New South Wales Supreme Court CITATION : Lucantonio v Kleinert [2009] NSWSC 853 HEARING DATE(S) : 10 August 2009 JURISDICTION : Common Law JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 11 August 2009 DECISION : Tender of report refused. Leave to permit supplementary evidence to be called refused. CATCHWORDS : EVIDENCE – Expert evidence – professional negligence – admissibility of evidence of what a prudent practitioner would have done in relevant circumstances – necessity for additional or special qualification – necessity for relevant circumstances to be specified – necessity for witnesses' rationale to be articulated (NSW) Conveyancing Act 1919 s 55(2A) LEGISLATION CITED : (NSW) Evidence Act 1995 s 135 (NSW) Fair Trading Act 1987 CATEGORY : Procedural and other rulings Fox v Everingham & Howard (1983) 76 FLR 170 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, (2001) 52 NSWLR 705 MB v Protective Commissioner [2000] NSWSC 718, (2000) 217 ALR 631 CASES CITED : Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384 O'Brien v Gillespie (1997) 41 NSWLR 549 Permanent Trustee Australia Limited v Boulton Permanent Trustee Australia Limited (1994) 33 NSWLR 735 Rebelais Pty Ltd v Cameron [1993] ANZ ConvR 457 Dean Lucantonio as trustee for the Lucantonio Family Trust (plaintiff) PARTIES : Jaime Kleinert (first defendant/XC1 first cross-defendant/XC2 cross-claimant) Otto Stichter (second defendant/XC1 cross-claimant/XC2 first cross-defendant) Darryl Leslie Warren (third defendant/XC1 second cross-defendant/XC2 second cross-defendant) FILE NUMBER(S) : SC 20351/04 Mr G Laughton SC w Ms D Christofis (plaintiff) COUNSEL : Mr R Darke SC (first defendant) Mr G Curtin (second defendant) Mr M Ashhurst SC (third defendant) Gells Lawyers (plaintiff) SOLICITORS : Kennedys Lawyers (first defendant) DLA Phillips Fox Lawyers (second defendant) McCabe Terrill Lawyers (third defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION BRERETON J Tuesday 11 August 2009 20351/04 Dean Lucantonio as Lucantonio Family Trust v Jaime Kleinert & 2 Ors JUDGMENT (ex tempore) 1 HIS HONOUR: In these proceedings the plaintiff (as present trustee of the Lucantonio Family Trust) Dean Lucantonio claims damages in respect of losses said to have been occasioned by the failure of a proposed acquisition of land for development, and of subsequent legal proceedings arising out of that attempted acquisition, alleging that those losses were caused or contributed to by the professional negligence respectively of the first defendant Mr Kleinert as the architectural consultant retained in respect of the proposed development, the second defendant Mr Stichter as the solicitor who acted for the purchaser on the contract and in the subsequent litigation, and the third defendant Mr Warren as the barrister retained for the purchaser in that litigation. The present judgment relates to the tender by the plaintiff of expert evidence of Senior Counsel as to what a reasonably competent barrister in Mr Warren's position would have done if briefed to draw the summons and affidavit that initiated the proceedings and thereafter conduct those proceedings. 2 For present purposes, it suffices to record the following factual background. On 3 November 2001, Mr Lucantonio and his wife as trustees of their family trust purchased at auction the property at Majors Bay Road, Concord for a price of $2.2 million. The property had development approval granted by the Canada Bay Council, for commercial redevelopment involving retail shops, commercial units and 21 underground car parking spaces on two levels. The availability of the development approval is said to have have been fundamental to the Lucantonios' decision to purchase. 3 Mr Stichter acted for the Lucantonios on the purchase. On 21 November 2001 – after exchange, but before completion – Mr Kleinert advised the Lucantonios that there were problems with the development approval, in that 21 compliant car parking spaces could not be fitted on the two levels proposed, and that the DA plans would require extensive revision – including a third underground parking level, at significantly increased cost – to accommodate the requisite number of parking spaces, which would necessitate at least a s 96 modification of the DA, if not a new DA. Upon that advice, and that of Mr Stichter (who, for this purpose consulted Mr Warren), the Lucantonios initiated proceedings for specific performance of the contract, apparently on the basis that the vendor was said to be obliged to convey a property with a buildable development approval, or to allow compensation for the additional cost that would be incurred, or alternatively, to pay damages for misleading and deceptive conduct under the (NSW) Fair Trading Act, 1987. 4 The Lucantonios did not complete the contract on the date fixed for completion. The vendors served a Notice to Complete. Again, the Lucantonios did not complete on the date appointed for completion, asserting that the vendor was unable to convey the subject matter of the contract. On 7 February 2002, the vendors purported to terminate the contract. Mr Stichter, on behalf of the Lucantonios, lodged a caveat claiming an interest as purchaser under the contract. The vendor duly served a lapsing notice. An interlocutory application for extension of a caveat was heard and determined by Austin J, who refused to extend the caveat, finding, in substance, that there was no serious question to be tried that the Lucantonios were not obliged to complete on the completion date, essentially by reason of the operation of Standard Conditions 6 and 7 of the Contract for Sale. His Honour also would have declined to extend the caveat on balance of convenience considerations. 5 The matter proceeded to a final hearing before Bryson J, as a claim for damages and for return of the deposit. His Honour ultimately dismissed the proceedings, finding that the DA plans were not unbuildable and that there was no such defect in title as would entitle the purchaser not to complete, and that discretionary considerations did not favour an order for return of the deposit under the (NSW) Conveyancing Act 1919, s 55(2A). 6 It is in that context that the plaintiffs tender the report of Stephen Epstein SC of 8 September 2008. The essence of that report are opinions that: (1) an ordinary skilled barrister in Mr Warren's position would have appreciated from the beginning to the end that the proposition that the Lucantonios were entitled to require the vendor to complete the sale on payment of the contractual sale price less an amount of damages to which they were said to be entitled was flawed on a fundamental legal basis from beginning to end (paragraph 14); (2) that an ordinary skilled barrister in Mr Warren's position ought to have appreciated that there was never a serious question to be tried in this respect (paragraph 15); (3) that an ordinary skilled barrister in Mr Warren's position would have advised Mr Stichter and the Lucantonios that the vendor was entitled to require the Lucantonios to tender on completion the full contract price (paragraph 16); (4) that an ordinary skilled barrister in Mr Warren's position upon being consulted with respect to the Notice to Complete would have advised the Lucantonios that they were contractually bound to complete by paying over the full sale price (paragraph 16); (5) that an ordinary skilled barrister in Mr Warren's position, upon receipt of Austin J's reasons for judgment, would have advised the Lucantonios that his Honour was correct in rejecting their case (paragraph 16). 7 The third defendant contends that Mr Epstein's evidence should not be admitted, for three main reasons: first, that he is not qualified to give evidence of what other barristers would do, although he is admittedly expert in the relevant fields of practice; secondly, that he does not in his report identify the relevant assumptions as to the precise position in which Mr Warren relevant to what a barrister would or would not appropriately have done, so that it cannot be ascertained whether the opinion is based on the facts that will ultimately be found by the Court; and, thirdly, that he does not articulate the rationale for his opinion. 8 With the benefit of the helpful submissions of Mr Ashhurst of Senior Counsel, for the third defendant, it is possible for present purposes to summarise the relevant principles as follows (extracted primarily from the following authorities: Fox v Everingham & Howard (1983) 76 FLR 170, 178; Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384, 402; Permanent Trustee Australia Limited v Boulton Permanent Trustee Australia Limited (1994) 33 NSWLR 735, 738; Rebelais Pty Ltd v Cameron [1993] ANZ ConvR 457; O'Brien v Gillespie (1997) 41 NSWLR 549, 557-558; MB v Protective Commissioner [2000] 217 ALR 631, Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, (2001) 52 NSWLR 705 [59], [71]): (1) In a professional negligence case, expert evidence is admissible of an accepted or standard professional practice, conduct or standard. Expert evidence is also admissible of what is commonly considered professional practice of competent and careful professionals in the field. (2) Expert evidence is not admissible of what the expert would himself or herself have done in the circumstances, at least if that evidence is tendered to support the inference that other careful and competent professionals would have done the same things professionally; nor is expert evidence admissible of what as a matter of law reasonable care is required; that is a question of law for the Court and not for an expert. (3) Expert evidence of what a competent and prudent practitioner would have done in the particular circumstances of the defendant is not admissible if, in effect, it is no more than one professional commenting on the conduct of another, at least in the absence of evidence that the expert has additional training, study or experience to demonstrate the acquisition of specialist knowledge of what a competent and prudent practitioner would do. However, expert evidence of what a competent and prudent practitioner would have done in certain circumstances may have been admissible if the witness has by training or experience such additional special qualifications or experience as to equip him or her to give evidence with competence of what the general body of competent and general practitioners would do. (4) Where the expert witness does not sufficiently state the assumed circumstances of the defendant's position on which the opinion is based, that may impact on the fairness to the defendant of admitting the evidence to such an extent as to warrant its rejection under (NSW) Evidence Act 1995, s 135, even if it is technically admissible. (5) In any event, the expert must furnish the Court with criteria enabling the evaluation of the expert's conclusion, including its essential integers and rationale. (6) Where the professional field in question is that of law, expert evidence is not essential to making (or for that matter defending) a case of professional negligence, because the Court itself is sufficiently equipped to form an opinion about legal practice unaided by expert opinion. That is not to say that such opinion is inadmissible in such a case; to the contrary, it is admissible, but even where adduced it is not conclusive, and the Court is entitled to decide the case contrary to expert evidence where appropriate to do so. 9 Turning to their application to the present case, the first objection raised as to whether Mr Epstein possesses the relevant additional or special qualification to comment on what prudent practitioners would have done. The objection is based on what was said by Hodgson CJ in Eq (as his Honour then was) in MB v Protective Commissioner (at [9]) as follows: The third problem with this sort of evidence is that there can be a real question as to the qualification of the witness. In many cases, just the ordinary training and experience of a professional in the field would not be sufficient to justify admission of that person's opinion as to what a competent and careful professional would do in hypothetical circumstances. For that kind of opinion, I think one needs some additional and special qualification. In that respect also, I agree with what was said in O'Brien . 10 At present, the evidence of Mr Epstein's qualifications establishes only that he was admitted as a solicitor in 1978, was called to the Bar in 1982, was appointed Senior Counsel in 2000 and has practised extensively in contract law, real property, equity and trade practices. That does not of itself demonstrate that he has the relevant additional or special qualifications to comment on what prudent practitioners would have done or ought to have known. On the other hand, his standing as Senior Counsel and his experience in 32 years of practice together means that he has substantial experience, more extensive than the "ordinary" barrister. In the course of that practice, and having regard to the necessarily extensive interaction he must have had with other barristers in relevant fields of practice over the years, it is reasonable to infer that he has acquired knowledge of what other professionals do or would do in certain circumstances. In my view, the evidence does not presently sufficiently qualify him to express the opinions he has, but it would not take very much to overcome that hurdle, and if this be the only successful objection, I would grant leave to adduce supplementary evidence to qualify him in that respect. 11 The second ground of objection is based on what was said by Hodgson CJ in Eq in MB v Protective Commissioner in (at [8]) as follows: Second, there may be a problem of lack of clarity as to the circumstances being addressed. If hypothetical circumstances are fully stated by the professional in the opinion, then it will be reasonably clear to what circumstances the opinion applies. However, if the witness merely says that, in the circumstances faced by the person whose conduct is in issue, a careful and competent professional would act in a certain way, there is a problem that those circumstances may be determined by the court differently from the circumstances which the witness had in mind. For that reason at least, I think evidence in that form should normally be rejected. Even if it were technically admissible it would, in my opinion, be unfair to give the other party the task of teasing out all the circumstances the witness had in mind, so that rejection under s 135 of the Evidence Act 1995 (NSW) would be justified. 12 It is true that, contrary to the guidance provided by that paragraph, Mr Epstein does no more than say that "in the circumstances faced by Mr Warren", a careful and competent professional would act in a certain way. He does not fully state the hypothetical circumstances involved. On the other hand, it is also to be borne in mind that Hodgson CJ indicated that such evidence would "normally" be rejected, it being implicit that rejection is not universally inevitable. In the present case, it is not apparent that any idiosyncrasies of Mr Warren's precise position or instructions would impact on the general expressions of opinion which I have described as being the essence of Mr Epstein's opinion. This is a case in which, as it seems to me, the absence of a full statement of the hypothetical circumstances on which Mr Epstein's opinion is based is not prejudicial to the third defendant, and I would not reject Mr Epstein's opinion on this ground. 13 I turn then to the objection that Mr Epstein's report does not sufficiently set out the basis and rationale for his opinion. Essentially, what Mr Epstein's report does is to commence from the judgments of Austin J and Bryson J, to find that those judgments convincingly demonstrate that a proposition believed to be essential to the Lucantonios' case against the vendor was fundamentally flawed, and to opine that a barrister would have recognised that from the outset and before the relevant judgments were given. The judgments of Austin and Bryson JJ were ex post facto in this case. What an expert would have to demonstrate was that there was current in the profession at the time of the conduct in question, knowledge, standard or practice applicable to the present circumstances. Mr Epstein does not descend to say, for example, that it was commonly discussed or acknowledged in the profession prior to those judgments that positions such as that adopted on behalf of the Lucantonios were untenable. He does not refer to any professional publications or judicial decisions, prior to those in this case, to demonstrate that that was so. 14 Apparently, his report proceeds on the basis that the reasoning adopted by Austin J and Bryson J ought to have been apparent at the outset to a barrister in Mr Warren's position. One difficulty with that approach is that the judgments of Austin J and Bryson J proceed on different bases. Austin J found that there was no serious question to be tried, having regard to clauses 6 and 7 of the Standard Conditions of Sale. Bryson J found that the DA plans were not unbuildable, and touched on Special Conditions 31 and 40 of the Contract for Sale. It is simply impossible to tell, from reading Mr Epstein's opinion, which particular line of argument he is opining should have been apparent to a barrister in Mr Warren's position. In my view, his opinion is no more than an ipse dixit disclosing no rationale whatsoever. It is no more than one barrister, albeit it be an experienced and senior one, commenting on the conduct of another. In my view, Mr Epstein's opinion adds nothing to what the Court could, on appropriate argument and facts, conclude itself. It does not meet the standard required of experts' reports by Makita v Sprowles. 15 Mr Laughton SC, for the plaintiff, submitted that if I reached that conclusion, leave to supplement should be granted. As I have said, had I come to the conclusion only that Mr Epstein's qualifications were not sufficiently disclosed, I would have granted that leave. However, if leave were granted in respect of the objection which ultimately succeeds on the Makita v Sprowles basis, that would result in the third defendant being confronted more than half way through the trial, and for the first time with an explanation of the basis upon which his conduct is criticised, and an articulation of what and why it is said that he should have realised something. It may well be that he will have to confront that issue in cross-examination in any event, but that is quite a different matter from having to be positioned to respond to an expert opinion, including by calling countervailing expert opinion. 16 Bearing in mind that expert opinion is, as I have recorded, not essential in a legal professional negligence case, it seems to me that the least prejudicial course is not to permit supplementary evidence to be called. 17 I reject the report of Mr Epstein, which will remain marked for identification as MI31. ********** 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. 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