Supreme Court New South Wales Medium Neutral Citation: Hornsby Shire Council v The Valuer General of New South Wales [2013] NSWSC 1026 Hearing dates: 12/07/2013 Decision date: 12 July 2013 Jurisdiction: Common Law Before: Garling J Decision: (1) The application of the Hornsby Shire Council for a ruling pursuant to section 192A of the Evidence Act 1995, that the fifth defendant, CSR, not be permitted to rely upon the expert report of Mr Keith Cottier, an expert architect of Allen Jack & Cottier dated 28 June 2013, is refused. (2) Order the costs of this application be costs in the cause. Catchwords: EVIDENCE - application for advanced ruling pursuant to s 192A of Evidence Act - further expert evidence sought to be relied upon - whether applicant can show real or substantial prejudice - interests of justice require all issues to be determined at trial - no prejudice in reliance on additional expert evidence - no general point of principle Legislation Cited: Civil Procedure Act 2005 Evidence Act 1995 Land Acquisition (Just Terms Compensation) Act 1991 Valuation of Land Act 1916 Category: Procedural and other rulings Parties: Hornsby Shire Council (P) The Valuer General of NSW (D1) State of New South Wales (D2) Brian Rushton Nicholson (D3) Alcorn Corbin Nicholson Pty Limited (D4) CSR Limited (D5) Representation: Counsel: J Lazarus (P) P Menzies QC / B Nolan (D1, D2 & D6) B Hackney (D3 & D4) A J L Bannon SC / C D Wood (D5) Solicitors: Storey & Gough (P) Crown Solicitors (D1, D2 & D6) Norton Rose Fulbright Australia (D3 & D4) Minter Ellison Lawyers (D5) File Number(s): 2009/00297428 EX TEMPORE Judgment 1Proceedings were commenced by Hornsby Shire Council ('the Council') in 2009 against various parties for administrative law relief and also damages for both common law and statutory causes of action. 2The proceedings arose out of events which occurred in 2002 and 2003. These events culminated on 21 February 2003 with the Valuer General making a determination of compensation pursuant to his powers under the Land Acquisition (Just Terms Compensation) Act 1991 and the Valuation of Land Act 1916. The Valuer General determined that the amount of compensation which was payable by the Council to CSR Limited, the fifth defendant, was $25,099,500 for an area of land, within the Council's local government area, upon which there was a quarry which had ceased operations and which was owned by CSR. 3In these proceedings, the Council challenges that determination seeking to have it set aside and, in the alternative, if it should stand, seeking damages because, so it alleges, the determination was made negligently or as a result of fraudulent or misleading and deceptive representations. 4These proceedings, which are complex, having been extensively case managed by the Court, have now been fixed for a final hearing to commence on 26 August 2013 and continue for a period of six weeks. 5In the course of the preparation for hearing, including, in accordance with the usual practice of having experts meet in joint conclave for the preparation of joint reports, an issue has arisen which the Court is being asked to determine in advance of the hearing. Since this judgment deals with that issue only, and because there is a need for the judgment to be delivered promptly, these reasons will not canvas or attempt to summarise all of the issues to be traversed at the hearing. 6These reasons necessarily assume that all those who read them will have a sufficient familiarity with the issues, the terms used by the experts and the nature of the proceedings. THE APPLICATION 7The Council seeks a ruling pursuant to section 192A of the Evidence Act 1995 that the fifth defendant, CSR Limited, not be permitted to rely upon the expert evidence of Mr Keith Cottier, an architect of Allen Jack + Cottier, contained in a report dated 28 June 2013. RELEVANT PLEADINGS 8In the Third Further Amended Statement of Claim filed on 23 April 2013, the Council alleged that there were geotechnical issues, including those relating to slope instability with the quarry land which, amongst other things, diminished the suitability of the quarry land for residential or other development. The particulars provided of this allegation include: "The instability of the quarry land was a physical defect...which would have precluded the development of any part or, alternatively, any significant part of the quarry land for residential purposes." 9As well, particulars suggested that the instability would have precluded any part or, alternatively, any significant part of the quarry land from being zoned for residential purposes. 10By its Amended Defence, CSR denied these allegations, and pleaded that there were no geotechnical issues which precluded residential development as part of the quarry land. It further pleaded that any geotechnical issues were rendered irrelevant because the original 2002 PSB concept plans could be reconfigured to take account of those issues. The defence went on to refer to a concept plan, prepared by Mr Cottier of Allen Jack & Cottier in June 2012, which had been examined and commented on by other experts; including Mr Walker, a geotechnical expert. 11The Council's reply to this defence joined issue with it, pleading, amongst other things, that the Cottier 2012 concept plan had not been submitted to the Valuer General, a statement which is undoubtedly correct, and, hence, "the theoretical possibility of such an amendment was irrelevant". THE CONTOUR LEVEL ISSUE 12In March 2011, Dr Philip Pells produced an expert geotechnical report for the Council. In it he considered the original PSB concept plans which had been provided by CSR in 2002. He expressed various opinions about the geotechnical issues which would impact on those concept plans. He said nothing at all about the correctness or otherwise of the contour levels used by PSB in those plans, even though he was in possession of topographical contours generated by a survey conducted by AAM Hatch in September 2006. He did not suggest that the contour levels, which were different between PSB and AAM Hatch, had any impact upon his opinion. 13In April 2012, Mr Walker, a geotechnical expert retained by CSR, provided his response to the report of Dr Pells. In that report, at paragraph 4.2.9 and following, he identified that there was a discrepancy between the contour levels used by PSB and the AAM Hatch levels of 2006, used by Dr Pells. He said that, on average, the contours used by Dr Pells were ten metres higher than the PSB levels. He gave an opinion as to the effect of this difference of levels in terms of the conclusions Dr Pells had expressed in his report. It was not until about six months later, immediately prior to the usual Christmas vacation, that the Council's solicitors raised the issue of the difference in the contour levels with CSR's solicitors. The Council assert the correctness of the AAM Hatch 2006 contour levels and invited CSR to consider a process for the resolution of the differences in the contour levels identified in the expert opinions. 14CSR's solicitors responded in January 2013 in terms which suggested that there was no difference in the expert opinions as to the accuracy of the AAM Hatch 2006 survey levels. In their letter of 18 January 2013, Minter Ellison said, in part: "We have reviewed paragraphs 4.2.7 to 4.2.10 of Mr Walker's report and we do not read those paragraphs as having the effect you say, that is that Mr Walker 'disputes the survey results prepared by AAM Hatch'. In fact, at paragraph 5.1.20 of his report, Mr Walker makes an assumption that Dr Pells has derived his volume estimates using the CAD existing surface model based on the 2006 contours and says, further, that he would 'expect the CAD calculation to be accurate to the contours/levels modelled' being the 2006 contours." 15It subsequently became apparent, after a further exchange of correspondence, that the Council's solicitors were actually concerned about the content of the Cottier 2012 concept plans, and in particular, the levels at which those plans had been drawn. 16Further correspondence clarified the Council's position. By letter, dated 27 February 2013, Council's solicitors said: "As you are all aware, evidence served by CSR goes to, inter alia, an alternative residential concept plan prepared by Mr Cottier last year and an alternative use of the land for land filling purposes. Our client's experts are currently preparing extensive expert reports in response to those alternative proposals. That evidence will include not only responses to them from experts who have already prepared expert reports in the proceedings (such as Dr Pells, Mr Smith and Mr Rayner) but is also likely to include evidence from a traffic engineer, a landfill engineer, a registered surveyor and landfill valuer, an acoustic expert and possibly others. The evidence will, we anticipate, be relevant to demonstrating that neither alternative proposal was capable of effecting the highest and best use of the land as at the acquisition date because the prospects of approval in either case were extremely slim, in addition to more practical difficulties relating to geotechnical constraints on the land." 17A report in reply by Dr Pells was served on 9 April 2013. In that report, although questioning the correctness on both the original PSB levels and the Cottier 2012 concept plan levels, Dr Pells undertook calculations necessary to identify the excavation volume of material required for the PSB development. He set out his calculations. There the issue of differential contour levels seemingly lay dormant until the recent events of the geotechnical expert conclave. GEOTECHNICAL EXPERT CONCLAVE 18On 13 May 2013, the geotechnical experts met in conclave. They resolved some issues. At the conclusion of their conclave, in their joint report, which was issued on 16 May 2013, they included a recommendation in the following terms: "1. The experts recommend, under item 17 of the Joint Conferences of expert witnesses Practice Note, SC Gen 11.1: The planners for CSR should prepare an amended road layout to the PSB concept plan (showing amended floor and road levels) assuming the 2006 AAM Hatch contours as being an accurate representation of the contour levels as of late 2002. 2. The planners for CSR are asked to prepare drawings on optimised building and road layouts taking into account geotechnical constraints known in 2002 as documented in Walker 2012 (section 6 and figure 8 primarily adjusting the buffer zone line on the west side to be 10 metres back from the top edge of the quarry face) and assuming the 2006 AAM Hatch contours as being a reasonably accurate representation of the contour levels as of late 2002. The purpose of this work would be to allow a competent geotechnical engineer to assess the geotechnical works required for the PSB concept design and the geotechnical works designed to optimise in respect to known geotechnical constraints. The quantities of earthworks, retraining walls and slope destabilisation or both of the above schemes should be recalculated for costings." 19Following upon that request, Mr Walker issued a further report to Minter Ellison on 6 June 2013. That report was apparently intended to clarify, for the benefit of Mr Cottier and other experts, what the geotechnical experts wanted and why. That report identified an error in a plan, Figure 8 of Mr Walker's original report. That error only became apparent to Mr Walker after receiving the April 2013 report of Dr Pells. No doubt also, the usual beneficial interaction during the conclave had enabled the correct position to be identified and agreed upon. 20Mr Walker, in his report, said: "However, during my review of the AJ+C subdivision, (after receiving the Pells April 2013 report) it became apparent that I had made an error in drawing the red line on figure 8 of my April 2012 report. ...as a result, the 20 metre buffer zone depicted by my red line on my figure 8 is also to the east of the top edge of the quarry. This error was also identified by Pells in relation to building A...the intent of Recommendation Two was this error could be corrected by use of an amended buffer zone line that was not less than 10 metres from the top edge of the quarry face. The attached figure has been prepared by Pells and me to depict the location of the corrected buffer zone line which comprises the red line and blue line. The area that Pells and I consider suitable for residential development is shaded blue. This figure has been agreed by all members of the conclave as showing the intent of Recommendation Two with respect to the amendment of figure 8 from my April 2012 report. Therefore, the further work comprises the following activities: To take the AJ+C subdivision layout of buildings and roads and superimpose on them on the 2006 contour adopting a best fit for the existing features between the two plans, then the location of building A and adjacent pool and recreational area needs to be adjusted to suit the buffer zone lines shown on the attached figure. For each of the buildings, the architect should determine an appropriate ground floor level and appropriate basement level consistent with the architectural requirements. The architect should also determine appropriate road levels consistent with the basement access points and usual grades for access roads." 21Mr Walker went on to say that the proposed works should be limited to the area considered suitable for residential development and further said that once the new amended layout had been designed, the earthwork quantities would have to be recalculated to derive an appropriate cost estimate for earthworks. 22I do not regard the material set out in Mr Walker's report as in any way changing or significantly expanding upon the recommendations of the conclave. On the contrary, it calls for a further consideration in advance of the hearing of a complex of factors which had come to light and which needed to be addressed so that the geotechnical issues could be narrowed between the experts. THE ALLAN JACK + COTTIER 2013 REPORT 23Mr Cottier, after receiving the request of the conclave and the report of Mr Walker, undertook the preparation of a further concept plan, which can be referred to as the 2013 Cottier concept plan. CSR's solicitor deposes, without challenge, to the considerations which have impacted upon the content of, and the concepts in, this plan. He said: "I am informed by Ms Kerry Fyfe, an architect who assisted Mr Cottier in the preparation of the Cottier 2013 report, and believe, that if the 2006 contours are to be used it is not possible to prepare a drawing in response to Recommendation Two which optimises the layout in the Cottier 2012 report only by adjusting the location of building A and adjacent structures. I am also informed by Ms Fyfe, and believe, that the 2006 contours require the roads, in the Cottier 2012 report, to be reconfigured to achieve the appropriate gradient and therefore a new building layout required to accommodate the new road system." 24It is clear that the 2013 Cottier concept plan is different in material respects from the 2012 Cottier concept. The Council's solicitor described the changes in this way: "I have compared the June 2012 concept design plan to the June 2013 concept design plan and have noted the following differences: 1. The 2013 proposal is a completely new scheme proposing six buildings in place of the eight buildings in the 2012 scheme. 2. Some of the buildings have increased in size. 3. The internal road system has been changed and involves an extensive cut at the centre line of up to 14 metres and an outer edge of up to 20 metres. 4. The roads in the 2013 plans will require significant retaining walls of up to 11 metres in height on the southern boundaries near buildings B and C. 5. The buildings have been relocated and, in some instances, set further back from the quarry. 6. Open space areas have been changed." 25The issue has now become whether, having regard to all of the other activity necessary for the proper preparation for hearing of the proceedings, the introduction of the Cottier 2013 concept is unfair and prejudicial to the Council and that CSR should be prevented from adducing the evidence of it. COUNCIL'S SUBMISSIONS 26Council objects to the introduction of this evidence which it says is, at this stage, unfair and prejudicial because, principally: (a)The Cottier 2013 concept addresses, for the first time, an issue which was apparent, if not earlier, then at least by December 2012, of the differing contour levels of the land and the impact of those levels upon the 2012 Cottier concept plan. (b)The work necessary to respond to the Cottier 2013 concept is extensive and would require considerable effort from the experts to now be required to give additional opinions about a substantially new concept plan. (c)The introduction of the new evidence would, at this late stage, provide a significant distraction for the lawyers in their preparation of the proceedings generally. The Council's solicitor said in his evidence that: "I have contacted each of the council's experts relevant to the AJ+C June 2013 report and the June 2013 reconfigured concept design plan being Dr Pells; George Smith (town planning); Craig McLaren (traffic); Mark Bridges (noise) and Barry Tozer (quantity surveying). Each of those experts inform me, and I believe, that they would have to undertake significant further work to properly assess the AJ+C June 2013 report and the June 2013 reconfigured concept design plan, including obtaining further and additional information and details relating to the proposal. Each expert advised me they would have to prepare a further report to address the AJ+C June 2013 report and the June 2013 reconfigured concept design plan and that further joint conferencing with their opponents would be necessary. Before the other experts can express opinions about the latest proposal, it is first necessary for Dr Pells to express a view about the geotechnical constraints on the proposed development and also to estimate the geotechnical works required to give effect to the proposal. I am informed by Dr Pells, and believe, that he requires four weeks to complete that task." 27It is appropriate to note, at this point, that the geotechnical experts in their second conclave all agreed that the Cottier 2013 concept plan addressed and responded to their recommendations. Dr Pells said it was different from his expectation. 28CSR, in its submissions, accepted that the Cottier 2013 concept plan differed from the Cottier 2012 concept plan, but submitted that having regard to the nature of the issues, even accepting the need for additional work, there was no good reason to exclude the Cottier 2013 concept plans from the evidence in the proceedings. The other defendants, in particular the State interests, broadly supported the position of CSR. DISCERNMENT 29I am not satisfied for the following reasons that the orders sought by the Council ought be made. 30First, it is incorrect to say that the Cottier 2013 concept plans have been produced only as a consequence of the unduly late attention being given by CSR lawyers to the correction of the contour levels said to be incorrect. As I have earlier described, CSR did not and has not disputed the correctness of the AAM Hatch 2006 survey plans. On the contrary, as it seems to me, Mr Walker has correctly addressed the geotechnical issues which remain in dispute, or which remained in dispute by dealing with both sets of contour plans. Dr Pells did not deal with the differential contour levels until his most recent report of April 2013. 31Secondly, it seems to me that the central two geotechnical issues which are now posed, among many other expert issues in the proceedings, are these: (a) What part of the quarry land, if any, is suitable for residential development? This issue directly relates to the pleadings which I have earlier identified. As the combined drawing of Dr Pells and Mr Walker, which is attached to Mr Walker's report of 6 June 2013, shows, the geotechnical experts are now agreed, as a consequence of their conclave of 13 May 2013, on the specific area of the overall quarry land site which is geotechnically acceptable for residential development. This area is a refinement of the area, which had been used in the PSB concept plans and the Cottier 2012 concept plans. Whether any particular building can be put on any identified site within that general area, which is identified, is not yet the subject of any agreement in terms of any location specific geotechnical constraint. (b) The second issue is what the appropriate estimate is of the cost for any proposed concept development by way of excavation and fill replacement for the development, including the costs of such excavation and fill requirements dictated by the design and layout of the proposed internal roadway and buildings. Substantially, the calculation of this estimate depends upon the nature and layout of the development. An exercise in addition to that, which has already taken place, will need to be done to address the second but, so it seems to me, not the first of these two issues. But I am satisfied that this is the consequence of the geotechnical conclave's agreement and the joint drawing of Mr Walker and Dr Pells, which has emerged from the conclave and not from anything else. 32I accept, in broad terms, the second submission of Council that this 2013 concept will need to be the subject of further work with its experts to assess the cost and appropriateness of the 2013 concept plans. However, I am not satisfied that this is an unfair, undue or prejudicial burden. The need to obtain further expert opinion is, in my assessment, unsurprising having regard to the nature of the issues of the proceedings and the subject matter. In effect, the Council has pleaded that no residential development could take place on quarry land. The obvious and expected response from CSR, and the other defendants, is that it could and then for them to demonstrate, by one or more concept plans, how this could occur. 33Often, in my experience, these matters of fact are dealt with in the course of a hearing. Here, the Council has the benefit of concept plans in advance of the hearing. The Council is able to obtain expert opinion upon the concept plans, in sufficient time, so that the principal issues can be dealt with at the hearing and that the Council will not be prejudiced. I am not satisfied that the Council has shown any real or substantial prejudice. I am not satisfied that the expert reports in response cannot be obtained in a timely manner, and I am not satisfied that the Council's preparation for its case will be hampered by the need to obtain further evidence in respect of the report of Mr Cottier of 28 June 2013. 34Thirdly, in considering the exercise of my discretion, I have also had regard to, and kept firmly in mind, the overriding purpose set out in s 56 of the Civil Procedure Act 2005. Ultimately, I have exercised my discretion to refuse the Council's application, as I am not satisfied that the interests of justice are appropriately served by the making of the order. On the contrary, I am satisfied that the interests of justice require that all of the issues be determined at the hearing commencing later in August 2013 and I am satisfied that that can be done without prejudice to any party. It will be a matter for the trial judge to determine whether any other order needs to be made in the course of the running of the trial with respect to any of these issues. 35According, I make the following orders: (1)The application of the Hornsby Shire Council for a ruling pursuant to section 192A of the Evidence Act 1995, that the fifth defendant, CSR, not be permitted to rely upon the expert report of Mr Keith Cottier, an expert architect of Allen Jack & Cottier dated 28 June 2013, is refused. (2)I order the costs of this application be costs in the cause. ********** 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. Decision last updated: 05 August 2013