Chaina v Presbyterian Church (NSW) Property Trust (No. 23) [2013] NSWSC 1675

Supreme Court New South Wales

Medium Neutral Citation: Chaina v Presbyterian Church (NSW) Property Trust (No. 23) [2013] NSWSC 1675 Hearing dates: 13 November 2013 Decision date: 13 November 2013 Jurisdiction: Common Law Before: Davies J Decision: The report of Dr Richardt of 9 August 2012 is rejected. Catchwords: EVIDENCE - expert evidence - report on costs to manufacture products - no basis shown for costings calculated - no other expert uses conclusions on costings - no evidence of sale price of items - no evidence of likely volumes of sales - report rejected Category: Interlocutory applications Parties: Mathew Chaina (First Plaintiff) and ors Presbyterian Church (NSW) Property Trust (First Defendant) and ors Representation: Counsel: In person (Plaintiffs) R Stitt QC, G L Turner & H Stitt (Defendants) Solicitors: In person (Plaintiffs) Curwoods Lawyers (Defendants) File Number(s): 2002/69354

Judgment 1Objection was taken to the report of Dr Peter Richardt of 9 August 2012. Dr Richardt says in that report, "I have been engaged to prepare an expert report in relation to the cost of goods produced based on the expert reports for raw materials, manufacturing and packaging costs". 2Dr Richardt sets out in section 2 of the report the documents that were provided to him to enable the report to be prepared. There are nine such groups of documents. Some of those documents have never been produced to the Defendant and are certainly not in evidence. It is difficult indeed in reading the list to understand quite what some of the documents are. That is one of the objections taken to the report. 3The report is also objected to on the basis that it purports to be a costing but has not been used by Ms Cartwright of Pitcher Partners who has calculated the likely value of sales of the business based on the market share estimated by Professor Dowling. The third basis for the objection is that there is no evidence of any sales volumes of the items, so that the evidence of costing goes nowhere. 4The fundamental problem with the report is that there is no other evidence in the case which makes this report relevant. The report contains a schedule of what Mrs Chaina concedes are hundreds of different items and products packaged in different quantities. In respect of each of those hundreds of items, Dr Richardt has calculated a cost of production. That cost is said to be based on what is described in section 2(h) as a consolidated raw material price list for the raw materials. That document is not in evidence. I was informed that it was prepared by the lawyers, Berrigan Doube, who were previously acting for the Plaintiffs. It is said to consist of the unit prices of ingredients that were annexed in spreadsheets to Sam Daniel's report of 5 June 2012 and to the costs which are contained in the DAFTA report of 5 June 2012. 5Dr Richardt does not refer at all in his report to Sam Daniel's report nor to the DAFTA report. I was handed a copy of what was said to be the consolidated raw material price list to understand the point Mrs Chaina was arguing in respect of the admissibility of this report. There is no evidence of how the document was compiled, merely a statement from the bar table by Mrs Chaina of what the solicitors did. It would require a close analysis to conclude that the prices contained in that document were obtained from the report of Sam Daniel and the DAFTA report. 6Even if that problem was overcome Ms Cartwright does not use the costs that are detailed in this report as any basis for the conclusions to which she comes. Rather she estimates a percentage of a share of the market to calculate the sales. 7Mrs Chaina handed to me a bundle of invoices which were said to be the sale price obtained by the Plaintiffs of a few but not many of the hundreds of items contained. She said that many of these items have never been produced by the company. That highlights the problem with this report further. Even if I was to have regard to those invoices, which themselves are not in evidence, it would be possible to discern only that a small proportion of the hundreds of items were sold for more than they cost to produce. 8Reliance has been placed on the second report of Dr Van Dyke where he has estimated on the basis of a 10 per cent market share the number of litres required in each category of product. However, the costings are not based on categories but on individual products. There is no evidence of what volume of each of these items would have been sold. Professor Dowling's report throws no light on that matter. 9There are, therefore, gaps in the evidence on both sides of this report. First, there is no evidence demonstrating the basis for Dr Richardt's costings. Secondly, there is no evidence of the price to be charged for each of the items to set against the cost of production. Thirdly, there is no evidence of the likely volume of sale of each item to feed into any estimate of likely sales overall of the industrial side of the business. Certainly, as mentioned earlier, Ms Cartwright does not use the information in Dr Richardt's report in any way. 10Because the material in this report is not used by any other expert in the case, it does not go anywhere and is therefore irrelevant. Principally, for that reason, but also because the basis of the product charges that Dr Richardt has calculated has not been demonstrated by any evidence in the case, the report is rejected.