Supreme Court New South Wales Medium Neutral Citation: Camellia Properties v Wesfarmers General Insurance [2013] NSWSC 1093 Hearing dates: 02/08/2013 Decision date: 02 August 2013 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Refuse leave to defendant to rely on expert report served out of time. Catchwords: PRACTICE & PROCEDURE - expert report - application to adduce expert report - where report produced and served grossly out of time - no question of principle Category: Procedural and other rulings Parties: Camellia Properties Pty Limited (First Plaintiff) SA Matthews Holdings Pty Limited (Second Plaintiff) Lithgow Properties Pty Limited (Third Plaintiff) David Ferdynand Libling (Fourth Plaintiff) Sandra Anne Libling (Fifth Plaintiff) Wesfarmers General Insurance Limited (Defendant) Representation: Counsel: MA Jones SC / CO Gleeson (Plaintiffs) SJ Walsh (Defendant) Solicitors: Corrs Chambers Westgarth (Plaintiffs) TurksLegal (Defendant) File Number(s): 2010/302314 Judgment (ex tempore - revised 2 august 2013) 1HIS HONOUR: The defendant seeks leave to rely on an expert report which has been produced and served grossly out of time. 2The underlying dispute between the plaintiff and the defendant arises out of a fire that damaged a residence owned by the plaintiff. The residence was insured with the defendant. It is the plaintiff's case that the parties came to an arrangement or understanding to the effect that the notional reinstatement of the property would be assessed and costed by a Mr Martin of a consultancy known as KCJ, and that provided the amount produced by Mr Martin was less than the limited indemnity, the defendant would pay that amount in settlement of the claim. The plaintiff says that the defendant is estopped from disputing, or resiling from, that arrangement or understanding. 3It was necessary to consider the scope and cost of notional reinstatement (of course, on the terms of the policy, including "new for old") because the plaintiff wished to rebuild the residence in some respects different to what had existed before the fire. 4The matter has progressed to the stage where a hearing date has been allocated, to commence on 8 October 2013 with an estimate of four weeks. There is a substantial body of evidence, both lay and expert. The expert evidence has been progressed to the point where conclaves between the experts in the various disciplines have proceeded, in some cases to near finality and in other cases substantially. 5The report that the defendant wishes to rely upon is by a building consultant, Mr Roberts. If permitted to do so, Mr Roberts would offer expert opinion on what is involved in the concept of notional reinstatement and expert critiques of aspects of the plaintiff's case on this issue. 6Further, in relation to another aspect of the plaintiff's case, it is apparently necessary to investigate quotations prepared by two other builders, known as Sydcon and Alvaros. As I understand it, one of the criticisms that the defendant, through Mr Roberts, wishes to make is that none of the quotations (the two to which I have just referred and the assessment prepared by Mr Martin) reflect truly competitive prices, because none of them was a competitive tender. 7It is necessary to note some of the unfortunate history of the defendant's attempts to get relevant expert evidence. On 14 September 2012, the Court ordered the defendant to serve its expert evidence by 9 November 2012. The defendant did not do so. It sought an extension to 21 December 2012. On 15 November 2012, when the defendant's solicitor swore and served an affidavit, it became apparent that at that stage the defendant had retained, but had not provided instructions to, relevant experts. That is to say, a week after the time when the expert evidence was first due to be served, the experts had not been given instructions. 8The Court made orders from time to time extending the time within which the defendant was to serve its expert evidence. In due course the defendant served evidence of an expert architect and an expert quantity surveyor. 9The defendant also instructed an expert building consultant, Mr Zakos. It seems that this was done on 26 November 2012. The defendant was advised that Mr Zakos would be able to provide a report by the then due date, 21 December 2013. 10A further affidavit of the defendant's solicitor retails the sorry history of the defendant's attempts to get a report out of Mr Zakos. At one stage, a draft report was prepared. The defendant's solicitor commented in substance, and appropriately, that it was next to useless. That was because it made no attempt to comply with the rules relating to expert evidence, and did little more than express concurrence with opinions indicated by others. 11The attempts to get a report from Mr Zakos continued for some months, until late June 2013. When it became clear that there would be no report, Mr Roberts was instructed. I am satisfied that Mr Roberts provided his report promptly enough. However, the question is whether, in all the circumstances, things have gone so far that it would be an injustice to the plaintiff to permit the defendant to rely upon it. If the answer is "yes", then that requires some comparison of the injustice that would be caused to the defendant if it were not permitted to rely upon it. 12I accept without hesitation that the defendant's solicitors did all they could to extract a report from Mr Zakos. I accept, further, that Mr Zakos gave repeated reassurances that he would be able to produce a report by a date not too far in the future. I accept, in those circumstances, that the defendant was put in a very difficult situation: should it pull the instructions from Mr Zakos, and thus start the clock ticking again; or should it act on his assurances, in the hope that it would receive a report in the near future? 13Whilst I appreciate that situation, I think that it must have been apparent well before late June that the prospects of getting a report out of Mr Zakos were negligible, or perhaps less. Thus, I think, the defendant, acting reasonably, should have terminated the instructions given to Mr Zakos and given instructions to another expert. In this context, having regard to the sorry history of correspondence and repeated broken promises, it does seem to me that by no later than end March 2013, the defendant, acting reasonably, should have terminated Mr Zakos' instructions and instructed another expert. Had that been done then, as history shows, a report would have been available within about a month. 14The next question that arises is, as I have indicated, the impact on the plaintiff should the defendant be given leave to rely upon the report. 15The plaintiff's solicitor has pointed to the fact that the conclaves are in progress, and to the fact that the hearing is due to start in about nine weeks time. She has made enquiries, in the short time available, of the experts retained by the plaintiff. It is apparent from those enquiries that it is extremely doubtful that the experts have sufficient time, between now and the hearing, to consider the detail in Mr Roberts' report, to respond to it, and to undertake further conclaves in which Mr Roberts could be involved in a meaningful way, insofar as the plaintiff's experts would respond to matters that are relevant to him. 16In what I have just said it should be understood that the report prepared by Mr Roberts appears to trespass somewhat beyond what one would normally expect from a building consultant, into areas of architectural practice and, even more strangely, mould remediation. 17In the circumstances, I am satisfied that there would be a very significant injustice caused to the plaintiff if the defendant were given leave to rely upon Mr Roberts report. I reach that conclusion because I am satisfied, having regard to the matters I have mentioned, that there is absolutely no certainty that the plaintiff could respond to the matters raised by Mr Roberts, and indeed there is a very real risk that its experts would not be able to do so. In this context, as one might expect, the experts have more on their plates than simply attending to the requirements of this litigation. 18I turn to the question of injustice to the defendant. 19The question of the scope or content of notional reinstatement is a very important one. I accept that if the defendant can not rely on Mr Roberts' report, it will not be able to adduce expert evidence on some matters dealing with this question which are undoubtedly within his apparent area of expertise. Thus, to refuse the defendant leave to rely on the report would undoubtedly cause it an injustice. 20Nonetheless, it will be open to the defendant to use Mr Roberts' report to cross-examine the experts called by the plaintiffs, to the extent that matters referred to in the report are relevant to the expertise of those witnesses. Thus, even though the defendant may not have the benefit of Mr Roberts' testimony, nonetheless the substance of his views can be deployed in cross-examination. To my mind, that will to some extent alleviate the injustice. 21It is a very serious step, I acknowledge, to deprive a party to litigation of evidence that goes to a real and significant issue in the case. It has been suggested in this case that the difference between the plaintiff's and the defendant's view of notional reinstatement is, in monetary terms, of the order of $1.5 to $2 million. Thus, there is a lot riding on this question. 22However, at the end of the day, it is the defendant that has created the situation because it is the defendant that did not act, as in my view it should reasonably have done, and take steps at an earlier and appropriate time to terminate the retainer of Mr Zakos to retain another expert. 23Balancing all those considerations, I have, although reluctantly, come to the conclusion that the defendant should be refused leave to rely on Mr Roberts report. 24I order the defendant to pay the plaintiff's costs of the defendant's notice of motion filed on 24 July 2013. 25I reserve leave to the defendant to move on notice for a third party costs order. 26The exhibits on the motion should be handed out. ********** 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: 13 August 2013