Commonwealth Bank v Iinvest (No 7)

Mr King of counsel seeks leave to read an affidavit of Richard Victor Ivey sworn on 19 January 2017 which annexes Mr Ivey's expert report dated 12 January 2017.

Mr Ivey is a chartered accountant by profession and according to his curriculum vitae is an agricultural consultant. In his CV he lists his special expertise as including the following:

His report expresses opinions and conclusions about the amounts necessary in today's values to restore the cross‑claimants to the property they say they were forced to divest themselves of because the bank failed to accede to their requests that they be permitted, with the co-operation of the bank, to implement a plan for trading out of the financial difficulties they found themself in in April and May 2008. Their plan has been referred to for ease of reference in these proceedings as “plan A”.

As I have previously recounted, in other judgments of an interlocutory nature in these proceedings, Davies J, who was managing this litigation in the possessions list, made directions in 2015 for the exchange of expert evidence.

Uniform Civil Procedure Rules 2015 (NSW) r 31.28(1) provides that:

In making orders for the management of the case, Davies J imposed what has been referred to as a “guillotine order” whereby no further evidence could be exchanged after a stated date in 2015 without prior leave of the Court having been obtained.

The important consideration for present purposes is that, his Honour having made orders for the exchange of evidence including the service of experts' reports, Mr Ivey's report is not admissible except with my leave.

By force of r 31.28(4), I am not to give leave unless I am satisfied in the circumstances of this case, in relation to this report, “there are exceptional circumstances that warrant the granting of leave”. I should record that Mr King has very properly eschewed any argument that Mr Ivey's report "merely updates" the earlier report of a Mr Firth, even though Mr Ivey's report has been referred to in correspondence as being “supplementary” to Mr Firth's report.

There was a significant difference in the approach that each of Mr Firth and Mr Ivey were asked to adopt in expressing their opinions. Mr Firth, it might be said, was asked to first assess the cash flow position of the cross‑claimants assuming plan A had been adopted, and to assess what was described as economic loss flowing from the bank's failure to adopt plan A. Mr Ivey has been asked to approach it from another angle. He has been asked, as I have said, to assess the loss in terms of the cost of reacquisition and re-establishment of the grazing enterprise.

Black J has helpfully collected relevant authorities concerning the operation of r 31.28(4) in his decision in Correa v Whittingham [2012] NSWSC 266 at [11], including San v Rumble (No 2) [2007] NSWCA 259. His Honour has described exceptional circumstances in the following terms:

It should be borne in mind that the rationale of r 31.28(4) is to further the overriding purpose of civil litigation in New South Wales as established by Civil Procedure Act 2005 (NSW) s 56. Mr King relies upon a confluence of circumstances to establish the requisite exceptional circumstances. This is not an unusual approach. Seldom will one particular circumstance standing alone amount to exceptional circumstances. It is for this reason that Black J emphasised that the decision is sensitive to the particular facts of the given case.

Mr King has read the affidavit of his instructing solicitor, Mr Roderick Storie, of 2 February 2017. Although Mr Storie had acted for Mr Harker‑Mortlock over the years in different matters, as I understand his evidence, he had not been asked to assume the carriage of this matter until August 2016. I am aware from having read the decision of N Adams J given on 16 August 2016 ([2016] NSWSC 1097) that at or around that time solicitors previously acting who had retained Mr Firth withdrew because they formed the view that they were not and could not be, as it is euphemistically put from time to time, properly instructed.

In any event, Mr Storie assumed conduct of the proceedings, secured an adjournment from N Adams J and decided to retain Mr King as counsel. For a variety of circumstances, including the reluctance of the previous solicitors to disgorge the file, and Mr King's unavailability for an early conference, a conference with counsel could not take place until 22 and 23 November 2016. I interpolate that despite the difficulty in obtaining the file, Mr Storie had been provided with a copy of the Court book of some four volumes which had been prepared for the purpose of the earlier hearing.

Mr White argues that these circumstances do not in any sense amount to exceptional circumstances. He says given the consideration that the matter was fixed for hearing and ready to proceed in August last year it is not satisfactory that it took until January of 2017 to obtain the up‑to‑date report. He also argues so far as discretionary considerations are concerned that with great respect to Mr Ivey that the matters of valuation are outside the range of his expertise and it cannot be said therefore that the opinions expressed are wholly or substantially based upon his branch of special knowledge.

Mr King in reply says that the report is not a valuation report and that the assessments and quantifications made are within the purview of the chartered accountant. I interpolate that I have received valuation evidence, being exhibits G to M, however none of the recent valuations in that series values Yulgilbar and that part of Blackburn that has been sold since this dispute arose.

Having said that, the circumstance of a change of legal advisor is not of itself an exceptional circumstance. I do not regard it as relevant with respect that experienced lawyers more recently involved have formed a different view as to how best to present the cross‑claimants’ case from their equally experienced predecessors. Indeed, the circumstance that fresh eyes may wish to adopt a fresh approach is not exceptional but is understandably commonplace.

I accept that the evidence could have some importance in the cross‑claimants’ case and that given what is now an inevitable adjournment, the defendant would have the opportunity to meet it if it so chose; so, although there is presumptive prejudice at this time, there is, it seems to me, no real prejudice to the plaintiff. It is understandable that the plaintiff has not gone to the expense of obtaining a report in response given the circumstances of this case and the circumstances in which this later report has come into existence.

I am of the view that exceptional circumstances have not been shown in the particular circumstances of this case.

I should also say that, with no disrespect whatsoever to Mr Ivey, I am of the view that the report in large measure depends upon the accurate valuation of the divested property. Virtually the whole cost of restoring the cross‑claimants to the position they would have been in if the bank had allowed them to successfully pursue plan A depends upon accurate valuation of the property divested, on their case, on a sale forced by the bank. It seems to me that despite Mr Ivey's impressive qualifications and experience, I am entitled to know that there is a learned profession of registered valuation and that registered valuers are frequently called to give evidence in court as to the value of property at different times.

It would seem to me that were I called upon to make a decision about whether Mr Ivey's opinions as expressed in this report are wholly or substantially based upon his specialised knowledge, I would rule that they were not. And that's a factor, I think, as Mr White argues, which is relevant to the question of whether leave should be granted.

In the circumstances, I reject the affidavit of Mr Ivey sworn on 19 January 2017 which may be marked for identification and returned to Mr King.