FEDERAL COURT OF AUSTRALIA

Jadwan Pty Ltd v Rae & Partners (A Firm) (No 3) [2017] FCA 1045

ORDERS

THE COURT ORDERS THAT:

1.    Document 156 at pages 1629 – 1631 of the Court Book is admitted into evidence for all purposes.

2.    Document 209 at page 1906 – 1907 of the Court Book is admitted into evidence for all purposes.

3.    Document 1065 at pages 8065 – 8067 of the Court Book is admitted into evidence for all purposes.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from the transcript)

KERR J:

1    The Applicant has sought to tender a large number of documents as part of a tender bundle. The Respondents have raised objections to the admissibility of three of those documents. I made rulings on the admissibility of those documents and delivered ex tempore reasons on 19 July 2017. These are my reasons revised from the transcript.

Legislative provisions

2    Chapter 3 of the Evidence Act 1995 (Cth) (the Act), comprising ss 55 to 139 contains the statutory rules that govern admissibility of evidence in this Court. Under the heading ‘Introductory Note’, the draftsman has set out a brief summary of Parts 3.1 to 3.11 of the Act, followed by a diagram that is designed to demonstrate how Chapter 3 applies to particular evidence. That diagram provides a guide through Chapter 3. According to that diagram, the first ground for excluding evidence is that the evidence sought to be tendered is not relevant. It is not pressed in relation to these proceedings that the evidence does not meet the relevance test.

3    According to the diagram the next exclusionary rule is the hearsay rule. Evidence which is relevant but which offends the hearsay rule is not admissible. Part 3.2 of Chapter 3 of the Act deals with the hearsay rule and the exceptions to it. The objections which have been taken to document 156, at page 1629 of the Court Book, document 209, at page 1906 of the Court Book and document 1065 at page 8065 of the Court Book are based on the proposition first, that the representations contained in those documents are hearsay, and second, that those representations contain statements of opinion.

4    The hearsay rule contained in s 59(1) of the Act is in the following terms:

Evidence of a previous representation made by a person is not admissible to prove the existence of a fact that it can reasonably be supposed that the person intended to assert by the representation.

5    Subsection (2) states that:

Such a fact is in this Part referred to as an asserted fact.

6    One exception to the hearsay rule, that regarding business records, is contained in s 69 of the Act:

Exception: business records

(1)    This section applies to a document that:

(a)    either:

(i)    is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or

(ii)    at any time was or formed part of such a record; and

(b)    contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.

(2)    The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made:

(a)    by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or

(b)    on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

7    The business record exception does not apply (s 69(3)) if the representation:

(a)    was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding; or

(b)    was made in connection with an investigation relating or leading to a criminal proceeding.

8    No objection was pressed on the premise that s 69(3) applied in respect of any of the three documents. In any event, evidence extrinsic to this discussion establishes that, at the relevant times, Jadwan was planning to construct, or exploring the possibility of constructing, a 51-bed nursing home on a greenfield site. Each of the three documents came into existence independently of any purpose referred to in s 69(3).

9    I turn to the documents to which objection has been made. I refer to them in the order that they were addressed by counsel.

The Contested documents

Facsimile and letter signed by Mark Selby-Hele dated 1 April 1999

10    Document 1065 is a three-page document. It was sent by fax on 1 April 1999 to Mr Jeff Alexander. From extrinsic materials, we know that Mr Alexander was then a director of Jadwan.

11    The fax cover-sheet was followed by a letter of the same date on the letterhead of a company therein described as “Aged Care Developments”. Under that in bold, are the words, ‘Designers and builders of quality aged care facilities’. The letter was signed by a Mr Mark Selby-Hele over the title ‘Director, Aged Care Developments’ The letter reads:

Dear Jeff

I am pleased to present to you Aged Care Developments fee structure and outlines for professional services and cost estimations for a proposed new 51 bed nursing home facility to be constructed on your land in Hobart, Tasmania.

This estimation is based on a brief given to Mark Selby-Hele by Mr. Jeff Alexander at the offices of Aged Care Developments at Seaford on 17/03/99.

NEW BUILDING AREA: 2250 Square metres.

The estimated cost to design and construct a new 51 bed facility on a reasonably level, greenfield site is $2,445,000 (Two Million, Four Hundred & Forty Five Thousand Dollars.) This estimate assumes that the proposed building is constructed as a brick veneer dwelling and generally applying the same product specification currently on display at Aged Care Developments offices in Peninsula Boulevard, Seaford and similar projects recently completed in and around Melbourne and Country Victoria.

CONSULTANTS ALLOWED FOR IN THIS PROPOSAL.

•    Architect/Building Designer.

•    Land Surveyor.

•    Building Surveyor.

•    Structural/Civil engineer.

•    Hydraulics consultant.

•    Fire Services consultant.

•    Mechanical Services consultant.

•    Colour Consultant.

•    Landscape designer.

BUILDING FEATURES INCLUDE

•    Brick veneer constructed facility on concrete slab.

•    Floor coverings throughout.

•    Carpark, driveways and vehicle crossings.

•    Landscaping to a value of $40,000.

•    Commercial Kitchen to a value of $55,000.

•    Commercial Laundry to a value of $30,000.

THE FOLLOWING ITEMS ARE NOT INCLUDED IN THIS PROPOSAL.

•    Loose furniture, drapes, blinds or soft furnishings.

•    Any equipment other than that which is associated with the Kitchen or Laundry fit outs.

•    Any additional costs involved with supplying basic services to the site.

Basic services being Water, Gas, Sewer and Electricity.

I have assumed that these services will be available at the property boundary.

•    Contribution fees (Sewer & Water.) set by the relevant authority.

I trust this brief overview of the proposed works and estimate cost projections are of assistance to you.

Yours sincerely

JOHN CALDER

General Manager

12    The primary asserted fact conveyed by that correspondence is that Aged Care Developments would be willing to design and construct a new 51-bed nursing home facility on a greenfield site on land to be supplied by Jadwan for an estimated cost of $2,445,000, not including the cost of certain items expressly excluded.

13    Given that the letter was signed by Mark Selby-Hele over the title ‘Director, Aged Care Developments’, I am satisfied that Mr Selby-Hele was a person who might reasonably be supposed to have personal knowledge of that asserted fact, for the purposes of the provisions of s 69(2) of the Act.

Letter from Tasmanian Building Services dated 17 March 1997

14    Document 156 in the Court Book is a letter dated 17 March 1997 addressed to Mr Alexander. It is on the letterhead of a company identified as Tasmanian Building Services. It is signed by a Mr John Calder over the title General Manager. The letter refers to ‘recent discussions’ and provides Mr Alexander with what are described as ‘estimates of cost based on your requirements’.

15    The letter reads as follows:

Dear Sir

DERWENT COURT NURSING HOME PROPOSED NEW CONSTRUCTION

Reference is made to our recent discussion regarding the above. I provide for your information estimates of costs based on your requirements.

In conjunction with our Quantity Surveyor, we have calculated the estimates for the provision of a 51 bed complex with a fully enclosed floor area of approximately 2300  m², constructed on a near level “greenfield” site. No allowance has been made for space for the additional 9 beds that you may require in the future.

It is assumed that a simple “slab on grade” foundation system would be suitable. The estimates do not include any allowance for additional costs that could apply to a site which has a poor bearing capacity, reactive clays or large areas of rock. Any such additional costs would have to be estimated after a site has been selected and any foundation problems determined.

A split up of the estimate into component sections is detailed below. It should be noted that all costs, with the exception of Council Planning Fees have been included. The estimated cost for these Planning Fees is $5,000.00.

•    Building (excluding specialist services costs)    $1,695,000

•    Internal plumbing (fixture and services reticulation)    $ 215,000

•    Heating (assumed slab and/or ceiling panels)    $ 85,000

•    Mechanical ventilation (including kitchen and laundry)    $ 60,000

•    Fire services (sprinkler and smoke detection)    $ 75,000

•    Electrical (including nurses call, TV and security)    $ 265,000     2,395,000

•    Allowance for kitchen and laundry equipment    $ 110,000     110,000

•    Site works, roads, car park and paths    $ 130,000

•    Landscaping (provisional allowance)    $ 40,000

•    External stormwater and sewer drainage    $ 75,000

•    External water supply and fire service    $ 55,000

•    External power supply and lighting    $ 45,000     345,000

•    Contract contingency sum allowance    $ 70,000     70,000

TOTAL ESTIMATED CONSTRUCTION COST            $2,920,000

The estimated “Building” cost of $2,350,000 equates to a rate of approximately $1,020 per m² or $46,000 per bed. These rates are towards the lower range which could be expected for a project of this type, but given the very tight tender market prevailing at the moment, we consider that for budgeting purposes, it would be reasonable to base costs on such rates.

The “unknown” additional works for which we have made allowances based on previous knowledge of similar projects, relate to site works and site services. These allowances can only be treated as “provisional” at this stage and will not be able to be more accurately estimated until such a time as a site has been selected and the extent of existing services and ground conditions are known. If a site was selected where sewer draining was not available, the estimated additional cost of providing an “on-site” treatment plant is $75,000. This additional cost could well be off-set by the expected lower land acquisition costs.

The total estimated construction cost of $2,920,000 is based on current costs and does not include allowances for the following:

•    Increases in costs after March 1997.

•    Professional fees.

•    Land acquisition costs.

•    Loose furniture, fittings and equipment.

•    Curtains, blinds and furnishings generally.

For this project, Tasmanian Building Services can provide a project management role to include the following:

•    Assistance in choosing the appropriate site.

•    Recommendation of an Architect who will best cater for your needs. This recommendation would only take place after further discussions with you, possibly including the viewing of a number of different design projects.

•    Employment of the chosen Architect on your behalf, or arranging a contract between the Architect and yourself.

•    Design and documentation of all services including electrical, mechanical, fire safety requirements, plumbing, communications etc. ready for tendering.

•    Recommendation of suitable contractors and calling of tenders.

•    Cost control management to ensure the project comes within budget.

•    Arranging for all the appropriate approvals, including Council, Tasmanian Fire Service etc.

•    Administration of all contracts to ensure efficient and cost effective completion of the project.

Our fee to carry out the duties outlined above is 7.8% of the estimated construction cost of $2,920,000, that is $227,760.00 (including Architect’s fees). The total estimated project cost, including consultation fees and Planning fees is therefore $3,152,760.00. It should be noted that these are preliminary estimates only as there is insufficient information to provide a more accurate assessment.

I trust that the information provided in this report is of assistance. If you require clarification on any item, please do not hesitate to contact me.

Yours sincerely

JOHN CALDER

General Manager

16    An asserted fact conveyed by that correspondence is that Tasmanian Building Services had calculated what it estimated it would cost Jadwan to construct a 51-bed complex with a fully enclosed floor area of approximately 2,300 square metres, on a near-level greenfield site subject to the exclusions therein referred to.

17     A further asserted fact conveyed is that Tasmanian Building Services was willing, as at that date, to carry out the duties of project managing the building of the 51-bed complex for a fee of 7.8 per cent of its estimated construction cost of $2,920,000.

18    Given that the letter was signed by Mr John Calder, General Manager, I am satisfied that Mr Calder was a person who might reasonably be supposed to have had personal knowledge of those asserted facts.

Letter from Tasmanian Building Services dated 16 July 1997

19    Document 209 at pages 1906-1907 of the Court Book is a second letter to Mr Alexander – on the letterhead of Tasmanian Building Services signed by John Calder. It is dated 16 July 1997. The letter was headed ‘Proposed New Nursing Home’. In this letter Mr Calder refers to a request made by Mr Alexander for a program of work.

20    The letter reads as follows:

Dear Jeff

PROPOSED NEW NURSING HOME

Reference is made to your request for a program of work for the above. The following time line is considered a reasonable minimum, with various comments as noted.

Basic Needs Analysis                        2 weeks

To establish an understanding of the required building area and site requirements.

Site Selection                            8 weeks

Time may be more or less, depending on availability of suitable property. Factors to be taken into consideration include, (amongst others) size, zoning, location, contour, price. It is suggested that the site be purchased conditional upon receiving planning approval.

Schematic Design                        6 weeks

Preliminary design process to establish optimum layout for the site and for submission for planning approval.

Planning Approval                        6 weeks

How smoothly this phase of the project will proceed will depend upon what planning controls that apply to the site and whether the Council have to exercise discretion over any aspect of the proposal.

Where public comment is invited, there is a danger that the approval process can become bogged down and even end up in the Planning Appeals process. This time allocation assumes that the project will be an “as of right” development.

Design Development                        6 weeks

This phase of the project will provide the resolution of all design issues prior to commencing the documentation phase.

Documentation                        12 weeks

Preparation of all working drawings and specifications, sufficient for building approval, tendering and construction.

Building Approval                        6 weeks

Tendering                            6 weeks

It is assumed that 4 weeks tendering time would be sufficient with 2 weeks allowed for tender assessment and acceptance.

Construction                            48 weeks

This period will be influenced by the type of construction used for the project. Larger building contracts have been completed in less time, so it should be possible to reduce this period, depending upon the resolution of a number of factors.

Authorities Approval/Licensing                4 weeks

This figure will need to be confirmed.

TOTAL ESTIMATED PROJECT PERIOD            104 weeks

Client approval times would be built into each of the above project stages. It is considered safe to assume that a float of between 6 to 8 weeks would be available within the construction period above.

I trust that the above information will be of assistance to you.

Yours sincerely

JOHN CALDER

General Manager

21    An asserted fact conveyed by that correspondence is that Tasmanian Building Services had estimated the total completion time for the construction of Jadwan’s then proposed new nursing home complex to be 104 weeks, subject to the various caveats therein expressed.

22    The letter was signed by John Calder who, as above, might reasonably be supposed to have personal knowledge of that fact.

Documents are business records

23    Counsel for the Fifth Respondent Mr McElwaine SC addressed the court on behalf of all Respondents on this point. Mr McElwaine conceded that he could not press a submission that the documents were not business records.

24    For completeness however, I should indicate that I have given attention to whether a statement in a letter from Business A found in the files or records of Business B can be considered, for the purposes of the Act, to form part of Business B’s business records. I am satisfied it can. The breadth of the business records exception to the hearsay rule has been the subject of much judicial commentary, including that of Vickery J in Hodgson v Amcor Ltd; Amcor Ltd v Barnes & Ors (No 5) [2011] VSC 295. There is no reason to give the provision a narrow reading.

25    The more specific issue was considered by Perram J in Australian Competition and Consumer Commission v Air New Zealand and Another (No. 1) (2012) 207 FCR 448 (Air New Zealand). His Honour held, at paragraphs [47] to [50] that it was consistent with the scheme of the Act that a statement from Business A found in the records of Business B can be accepted to form part of Business B’s records. I should follow that decision unless I regard it as clearly wrong. I do not regard his Honour to have been in error and I respectfully adopt both his Honour’s reasoning and his conclusion.

objections

26    The Respondents’ objections were pressed on the basis that the documents in question included, either expressly or by necessary implication, opinions.

27    A ‘fact that it can reasonably be supposed that a person intends to assert’ by a representation, in my view is capable, as a matter of ordinary grammar, of including both (a) that a particular opinion was held by the maker of the representations and (b) an opinion by the maker of the representation as to the existence of a fact. There appears to be no decision binding on me to that effect but there is a highly persuasive line of single judge authority including the decision of Hely J in Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 (Ringrow) for the proposition that an ‘asserted fact’ within the meaning of s 59(2) and s 69 of the Act may include the expression of an opinion. In that matter his Honour concluded at [18] that ‘s 69 of the Act is capable of operation even if the asserted fact is an opinion in relation to a matter of fact.’

28    Whether what was said by the High Court in Lithgow City Council v Jackson (2011) 244 CLR 352 (Lithgow) might cast doubt on that line of authority was considered by Perram J in Air New Zealand. His Honour held that Lithgow had not overruled the line of authority represented by the reasoning of Hely J. His Honour’s reasoning appears at [63] – [65]:

[63]    A considerable body of first instance decisions have concluded that an opinion as to the existence of a fact falls within the scope of the term ‘asserted fact’ in s 69: ASIC v Rich (2005) 191 FLR 385 at 433-434; [2005] NSWSC 417 at [206]-2[207] per Austin J; Connex Group Australia Pty Ltd v Butt [2004] NSWSC 379 at [3] per White J; Land Enviro Corp Pty Limited v HTT Huntley Heritage Pty Limited [2012] NSWSC 177 at [95] per Stevenson J; Ringrow Pty Ltd v BP Australia Ltd (2003) 130 FCR 569 at 573 per Hely J; Supetina Pty Ltd v Lombok Pty Ltd (1984) 5 FCR 439 at 442 per Spender J; Investmentsource v Knox Street Apartments [2007] NSWSC 1128 at [19]-[21] per McDougall J; Street v Luna Park Sydney Pty Limited [2007] NSWSC 688 at [5] per Brereton J; SPAR Licensing Pty Ltd v MIS QLD Pty Ltd (No 2) [2012] FCA 1116 at [238] per Griffiths J.

[64]    I should not depart from this view of s 69 unless persuaded that it us plainly wrong. I am not of that view. It is true that French CJ, Heydon and Bell JJ described this approach to the construction of s 69 as a ‘little strained’ in Lithgow City Council v Jackson (2011) 244 CLR 352 at 362 [11], but I reject the submission that the statement should be characterised as considered dicta of the High Court binding on me. I take that course because in the same paragraph their Honours also said:

However, it was not argued in this Court that the authorities which state that “asserted fact” includes an opinion in relation to a matter of fact are wrong. It is not necessary further to deal with this point, which the parties did not debate at any stage.

[65]    I would not, in any event, accept that there mere fact that an interpretation is ‘strained’ means inevitably it is wrong. Here the legislation was always intended as a beneficial reform. If ‘asserted fact’ does not extend at least to lay opinion as defined in s 78 then an important, reliable and common form of business record will be inadmissible. For example, a building site log recording that the site is ‘slippery due to rain’; a hotel incident report that a patron was ‘drunk’; a police pocket note that a person was ‘angry’ and so on.

29    Unless I were to be satisfied that Perram J was clearly wrong, then I should also not depart from that view of s 69 of the Act. While the alternative premise may be arguable I am unpersuaded that his Honour was clearly wrong.

30    Yet as Perram J recognised at [69] it is necessary to reconcile that broad conclusion with what was held by the High Court in Lithgow.

31    Lithgow is clear authority for two propositions: first that the operation of ss 76 to 79A of the Act is not confined to evidence of opinions given by a witness in a court; and, second that a statement of opinion in a business record must comply with those provisions as a precondition of it being admissible as evidence.

32    Accordingly, acceptance of the proposition confirmed in Air New Zealand that an asserted fact may be an opinion in relation to a matter of fact does not respond to the more specific objection put by counsel for the Fifth Respondent that Lithgow requires the exclusion of any hearsay lay opinion expressed in a business record if it conflicts with the rules contained in ss 76 – 79 of the Act.

The representations in the objected to documents are not relevantly opinions

33    However, the facts asserted in the three objected to documents in my view do not relevantly include opinions.

34    It may be accepted that both Mr Selby-Hele and Mr Calder had to form opinions including as to matters such as profit margins and their confidence in estimates of costs before they wrote to Mr Alexander on behalf of their companies. However the commercial judgments and opinions they formed as part of that decision making process; for example, with regard to what work their respective companies might offer to undertake, for what price and upon what conditions, were factors internal to their respective companies. Those issues had been determined prior to those letters being sent.

35    Neither Mr Selby-Hele or Mr Calder’s correspondence with Mr Alexander relate to those matters of opinion. Their letters were communications made in the course of commerce intended to convey to Mr Alexander what their companies had done or were prepared to do for Jadwan were it to engage their services. Their opinions with respect to matters they had considered before so writing were, in that context, irrelevant to the facts they asserted.

36    With regard to document 156, I do not take the fact that Mr Calder advised Mr Alexander in that letter that Tasmanian Building Services had undertaken its calculation of costs ‘in conjunction with our quantity surveyor’ as purporting, by implication, to convey independently the quantity surveyor’s opinions. All that it can reasonably be supposed Mr Calder intended to assert by that representation is that Tasmanian Building Services had consulted with its quantity surveyor before writing to Mr Alexander regarding what Tasmanian Building Services estimated it would cost to construct a 51-bed complex with a fully enclosed floor area of approximately 2,300 square metres, on a near-level greenfield site subject to the exclusions therein referred to. Mr Calder neither provided the quantity surveyor’s opinions to Mr Alexander nor claimed those opinions to be the basis for what had he communicated to Mr Alexander on Tasmanian Building Services’ behalf.

If I am in error

37    On the assumption that I am in error, Lithgow requires such representations as contain lay opinion not to be admitted as evidence in these proceedings, unless otherwise authorised by the rules relating to expert evidence set out in ss 76 – 79 of the Act.

38    However, in a like manner as s 60 of the Act provides that the hearsay rule does not apply to evidence of a previous representation that is admissible because it is relevant for a non-hearsay purpose, s 77 of the Act provides that the opinion rule does not apply to evidence of an opinion that is admissible because it is relevant for a purpose other than the proof of an existence of a fact about which the opinion is expressed.

39    In Lithgow, the statement of lay opinion which was ultimately held inadmissible by the High Court notwithstanding it was contained in a business record was relevant only to establish the fact in respect of which it had been expressed.

40    That is made clear at [9] of the plurality judgment of French CJ, Heydon and Bell JJ, in which their Honours explained the background as follows:

[9]     The trial judge did not refer to the impugned representation. That is probably because she had ruled, after admitting into evidence (without objection) the records of the Ambulance Service in which it appeared, that the impugned representation not be used as evidence of the truth of its contents. Since there was no relevant use of the impugned representation other than as evidence of the truth of its contents, the trial judge's ruling amounted to a rejection of it.

41    By contrast, in these proceedings, the representations in each of the three documents are also relevant for a distinct purpose other than the proof of the existence of a fact about which the opinion is expressed.

42    Each of those representations are also relevant to prove that Jadwan was, at the various times those letters had been written, actively pursuing the possibility of constructing a purpose-built nursing home on a greenfield site. That is a separate and distinct matter upon which Jadwan was put to proof.

43    Lithgow requires only that the admissibility of a representation in a business record be tested against the provisions of ss 76 to 79A of the Act. Section 77 is within that scope.

44    Accordingly, even if I am in error Lithgow does not compel, in these proceedings, the conclusion that evidence of the lay opinions of their authors should not be admitted into evidence. As noted in Seven Network Limited v News Limited (No 8) [2005] FCA 1384 (Seven Network) at [11]- [12] in which the like circumstances arose, s 77 of the Act expressly disapplies the opinion rule in respect of evidence admissible for a purpose other than the proof of a fact about which the opinion has been expressed.

45    I discern no reason not to apply the jurisprudence relating to s 60 analogously to the like provision in s 77 of the Act. Once evidence is so admitted it becomes evidence for all purposes.

46    For those reasons, but subject to the power of the Court to exclude or limit their use on discretionary grounds, I am satisfied that the representations in the three documents to which objection has been made are admissible evidence in these proceedings.

DISCRETIONARY POWER TO EXCLUDE OR LIMIT THE USE OF THE EVIDENCE

47    There are two discretionary bases upon which the court might not permit such evidence to be adduced.

48    First, s 135 confers a general discretion on the Court to exclude evidence which may be unfairly prejudicial. Second, s 136 confers a general discretion on the Court to limit the use of particular evidence.

49    Thus, returning to the example of Seven Network where a business record containing an expression of lay opinion would have been otherwise admissible for all purposes having regard to section 77 of the Act, Sackville J utilised s 136 to limit the use of that evidence to avoid unfairness to a party. In like circumstances Sperling J took a similar course in Roach v Page (No. 11) [2003] NSWSC 907 (Roach).

50    The starting point when a court is asked to exercise those discretions must be the terms of the statutory provisions..

51    Section 135 of the Act, which confers a power to exclude otherwise admissible evidence entirely, reads as follows:

General discretion to exclude evidence

The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:

(a)    be unfairly prejudicial to a party; or

(b)    be misleading or confusing; or

(c)    cause or result in undue waste of time.

52    Section 136, which permits a Court to limit the use of otherwise admissible evidence, is in the following terms:

General discretion to limit use of evidence

The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might:

(a)    be unfairly prejudicial to a party; or

(b)    be misleading or confusing.

53    Before turning to the Respondents’ submissions I should mention three propositions that I take to be well settled and not in dispute.

54    First, that evidence is not unfairly prejudicial to a party merely because it tends to damage the case of a party or to support the case of an opponent.

55    Second, as Sperling J held in Roach, normally in trials other than before a jury there will be only rare instances where evidence will not be admitted on the basis that it would unfairly influence the mind of the decision maker to admit it. His Honour cited at [52] the following passage from Odgers, Uniform Evidence Law, 3rd Edition at p 443:

…it will be an unusual judge or magistrate who is prepared to concede that a danger exists that he or she might be ‘unfairly prejudiced’ by evidence.

56    Third, notwithstanding that in Papakosmas v R (1999) CLR 297, McHugh J doubted (at [93]) that ss 135 and 136 allows a court to exclude evidence on the ground that its admission might be unfair merely because it presented procedural difficulties for an opposing party, for example, in cross-examination, the course of authority since that time has favoured the view that such disadvantage is open to be advanced as a relevant consideration. I will proceed on that basis. However, as was observed by Gleeson CJ and Hayne J in the same case at [39], I should do so bearing in mind that the court should reject any ‘unacceptable attempt to constrain the legislative policy underlying the statute by reference to common law rules, and distinctions, which the legislature has discarded.’ Accordingly, the absence of an opportunity to cross-examine is not, per se, a sufficient basis to reject the tender of evidence admissible pursuant to either ss 60 or 77 of the Act.

57    With those foundational considerations noted, I turn to what has been submitted by the Respondents to give rise to the discretion in the Court to exclude or limit the otherwise admissible evidence.

RESPONDENTS’ SUBMISSIONS

58    On behalf of all of the Respondent parties Mr McElwaine, (T 817, line 12 through to T 818, line 40) submitted that it would be unfairly prejudicial to the those parties to permit the Applicant to tender this evidence when its use would be as a foundation for Mr Ferrier who is to be called by the Applicant to give expert witness as to the quantum of loss alleged to have been suffered by Jadwan:

Now, you will see what was being asked to be assumed by this expert. And there we see the figure of $2,445,000.

…

And the question is why were those assumptions being posed for Mr Ferrier’s analysis at this point in time. Now, the best place to access that information is the letter of instructions, which is attached to this report at 481. And there we see the correspondence from the applicant’s lawyers; that is:

to provide a further report as to loss, assuming…

…certain matters. And this goes to two aspects of the damages claim. The first is the very substantial loss of profit claim from August 1997, and the second is the Hungerfords v Walker consequential loss claim. So, if we then turn to – again staying with the report of Mr Ferrier, we see, at page 478 – and this is critical, your Honour, to a multimillion dollar claim. But we see, at page 478, subparagraph (c), that Mr Ferrier has undertaken an FME and EBIDT calculation. And we will deal with those, presumably, at some later point in this trial.

…

In undertaking this analysis, he again applies the figure of $2.445 million. And then he reaches the opinion, at (iii)(5), of an estimated additional loss of $3,767,248. So we’re not dealing with small amounts of money, or this which are of little or no consequence. Now, that’s why the applicant finds it necessary to have admitted this evidence from Mr Selby-Hele So can I turn to the – I will call it an estimate – some people have called it a quote; it probably doesn’t matter, your Honour – which you did have at page 8066.

Now, a number of observations are immediately apposite. The first paragraph. Mr Selby-Hele says that he’s pleased to present to you his company’s:

Fee structure and outlines for professional services and cost estimations for a proposed new 51-bed nursing home facility to be constructed on your land in Hobart.

Now, we don’t know – and there is no evidence before this court as to – the form of that facility, the particular land parcel involved or the content of the building and development work. We have no plans. We have no elevations. We have no specifications. We have no particulars whatsoever. But we do know that somebody apparently had some information. If we turn to the second paragraph:

This estimation is based on a brief given to Mark Selby-Hele by Jeff Alexander on 17 March 1999.

There is not one skerrick of evidence in the eight and a half thousand page court book, or thereabouts, which indicates what that brief was. No evidence has been led by the applicant as to the content of that brief, so we are completely and utterly in the dark as to the basis for this estimate. We then go to the third paragraph. We’re told, or it’s represented that:

The estimated cost to design and construct a new 51-bed facility on a reasonably level greenfield site…

Now, we know that the site which is apparently relied upon was not acquired until July 1999. We don’t know if that’s the site. We don’t know if it’s another site…

…

…We had the evidence yesterday from the director – although I use that word advisedly now; he doesn’t seem to know what he directs – that four or five – perhaps six – sites were looked at in 1996 and he couldn’t identify any in 1997, and other than very general evidence – it either could have been in this municipality; could have been in that municipality – we just don’t know.

59    The vice Mr McElwaine drew specific attention to is that expressed at (P 821, lines 20 to 25) was that it was impossible for the Respondents to know in detail the basis upon which what he described as Mr Selby-Hele’s opinion had been formed:

…The vice in that, your Honour, is on what material was it formed? It was formed, on the face of the letter, from a discussion between Jeff Alexander and Mr Selby-Hele, the content of which or even the substance of which is not before this court. It might have been formed on the basis of documents which are not before this court. It might have been formed on the basis of that which is described in the document as the same product specification currently on display at the offices of Aged Care Developments, which is not in evidence. It might have been formed on the basis of similar projects recently completed in and around Melbourne and Country Victoria which is not in evidence.

60    There would be a significant unfair disadvantage to the Respondents in that the persons who were signatories to the three documents and their evidence could not be tested through cross-examination.

61    Counsel for the Fourth Respondent, Mr Gunson SC also addressed the issue of discretion. He similarly referred to the danger of prejudice in allowing the Applicant to rely on the representations in the various documents that had been objected to as a foundation for the giving of expert evidence without there being an opportunity to cross-examine. He referred to what the Applicant might properly have done (P 814, line 40):

The Respondents do not have the ability to test, in any way, this evidence or the validity of it. And that is, in my submission, grossly unfair in circumstances where the Applicant (1) seek to have your Honour award a very substantial amount of money, based on this evidence that we can't test; and (2) has always had the ability to prove the scenario that it wants to run in the ordinary and admissible way. The Applicant could have had an architect come along and say, "here is a design for an average level - a nursing home in 1997 that would comply with the relevant standards of the Building Code in Australia and the accreditation standards for nursing homes in ’98 and 2000 and onwards."

And then they could have adduced evidence of a quantity surveyor or a building surveyor who could say that in 1997 for an average build, it would have cost approximately this to construct the nursing home that the architect has said would comply with all the design standards and the like and could have included estimates of costs for variables, such as the soil types and the like. And we would then have had the opportunity to have our own experts look at that expert and criticise it, accept it in the ordinary way.

THE APPLICANT’S SUBMISSIONS

62    In response, counsel for the Applicant, Mr Pearce SC, submitted that the Court should not proceed on the basis that the proceedings were analogous to a building case; that Jadwan had contracted with Mr Selby-Hele to build a new nursing home facility for the price contained in the quote and that the dispute before the Court relates to unpaid amounts. Mr Pearce submitted:

This case, I need to remind your Honour, is a case of professional negligence against solicitors who, it [is] said, failed to give the proper advice and [it is] said that that caused certain loss.

63    Mr Pearce developed that argument (at P 833 to 834 of the transcript) by reminding the Court that, in respect of the task before it, there were vast numbers of past hypothetical facts that the Court would need to make findings about, and that all parties accepted that to be so. The Court must decide, he submitted, whether Jadwan might have applied for an injunction, what might have been the outcome of that application, and then, assuming Jadwan would have obtained an injunction, consider what Jadwan might have done. Mr Pearce submitted that the High Court had held, on at least two occasions that, in the realm of past hypothetical fact, there may be no alternative but to speculate and engage in conjecture. He submitted the evidence contained in Jadwan’s business records was properly available to be relied upon as the basis of that necessary speculation and conjecture, relevant to what it would have cost Jadwan to relocate.

64    Mr Pearce submitted that the Court should not be under the impression that the evidence in question was relevant to Jadwan’s claim for $7 million in lost profits. He submitted that, contrary to what the Court might have understood on the basis of the Respondents’ submissions, the Applicant’s primary submission was that Jadwan would have continued to operate Derwent Court Nursing Home from the Fitzroy Place premises. That was its primary claim. It was only if the Court was to reject that premise that the cost of moving to a specified site would become relevant.

65    Mr Pearce submitted (at P 834, line 4 of the transcript):

…when we move to scenario B however, which is what these matters go to, Mr Selby-Hele's quote, Mr Calder's estimate of the time it would have taken, these matters go to what additional costs would have been [incurred] in the relocation option.

66    That is, he submitted, the use the Applicant intended for the evidence to the proper measure of the reduction of the $7 million in profits it had claimed under scenario A. The evidence that Mr Ferrier would have a foundation to opine about, if permitted to have regard to the representations in the three documents, was that it would have cost Jadwan in the order of $2.445 million to relocate. That would significantly reduce the loss claimed under scenario B to about $3 million. Mr Pearce explained the Applicant intended to use the material to provide an evidentiary basis for the Court to engage in the necessary speculation and conjecture regarding the cost of relocating, had Jadwan pursued that option, so as to operate Derwent Court from alternative premises.

67    Mr Pearce submitted that the Respondents had been aware of the existence of the three letters since March 2016. He submitted that the Respondents had been on notice of their intended use since at least November 2016, particularly with respect to the reduction of damages calculations in its ‘Scenario B’. They had had ample time and opportunity to provide any contrary evidence of what it might have cost Jadwan to relocate. They had made the choice not to do so.

68    He submitted that the Respondents had not taken any steps to dispute the reasonableness of the assumptions upon which Mr Ferrier had been asked to prepare his expert evidence. In taking no steps other than attempting to exclude the evidence which would establish the basis for those assumptions, the Respondents had made a deliberate forensic decision. Their objections to its admissibility having been rejected, the Respondents could not be heard to say its reception would be unfair. They were bound by the consequences of their own forensic decisions.

CONSIDERATION

69    With respect to the exercise of the discretion to exclude or limit the use of otherwise admissible evidence the correct position is that articulated by Wood CJ at common law in R v Suteski (2002) 56 NSWLR 182 at paragraphs [126] to [127] each case turns on its particular facts, having regard to the character of the evidence involved and the nature of the strength of the potential prejudice.

70    The general discretion to exclude evidence pursuant to s 135 arises only if the probative value of the otherwise admissible evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to a party, be misleading or confusing, or result in an undue waste of time.

71    Only the first of those factors warrants appears to require detailed consideration in these proceedings.

72    A submission that evidence should be rejected as misleading or confusing will generally carry little weight in the case of a trial conducted by a judge alone. In any event no such submission was made by the Respondents.

73    Nor in this instance has any submission been made that the reception of evidence will cause or result in undue waste of time. Indeed, by comparison with the process to what Mr Gunson submitted should properly have been undertaken by the Applicant to establish a foundation for the premises upon which Mr Ferrier might opine, it will shorten the process.

74    I therefore turn to the question of whether the probative value of the otherwise admissible evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the Respondents.

75    I must be cautious about how I express my views about the probative value of the evidence. There may be later dispute as to what weight should be accorded to that evidence and whether it may need to be qualified by reason of a whole range of considerations, not the least that as a matter of common knowledge quotes provided by builders often underestimate actual final costs and projects take longer than expected. I do not wish to prejudge any submissions the Respondents may advance if the evidence is permitted to be adduced.

76    But as the matter currently stands I discern nothing (a) in the manner in which the representations that are contained in each of the three documents have been expressed; or (b) regarding the circumstances of the two persons who might reasonably be supposed to have had personal knowledge of the asserted facts who have made those statements to suggest a want of probative value. Each of the letters containing their respective representations appears to have been sent in the course of arms-length business dealings between Jadwan, represented by Mr Alexander, and persons with authority to speak on behalf of commercial construction companies interested in securing the work of building, or supervising the building of, a new 51-bed premise for Jadwan on a greenfield site, if Jadwan ultimately was to proceed in that manner.

77    It is true that the methodology recommended by Mr Gunson to be the more appropriate way for the Applicant to have established a foundation for Mr Ferrier to opine could have been adopted by it. But, equally, once the Respondents became aware of the intended use of the representations I have decided to admit into evidence and had apprehended that their use for that purpose would involve a significant undervalue or underestimate of the cost of constructing, or the time it would have taken to construct, a new 51-bed nursing home in the late 1990s it would have been equally available to them to have adduced similarly premised evidence to controvert that proposition.

78    However the Respondents did not adopt that course.

79    In respect of the unfair prejudice the Respondents submit they will thereby suffer I accept Mr Pearce’s submission that I am entitled to conclude it was a forensic decision by the Respondents to proceed in reliance on the Court rejecting the tender of these documents. I do not thereby mean to suggest that that was an improper course on their behalf. It was entirely open to the Respondents not to advance an alternative and to simply put the Applicant to proof. However, without expressing any criticism of it, I am satisfied that the course that was undertaken involved a deliberate choice.

80    Responding to Mr Pearce’s submission that the Respondents had been aware of the Applicant’s intention to tender this evidence and to rely upon it as a foundation for Mr Ferrier’s opinions, since November 2016, Mr McElwaine, (P 840) submitted:

Well, the answer to that is so what? The applicant carries the onus. If we take the view that the applicant has produced insufficient evidence, that is the position which we are entitled to take in adversarial proceedings.

81    Any party is entitled in adversarial proceedings to take such a position when the onus of proof lies on the other side but equally every forensic choice carries with it certain consequences. The consequence of making that decision in these proceedings is that the Respondents have no contrary evidence to adduce.

82    In those circumstances I am entirely unpersuaded that the probative value of the otherwise admissible evidence is substantially outweighed by a danger that its admission would be unfairly prejudicial to the Respondents. In that context I give little weight to the asserted loss of opportunity to cross-examine: the more so given that had the makers of the documents been called the Respondents would have maintained the same objection (P 816 lines 4-14).

83    Nor do I accept there is a proper basis to limit the use of that evidence so as to exclude it from being adduced to establish the fact of what had been earlier put by the Applicant to its expert witness Mr Ferrier as an assumption in relation to his expression of opinion regarding the loss suffered by Jadwan.

84     For the reasons I have set out at [69]-[83] above I am satisfied that there is no valid foundation for the Respondents’ submission that there is a danger that its use for that purpose would be unfairly prejudicial to them.

85    Additionally, (assuming, hypothetically, that the Applicant may otherwise succeed on liability) in the context of what inevitably must be a speculative and conjectural exercise of assessing the ‘what if’s in relation to damages it occurs to me to be a significant likelihood that any contemporaneous representations made on an arm’s length commercial basis could be a more reliable basis for an assumption than a conclusion formed after an entirely hypothetical contest between experts briefed to opine as to what it might have cost, or how long it would have taken, to build a new 51 bed nursing home on a greenfield site in Tasmania over 18 years ago.

86    For that and the preceding reasons I reject the Respondents objections to the tender of the three documents. They will be admitted into evidence for all purposes.

87    If the Respondents are advised to seek an adjournment to enable them to adduce responsive evidence to make good their circumstances in that regard, the Court would of course be open to hear any such application.

Associate:    

Dated:    1 September 2017

SCHEDULE OF PARTIES