Supreme Court New South Wales Medium Neutral Citation: Commonwealth Bank v Iinvest (No 6) [2017] NSWSC 439 Hearing dates: 6 February 2017 Date of orders: 06 February 2017 Decision date: 06 February 2017 Jurisdiction: Common Law Before: Campbell J Decision: I propose to admit the second report of 3 February 2017. Catchwords: CIVIL PROCEDURE – expert evidence – experts' reports – whether leave is to be granted for the tender of a supplementary expert report served out of time – consideration of Rule 31.28 of the Uniform Civil Procedure Rules 2005 (NSW) – the meaning of "merely updates" in Rule 31.28 (4)(b) – held that supplementary report merely updates previous report – held that leave is to be granted for the tender of supplementary expert report EVIDENCE – opinions based on specialised knowledge – s 79 of the Evidence Act 1995 (NSW) – whether opinions are wholly or substantially based on the expert's specialised knowledge – held that opinion based wholly or substantially on expert's specialised knowledge EVIDENCE – the Court's discretion to grant leave – s 192 of the Evidence Act 1995 (NSW) – whether leave is to be granted for the tender of a supplementary expert report served out of time - held that leave is to be granted for the tender of supplementary expert report Legislation Cited: Ritchie's Uniform Civil Procedure New South Wales Texts Cited: Ritchie's Uniform Civil Procedure New South Wales Category: Procedural and other rulings Parties: James Harker-Mortlock (Applicant) J H M Pty Ltd (Second Applicant) Iinvest Pty Ltd (in liquidation) (First Respondent) Commonwealth Bank of Australia (Second Respondent) Representation: Counsel: P King (Applicant) Ms Cheeseman SC with J White (Respondent) Solicitors: Roderick Alexander Ian Storie (Applicant) Campbell Hudson (Respondent) File Number(s): 2013/108514 Extempore judgment - revised 1. Mr Firth, a chartered accountant, is about to be called to give evidence of an expert nature. His opinions are set out in his original report of 30 July 2015, annexed to his affidavit of the same date. In that report he was asked to consider two broad questions which he assessed and expressed opinions about. The broad questions are as follows: "1. What is the financial position that (the company) would have been in vis‑a‑vis the properties if "plan A" had been adopted and implemented on and from May 2008?; and 2. What is the economic loss suffered by (the company) as a result of plan A not being adopted on and from May 2008?." 1. There is no objection as to the admissibility of that first report. Mr King of counsel also tenders a second report dated 3 February 2017, the tender of which is objected to by Mr White of counsel who appears for the bank, as junior to Ms Cheeseman SC. Rule 31.28 of the Uniform Civil Procedure Rules 2005 (NSW) requires expert reports to be served in accordance with orders of the Court, inter alia. In this case, Davies J made orders requiring the service of the evidence back in 2015. 2. UCPR 31.28(3) excludes the admission of any expert's report not served in accordance with subr (1), "except by leave of the Court". Subrule (4) is in the following terms: Leave is not to be given as referred to in subrule (3) unless the Court is satisfied: 1. that there are exceptional circumstances that warrant the granting of leave, or 2. that the report concerned merely updates an earlier version of a report that has been served in accordance with subrule (1). 1. Mr King does not rely upon para (a) requiring exceptional circumstances, but submits that this is a report which "merely updates" the report of 30 July 2015. 2. Before summarising the arguments of counsel, it is I think necessary to say something about the form and content of the report of 3 February 2017. Mr Firth was provided with a series of valuation reports that had been prepared for the bank in relation to its management of the various loans taken out by the defendants. Essentially, at different times, there have been three secured properties known as "Brecon", "Yulgilbar" and "Blackburn". 3. Mr Firth's earlier report assessed the questions I have identified, which really went to the expected performance of the grazing enterprise that was being carried out on those properties by the defendants. The report of 3 February 2017, in respect of each property individually, draws upon the relevant valuation reports extracting from them matter clearly considered significant by Mr Firth to the opinions he had already expressed, and in each case expresses a conclusion more or less in the following terms: In my opinion, the above factors noted in relation to the subject property are broadly consistent, and indirectly supported by the original report dated 30 July 2015, given that the property is noted to be in good condition and well‑watered and suitable for the sheep production activities being undertaken on the property. 1. The objections brought forward by Mr White include at the threshold that the condition expressed in para (b) of subr (4) has not been satisfied because this is not a report which "merely updates" an earlier version of the same report. Mr King joins issue. 2. As part of the argument advanced by Mr White, it is pointed out that attempts were made from 1 December 2016 to obtain a report for Mr Firth which effectively brought his calculations and substantive opinions up-to-date. But due to the pressures of his professional commitments he was unable to undertake that task and recommended another expert who might be available. That other expert is Mr Ivey and, as Mr White points out, a report from Mr Ivey was served on 17 January 2017 and Mr White points out that is propounded as "the supplementary report". 3. The circumstances in which the report of 3 February 2017 was commissioned really arise out of what I was told last Wednesday when Mr Firth attended court in the expectation of giving evidence, that there were additional documents provided to him that he needed some time to consider before expressing opinions about them. 4. There's no issue that the various valuation reports, which number nine, were produced to the Court in response to a notice to produce in relation to which I made certain rulings on 24 January 2017. When that matter was argued before me on the 20th January a bundle of documents was produced without prejudice and, as I understand what has been put to me, these valuation reports were amongst those documents. They had not previously been discovered in the limited discovery agreed between the parties. 5. "Merely updating" something is not a term of art in this field and doubtless the expression needs to be given its ordinary meaning. The commentary in Ritchie's Uniform Civil Procedure New South Wales refers to updating or refresher reports. Counsel have used, as have I, in argument to the expression "supplementary reports". Obviously to take an example removed from this case, in a personal injuries case a refresher or updating report might consist of a medical expert re‑examining a plaintiff who has been previously examined by that expert for the purpose of providing an up-to-date opinion at the hearing of the case. In providing that report, new material in terms of an up-to-date history, and any development in the patient's condition, will, of course, be documented and taken into account. 6. It has been recognised that what is an "updating" report may well be case sensitive. It seems to me that the fact that there is a second report from an expert propounded by the plaintiff's lawyers as a supplementary report is in no way determinative of the issue of whether this report "merely updates" the first report. Doubtless had Mr Firth had the time to undertake the task of considering further financial material brought into existence since July 2015 for the purpose of bringing his calculations up to date and to express a refreshed opinion about the matter, such a report would have fallen within the description "merely updates". 7. On the other hand a report of that type is not exhaustive of the expression and it seems to me that in circumstances like those here where an expert has considered material which was not available to him as at the date of his previous report, and has expressed opinions confirming his earlier views, such a report does fall within the category of "merely updates". 8. Mr White also objects on the basis that the report does not demonstrate on its face that the opinions expressed are wholly or substantially based upon Mr Firth's undoubted branch of specialised knowledge. With respect I do not agree. He has, in each case, set out the matters drawn from the previous valuation reports which he thinks significant to his previously expressed opinions and, for instance, I choose an example at random, what storages have been updated and interconnected to improvements to enhance the aspect of "drought proofing" of the block in relation to the Yulgilbar property. 9. It seems to me that, first, the valuation reports are likely to be admissible as business records and, second, the material of a factual nature stated in them is relevant to opinions expressed by the expert in relation to, for instance, the carrying capacity and productivity of the properties. Taking again the example of the Yulgilbar property, the eight factors he sets out in his report are, I think it can be said with some clarity, matters which, to an agricultural economist, are significant in assessing the carrying capacity of a grazing property. In my view the basis of the reiteration of the previously expressed opinion is made clear by those matters which demonstrate that the reiteration of the previous opinion is wholly or substantially based upon Mr Firth's expertise. 10. Mr White referred to a number of discretionary matters. It should not be forgotten that the consideration that the report is an updating report does not dispense with the necessity for leave to be granted before the report can be relied upon. Mr White referred to various considerations, including what he argued was the absence of any satisfactory explanation for the delay, and the circumstance of the qualification of Mr Ivey to give evidence in relation to the case. 11. I accept that, as Mr King submitted, it is relevant for me to have regard to the provisions of s 192 of the Evidence Act 1995 (NSW) in determining the leave question. It seems to me that although leave is required under the Rules, s 192 remains a governing provision in relation to the questions of leave for the admission of evidence in the proceedings. It may not strictly be applicable, but its terms are of some guidance in relation to the nature of the matters that the Court ought to take into account. Bearing this in mind, it seems to me that the admission of the short supplementary report from Mr Firth is unlikely to unduly affect the amount of time required to hear this case. I do not think there is any issue of unfairness as a particular matter for me to consider. This does bolster Mr Firth's opinions, and therefore it might be said to be unfair to the plaintiff not to allow it in. I am not so sure I accept that, but on the other hand, I do accept that it was not put by Mr White that there was any prejudice to the defendant. 12. I accept that the expert evidence is important. In particular it is important in relation to the defendant's cross‑claims for statutory unconscionability. It is essential, I would have thought as a practical matter, to the success of any such argument, that it be demonstrated that plan A was more than viable, but was likely to be successful, and likely to lead to a situation where the defendants could cope with their indebtedness to the bank. I am also of the view there is nothing much about the nature of these proceedings which points one way or another in terms of the significance of granting leave. Case management considerations, other than the need to impose a degree of forensic discipline on parties, do not much come into the equation at this stage. But even that imposition of appropriate forensic discipline should not be applied inflexibly, having regard to the interests of justice. I think that there is a satisfactory explanation for the delay in bringing this report forward when one considers its content, and, I will say, late availability of the valuation reports which were clearly relevant material for the consideration of Mr Firth. 13. In the circumstances, I propose to admit the second report of 3 February 2017. ********** 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: 19 April 2017