car was not greater than $1,480 and that Mr Toman was obliged to mitigate his damages. 9 The main issues raised on appeal were firstly, whether Mr Wild's evidence was that of an expert and secondly, if he had not adhered to the expert's code of conduct, whether the Magistrate should have afforded no weight to his evidence. Ms Sharkawy says that the evidence of her expert Mr Nunn should have been preferred over that of Mr Toman's expert, Mr Wild. The evidence of Mr Wild 10 The affidavit of Mr Wild was admitted into evidence without objection (t 20). Mr Wild gave evidence and was cross examined. It is important to understand the role of Mr Wild and how he became an expert witness. Four days after the accident had 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. 11 At paragraphs [4]-[8] Mr Wild deposed as to what transpired: 4. On 9th November 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 1996 Magna Mitsubishi, registration number QOG 472 ("the motor vehicle"), which I am informed and believe is owned by Raymon (Raymond) Toman. I noticed the "motor vehicle" had suffered damage to the front b/bar assay, n/s headlamp, radiator support panel, n/s front guard, bonnet, near side front skirt and chassis, off side front skirt and chassis, off side front door edge, wiring and fuse box and was presented with an estimate for repairs and expenses from Maroubra Automotive dated 8th November 2004… 5. After inspection of the car, I adjusted the estimate and concluded that, consistent with the incident and accident description, the final costs of $7,110.67 was a fair and reasonable amount for repairs. Annexed hereto and marked with the letter "B1" is a true copy of the Amended Estimate dated 29th November 2004… 6. 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. 7. On inspection of the "motor vehicle", I came to the conclusion that the damage was consistent with one incident. 8. I am of the opinion that the sum of $7,110.67 (excluding the cost of expenses) is a fair and reasonable cost of repairing the motor vehicle to restore it to its pre-accident condition." 12 The Magistrate in her written reasons (at p 10) 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 has he own 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 cost of repair was prepared pre-litigation and based wholly on his specialised knowledge and the cost base relying on the Motor Trades Association (MTA) Repair Times Manual. Both parties accept that the MTA repairs guide lists accepted times/charge for repairs within the motor industry. 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." 13 This part of the Magistrate's reasoning is correct. When does an expert become an expert witness? 14 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. 15 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." 16 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. Mr Wild established that he has had the necessary training and experience to satisfy the test for an expert witness in s 79 of the Evidence Act. 17 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. 18 "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." 19 In Kirch Communications Pty Ltd v Gene Engineering Pty Ltd [2002] NSWSC 485 Campbell 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". 20 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. 21 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 22 The plaintiff submitted that Mr Wild failed to set out his reasoning, or the facts, matters or assumptions upon which his opinions were based. 23 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." 24 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]). " 25 The solicitor for Mr Toman 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." 26 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 of 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 $7110.67 was a fair and reasonable amount for the repairs. 27 In evidence, Mr Wild explained that he referred to and applied 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. 28 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 Mr Toman's case. Objection to the witness' evidence 29 There was no objection by Counsel for Ms Shakawy to Mr Wild giving evidence on the basis that he did not meet the Code of Conduct requirements. When Mr Wild entered the witness box to give evidence this issue could have been raised by Counsel but it was not. Counsel only 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 it changed anything 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 evidence. It was too late to do so in submissions. 30 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 31 It has been submitted by Counsel for Mr Sharkawy that the Magistrate erred in fact and law by holding that Mr Toman was entitled to recover the cost of repairs as opposed to the constructive total loss of the vehicle. 32 In her judgment, the Magistrate stated, after considering the authorities, which included Darbishire v Warran [1963] 3 All ER 310 at 14: "On balancing the weight of the evidence, I am satisfied that the plaintiff's figure for repairs 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. Mr Nunn's comments, as stated, were made after repair. Mr Nunn's view that the vehicle value should be reduced so greatly to account for the excess kilometres as to make it almost worthless is not supported in his report. That is, the person he telephoned or this fact is not mentioned in the report. Putting aside any kilometres reduction, the difference in the estimates for repair amount to approximately $2000. In Darbishire (supra) the costs of the repairs were double that of the pre accident value also listed in a Glasses Guide. There was no evidence of any action by the plaintiff to indicate that the repairs were carried out for his own "personal interest". Furthermore I have not accepted evidence that the repairs were uneconomical. As noted in Darbishire (supra) there "should be an element of flexibility in the assessment of damages to achieve a result which is fair and just as between the parties in the particular case". 33 Ms Sharkawy 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 she ought to have avoided. 34 Ms Skarkawy 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". 35 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. 36 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. 37 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 were the 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 21 August 2006 is affirmed. The summons filed 18 September 2006 is dismissed. 38 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 21 August 2006 is affirmed. (3) The summons filed 18 September 2006 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.