New South Wales Supreme Court CITATION : CJD Equipment v A & C Construction [2009] NSWSC 1085 HEARING DATE(S) : 29/09/09, 30/09/09, 01/10/09, 02/10/09, 05/10/09, 06/10/09, 07/10/09, 08/10/09, 09/10/09 JURISDICTION : Equity Division Technology & Construction List JUDGMENT OF : McDougall J at 1 EX TEMPORE JUDGMENT DATE : 6 October 2009 DECISION : See paragraph [19] of the judgment. CATCHWORDS : EVIDENCE - expert evidence - whether expert report admissible without acknowledgment of expert code of conduct - whether relevant time for knowledge is creation of report or swearing of affidavit annexing report - whether exceptional circumstances. LEGISLATION CITED : Evidence Act 2005 Uniform Civil Procedure Rules 2005 CATEGORY : Procedural and other rulings Commonwealth Development Bank of Australia Pty Ltd v Cassegrain [2002] NSWSC 980 Investmentsource v Knox Street Apartments [2007] NSWSC 1128 CASES CITED : Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290 Portal Software v Bodsworth [2005] NSWSC 1228 State of New South Wales v Tszsyk [2008] NSWCA 107 Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 49 CJD Equipment Pty Limited (Plaintiff) A & Construction Pty Limited (First Defendant) PARTIES : Allan Jeffree (Second Defendant) G F Murphy Consulting Pty Limited (Third Defendant) Telford Building Systems (Aust) Pty Limited (Fourth Defendant) Peter Marcus Consulting Engineers Pty Limited (Fifth Defendant) FILE NUMBER(S) : SC 55065/08 F C Corsaro SC / D C Price (Plaintiff) E M Olsson SC / M Tanevski (First and Second Defendants) COUNSEL : R J Cheney (Third Defendant) I G B Roberts (Fourth Defendant) D J Fagan SC (Fifth Defendant) The Builders' Lawyers (Plaintiff) Walsh & Blair Lawyers (First and Second Defendants) SOLICITORS : Kennedys (Third Defendant) DLA Phillips Fox (Fourth Defendant) Coling Biggers & Paisley (Fifth Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY & CONSTRUCTION LIST McDOUGALL J 6 October 2009 (ex tempore – revised 6 October 2009) 55065/08 CJD EQUIPMENT PTY LIMITED v A & C CONSTRUCTION PTY LIMITED JUDGMENT 1 HIS HONOUR: The plaintiff wishes to rely upon expert evidence of Mr John Ryder. Mr Ryder is a facade structural engineer. The evidence is contained in a report prepared on 19 November 2008. The report does not contain any acknowledgment by Mr Ryder that he has read and accepts the Code of Conduct set out in Schedule 7 to the Uniform Civil Procedure Rules 2005. However, in an affidavit sworn on 10 December 2008 to which the report was annexed, Mr Ryder said that, a month or so after he prepared the report, he was furnished with a copy of the Code of Conduct, read it, and agreed to be bound by it. The affidavit said further that Mr Ryder believed (I do not think that the adverb "verily" adds anything to his state of mind) that the report had been prepared in accordance with the Code of Conduct. The report itself discloses that it was prepared on the instructions of the plaintiff (or, perhaps, of "Volvo Pty Ltd" - the plaintiff's business includes the sale and servicing of heavy earth moving equipment manufactured by the Volvo group of companies). 2 Perhaps contrary to what is asserted in Mr Ryder's affidavit (to the effect that he was the author of the report in question), the report says that it was prepared by "RS" - Ramy Sorial; checked by "CG" - Charles Gore; and approved by "JR" - Mr Ryder. Messrs Sorial and Gore were facade engineers or designers employed by Hyder Consulting, a company by which Mr Ryder also is employed. No-one sought to cross-examine Mr Ryder on the voir dire to resolve what appears to be an inconsistency between the relevant paragraph of his affidavit and the statements in the report to which I have referred. 3 Whilst I am dealing with matters arising from the terms of the report, it is convenient to mention that the report discloses that Messrs Gore and Sorial inspected the site together on 23 October 2008 and that Mr Gore inspected the site eight days later. It does not appear, either from the report or from the affidavit, that Mr Ryder has inspected the site at all. 4 The requirements of UCPR r 31.23 have been discussed in a number of cases. That rule provides as follows: r 31.23 Code of conduct (1) An expert witness must comply with the code of conduct set out in Schedule 7. (2) As soon as practicable after an expert witness is engaged or appointed: (a) in the case of an expert witness engaged by one or more parties, the engaging parties, or one of them as they may agree, or (b) in the case of an expert witness appointed by the court, such of the affected parties as the court may direct, must provide the expert witness with a copy of the code of conduct. (3) Unless the court otherwise orders, an expert's report may not be admitted in evidence unless the report contains an acknowledgment by the expert witness by whom it was prepared that he or she has read the code of conduct and agrees to be bound by it. (4) Unless the court otherwise orders, oral evidence may not be received from an expert witness unless the court is satisfied that the expert witness has acknowledged, whether in an expert's report prepared in relation to the proceedings or otherwise in relation to the proceedings, that he or she has read the code of conduct and agrees to be bound by it. 5 In Investmentsource v Knox Street Apartments [2007] NSWSC 1128, I said at [44] that the clear intention of the rule was to reinforce the proposition that, in general, expert evidence should not be admitted unless the expert has at the relevant time subscribed to the obligations contained in Schedule 7. 6 Barrett J adopted my explanation of that intention in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2009] NSWSC 49. At [46] his Honour added: "The concern is a quality assurance concern: to be sure that an expert has approached the task responsibly and mindful of the importance of the expression of opinion will have as part of a body evidence placed before the court. As a general rule, a written statement of the opinion of an expert should not be accepted as authoritative on a matter within the relevant field of expertise unless the person expressing the opinion is shown to have proceeded in that way; but the court may, in a particular case, allow the statement to be admitted even where the person is not shown to have proceeded in that way." 7 His Honour's reference to "in that way" is I think a reference back to his words "in the way required by Schedule 7 in relation to the preparation of the report and the formation of the opinion stated in it" which appear earlier in [46]. 8 In Investmentsource at [44], I referred to the need for the expert to have subscribed to the Schedule 7 obligations "at the relevant time". There appears to be some variation of opinion as to what is "the relevant time". Clearly enough, when the evidence is sought to be adduced through tender of a written report, the relevant time will be the time when the report is finalised and signed. That is because the report is treated as containing the evidence that the expert can give. However, where an expert opinion is expressed in an affidavit, the relevant time may be when the affidavit is sworn. See the decision of Brereton J in Portal Software v Bodsworth [2005] NSWSC 1228. That is because, as his Honour explained at [7], an affidavit is generally regarded "as a substitute for oral evidence, rather than as a report". Thus, when the affidavit is read, it is, in his Honour's view, equivalent to adducing oral evidence rather than the tender of the report, even though the evidence in question is adduced through the mechanism of a report annexed to the affidavit. It may be - I express no view - that a different analysis would apply if the report were an exhibit, rather than an annexure, to the affidavit. 9 If I were to follow the view of Brereton J, I would conclude that the relevant time is the time when the affidavit was sworn, and that r 31.23 had been complied with because in that affidavit Mr Ryder acknowledged that he had read and agreed to be bound by the Code of Conduct. 10 The parties did not address me in any detail on the significance of this distinction, although Mr Corsaro SC (who appeared with Mr Price of counsel for the plaintiff) referred to the decision of Brereton J in Portal Software and provided a copy to the counsel for the defendants who opposed the tender of the report. 11 If I regard the relevant time as the time when the report was signed, then the evidence could not be admitted unless I were to order that it should be pursuant to r 31.23(3). As Barrett J said in Tim Barr at [52] and following, that would require me to be satisfied that there were some "exceptional circumstances" that would justify the report's being admitted into evidence. His Honour referred to two judgments of Campbell JA dealing with this. The first was Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290. The second was State of New South Wales v Tszsyk [2008] NSWCA 107. It is convenient to proceed, as Barrett J did, by accepting that the relevant principles are set out at [206] of the latter judgment, and that their application is explained at [207]. I set out those paragraphs: [206] I venture to repeat what I said (with the agreement of Tobias JA and Handley AJA) in Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290 at [66]-[67]: "Another question of construction concerned "exceptional circumstances" in rule 31.18(4). In San v Rumble (No 2) [2007] NSWCA 259 at [59]-[69], I gave consideration to the expression "exceptional circumstances" in a different statutory context to the present. Without repeating that discussion in full, I shall state such of the conclusions as seem to me applicable in the construction of rule 31.18(4). (a) Exceptional circumstances are out of the ordinary course or unusual, or special, or uncommon. They need not be unique, or unprecedented, or very rare, but they cannot be circumstances that are regularly, routinely or normally encountered: R v Kelly (Edward) [2000] 1 QB 198 (at 208). (b) Exceptional circumstances can exist not only by reference to quantitative matters concerning relative frequency of occurrence, but also by reference to qualitative factors: R v Buckland [2000] 1 WLR 1262; [2000] 1 All ER 907 (at 1268; 912-913). (c) Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors, or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional: Ho v Professional Services Review Committee No 295 [2007] FCA 388 (at [26]). (d) In deciding whether circumstances are exceptional within the meaning of a particular statutory provision, one must keep in mind the rationale of that particular statutory provision: R v Buckland (at 1268; 912-913). (e) Beyond these general guidelines, whether exceptional circumstances exist depends upon a careful consideration of the facts of the individual case: Awa v Independent News Auckland [1996] 2 NZLR 184 (at 186). In the context of rule 31.18(4) UCP Rules , any decision about whether there are exceptional circumstances would need to bear in mind the explicit statement of objectives of a court in the management of litigation contained in sections 56-59 Civil Procedure Act 2005. [207] In my view, the combination of the reports having been cross-examined on, the reports having been in the plaintiff's possession for nearly one year, the defendant having notified an intention to tender the reports, lapse of a reasonable time for the plaintiff to take steps to deal with the tender of the reports (which might or might not be 28 days), and lack of any identifiable prejudice would, in the absence of any other countervailing factors, amount to exceptional circumstances 12 In the present case, there is no evidence as to how long Mr Ryder's report has been in the possession of the defendants. It appears to be the fact that although the affidavit "verifying" the report was sworn on 10 December 2008, it was not served on the defendants until very recently. However, at least some of the defendants have used some of the material in the report for the purposes of cross-examination; and indeed, the first and second defendants sought to tender calculations taken from the report. (Those calculations were tendered to give content to other calculations prepared by their expert. Since those other calculations were rejected, the tender of calculations from Mr Ryder's reports went with them.) 13 It also notable that no defendant has sought to adduce evidence in answer to what is said in Mr Ryder's report. It cannot be said that their failure to do so is in any way, directly or indirectly, related to the apparent problem with the Code of Conduct. 14 In Investmentsource at [50], I set out a number of reasons for the conclusion that I should not "otherwise order" so as to admit into evidence the opinions in question. The eight reasons that I gave should not be taken as indicating some checklist to be applied in every subsequent case. They were specific to the facts of that particular case. Nonetheless, at least some of the reasons that I there gave do seem to me to have more general application. Accordingly, I set out the eight reasons given: [50] I have come to the conclusion that I should not "otherwise order" so as to admit into evidence so much of the Colliers material as expresses Mr Williams' opinions. My reasons may be expressed briefly: (1) Mr Williams did not prepare his report with a conscious appreciation of the obligations imposed by Schedule K (which was applicable at the time it was prepared) or Schedule 7 (which is applicable now). (2) There is a real difference between the role of an expert retained to advise a client and the role of an expert engaged to give evidence. The former owes his or her primary obligation to the client; the latter owes his or her primary obligation to the Court. It cannot be assumed that those obligations are identical, or that in any given case performance of them would lead to the same outcome in terms of opinion. (3) For the reasons given by Einstein J in Cassegrain and Campbell J in United Rural Enterprises , there is a real risk that an expert who has not prepared a report under the discipline of the applicable schedule will form an opinion from which, thereafter, he or she would find it difficult to retreat, even if circumstances arise that might raise this as a possibility. (4) An expert retained to advise a client is not usually confronted with alternative expert evidence. An expert retained to give evidence usually is. In the latter case, the expert's obligations under the applicable schedule require that he or she consider the alternative material, and reconsider his or her position in its light. (5) Under the usual order for hearing that applies in the Commercial and Technology and Construction Lists, experts are required to confer with a view to defining, refining and where possible limiting the real issues in dispute between them. The ordinary workings of the human mind to which Campbell J pointed in United Rural Enterprises at para [15] might make this process more difficult for an expert who did not start out with an appreciation of his or her obligations under the applicable schedule. (6) In those circumstances, I think that there is a real risk of significant prejudice to Kimberly if the Colliers material is admitted to prove Mr Williams' opinions. (7) That prejudice is exacerbated because Mr Williams is not available for cross-examination. (8) Further, the agreement between Messrs Hillier and Feilich, which appears to draw a distinction between a valuation report and the exercise undertaken by Mr Williams, and which implicitly suggests that the latter is not to be regarded as a valuation, enhances the risk of prejudice. 15 I should also note that in Portal Software, Brereton J at [5] noted that in commercial cases (and in my view in proceedings such as this in the Technology and Construction List) "a higher degree of alertness to strict compliance with procedural requirements may be insisted upon". That was said with reference to the decision of Einstein J in Commonwealth Development Bank of Australia Pty Ltd v Cassegrain [2002] NSWSC 980: a decision that I considered in Investmentsource. 16 Balancing those factors as best I can in this case, and acknowledging the submission that even the affidavit does not suggest that the terms of the Code of Conduct were present to Mr Ryder's mind when he did whatever it was that he did by way of authorising or in preparation of the report, I think that the exercise of the discretion requires that the report should be admitted. It would be otherwise if there were some hotly contested issue in relation to the evidence conveyed by the report; but I infer, from the absence of any opposing evidence, that there is not. Equally, it seems to me, it would be an injustice to permit the defendants to do as at least some of them have done, and use parts of the report for their own purposes, but at the same time deny the plaintiff the use of the report in whole. 17 I am not to be taken as condoning any practice of ex post facto adoption of the requirements of the Code of Conduct. On the contrary, I acknowledge, and adhere to, the proposition that exceptional reasons must be shown why the Court should sanction departures from the requirements of r 31.23. I adhere also to the proposition that the Court should be even more careful, or vigilant, in cases in specialist lists. That is because it is entitled to expect that practitioners in those lists are aware of all relevant requirements, including the requirements of r 31.23. Although it appears that the plaintiff's solicitors may not have possessed that degree of awareness in this case - or if they did, there has been no explanation offered of the departure from the rule - the reasons that I have given suggest to me that the consequences of their apparent ignorance should not be visited, by way of some punishment, on the plaintiff. 18 I referred above to other suggested deficiencies in the report, including, as I have said, some concern that Mr Ryder might not have been the author, and arising from the fact that he does not appear to have inspected the building. To the extent that those matters are not resolved in cross-examination, they may go to the weight of the opinions expressed. They do not, as it seems to me at present, either taken by themselves or in conjunction with the Code of Conduct, suggest that the evidence should be rejected on discretionary grounds under s 135 of the Evidence Act 2005, or that its use should be limited in some way under s 136. 19 For those reasons I admit the relevant paragraph of and annexure to the affidavit of John Ryder sworn 10 December 2008. ********** 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.