Tyneside Property Management Pty Ltd & Ors v Hammersmith Management Pty Ltd & Ors [2011] NSWSC 30 (8 February 2011)

Last Updated: 14 March 2011

Supreme Court New South Wales

Case Title:	Tyneside Property Management Pty Ltd & Ors v Hammersmith Management Pty Ltd & Ors
Medium Neutral Citation:	[2011] NSWSC 30
Hearing Date(s):	Tuesday 8 February 2011
Decision Date:	08 February 2011
Jurisdiction:
Before:	Brereton J
Decision:	Affidavit of witness admissible, subject to matters of form, insofar as it describes how the contract would have been performed. Affidavit of witness inadmissible insofar as it relates to costs of completing contract and assumptions on which costs of completing contract are based.
Catchwords:	EVIDENCE - property developer's intentions and plans as to how would have performed a contract had contract not been repudiated - not excluded by opinion rule - relevant and admissible as to course contract would have taken. EVIDENCE - opinion evidence - whether property developer can give expert evidence of prospective lot yield - held: not within specialised knowledge of a property developer. EVIDENCE - opinion evidence - evidence of costs of performing contract had contract not been repudiated - evidence of property developer as to costs of performance - held: evidence from customers of people with specialised knowledge in trades or professions not specialised knowledge. EVIDENCE - opinion evidence - evidence of costs of performing contract had contract not been repudiated computed by extrapolating from costs previously incurred - held: not specialised knowledge as within the province of any reasonably intelligent person.
Legislation Cited:
Cases Cited:
Texts Cited:
Category:	Procedural and other rulings
Parties:	Tyneside Property Management Pty Limited (First Plaintiff) Namlot Nominees Pty Limited (Second Plaintiff) Roy Frederick Haggis (Third Plaintiff) Hammersmith Management Pty Limited (First Defendant) Roche Group Pty Limited (Second Defendant) John Oliver (Third Defendant) Tasmanian Prosperity Investment Pty Limited (Fourth Defendant) Bluegrass Nominees Pty Limited (Fifth Defendant) Nathan Oliver (Sixth Defendant) Frederick James Boswell (Seventh Defendant)
Representation
- Counsel:	Counsel: D.A. Smallbone (Plaintiffs) D.P. O'Connor (Plaintiffs) David L. Williams SC (Defendants) Scott Goodman (Defendants)
- Solicitors:	Solicitors: Moray Agnew (Plaintiffs) Clayton Utz (Defendants)
File number(s):	2003/83732
Publication Restriction:

JUDGMENT (ex tempore)

1	HIS HONOUR: The plaintiffs claim damages for the alleged repudiation by the defendants of contractual arrangements under which the plaintiffs were to be entitled to a share of the profits, calculated according to a formula contained in the contractual documentation, earned from the proposed development of land near West Wallsend known as Pambulong Forest, in respect of which in essence the defendants were the proprietors and the plaintiffs were the project managers - I oversimplify the true description of the roles of each of the parties, but for the purposes of the present ruling, they suffice.
2	Prima facie , if the plaintiffs succeed on liability, their damages will be the net benefits that would have been gained by them had the contract been performed in accordance with its terms, but in the events which have happened have not been derived, less any savings or benefits which they have gained in the events which have happened and which would not have been gained had the contract been performed. However, in the circumstances of a case such as the present, the result so derived would also need to take into account the chance or risk that those benefits would or would not have been derived on account of other supervening events.
3	In any event, it would be necessary for the plaintiffs to prove: (1) what would probably have happened had the contract been performed; (2) what revenue would have been generated by the project; and (3) what costs would have been incurred - in order to enable the net profits, of which they would have been entitled to a share, to be projected.
4	In order to do so, the plaintiffs tender the evidence of Mr Roy Frederick Haggis and for present purposes, in particular, his affidavit sworn 16 July 2010. Mr Haggis is, and at all material times has been, a director of the plaintiffs and was, until the purported termination of the contract by the defendants, a director of the defendant Hammersmith Management Pty Ltd. He claims quite substantial experience as a property developer and a consultant in property development, and some experience as a planning officer and an urban designer. However, his experience as an urban designer and a planning officer was in South Australia, and at least the first decade of his experience as a property development consultant until 1980 was also in South Australia.
5	His evidence contained in the subject affidavit appears to be directed primarily to three topics. The first is the course that the project would have taken but for the alleged repudiation, that is to say had the plaintiffs remained project managers and the contract been performed according to its terms. The second is to demonstrate the lot yield that would have been generated by the project. That lot yield, in due course, informs the evidence of land value that will ultimately inform the assessment of the projected revenues to be generated by the project. The third broad topic addressed by the affidavit is the projected costs of completing the development.
6	As to the first of those topics, it seems to me that a director of the plaintiffs -probably even one without project development experience and skills - would be entitled to give evidence of the plaintiffs' intention and plans, and how the plaintiffs would have performed the contract had they been permitted to do so. Accordingly, in so far as the affidavit describes in substance how the plaintiffs would have managed and implemented the project had the contract remained on foot, its contents are relevant and, subject to any questions of form, therefore admissible.
7	As to the second topic - that is, the lot yield which the development would have generated - that is a matter not necessarily within the expertise of a property developer. No doubt, property developers form broad assessments of the yield that might be derived from a development site, but that is a different thing from having the expertise to plan and calculate with relative precision how a development might be planned to yield its highest and best use. Assessments of lot yield necessarily require knowledge of relevant planning considerations and constraints. That expertise, it seems to me, resides with land economists and planners, rather than with project developers. Mr Haggis' experience as an urban designer did involve the design of urban and rural subdivision projects for private developers and the South Australian Housing Trust in South Australia, but many decades ago. There is nothing to establish that that experience is transportable in locality and in time to the Hunter Valley and its particular planning considerations and constraints nearly fifty years later.
8	Insofar as the evidence of lot yield states assumptions which form the basis of other admissible evidence given by Mr Haggis, I would have admitted it, simply as stating the relevant assumptions but not as evidence of their truth. Insofar as such assumptions are mathematical conclusions arrived from dividing available areas by lot sizes, that involves no application of expertise and would not be admissible opinion evidence.
9	I turn then to the third and probably crucial topic so far as this affidavit is concerned, namely, the evidence of the costs associated with completion of the development. That evidence is patently opinion evidence. B-eing the principal of a party, Mr Haggis is unable to comply with the expert witness code. However, in my view that does not disqualify a party - or a person interested in a party - from giving opinion evidence where otherwise qualified to do so, and where that evidence is otherwise admissible, although obviously such evidence will often, though not invariably, be of less weight than that given by independent experts.
10	Mr Haggis' opinions as to the costs of completing the development appear to be derived in two ways. One - typically introduced by the words "based on my experience" - seems to be founded on his experience as a property developer of what various contractors, consultants and tradespersons are likely to charge. The other is founded on what has been charged so far or what has been quoted by such consultants, contractors or tradespersons, which he then extrapolates having regard to time, area or size to the remainder of the development.
11	As to the first of those approaches, generally speaking I do not think that a customer who receives and is charged for services by a professional or tradesperson is qualified as an expert to give opinion evidence as to what are the reasonable costs of that professional or trade service. For example, the costs of medical services are not to be proved by calling patients to say what in their experience a doctor charges. The costs of legal services are not to be proved by calling clients to say what in their experience a lawyer charges. They are proved by calling persons qualified in the relevant profession or trade, to give evidence of the practices of that profession or trade. Accordingly, I do not think that a property developer, however experienced, is appropriately qualified to give evidence of what developers are charged by consultants, contractors and the like in providing services to a developer. Evidence of the first category is therefore not admissible.
12	As to the second category, extrapolations according to area, time, size and the like do not involve the application of any specialised body of knowledge in which a property developer is qualified by study, training or experience to give expert evidence. It is a mathematical, logical process of which any intelligent person is capable. It is not the specialised province of a property developer to do so. It may well be that the type of process described by Mr Haggis in his affidavit is undertaken by him and other property developers in preparing a budget for a project, but the assessment of damages is concerned not with budgets but with the reasonable costs and reasonable projections of profit, which should be informed by experts in the relevant fields rather than by the projections of a property developer based on quotes obtained from the relevant experts and deduced from them.
13	I have given some consideration as to whether - since costs obviously reduce damages - Mr Haggis' evidence in this respect should be received effectively as an admitted minimum position. However, I do not think that the plaintiffs wish to tender it on that basis. It would, of course, be open to the defendants to tender relevant parts as admissions if they were minded to do so, and it does not appear to date to be seeking to do so.
14	As it follows that the evidence of costs given by Mr Haggis will be rejected, his evidence as to lot yield - which I would otherwise have limited to being a statement of the assumptions that he made - does not found any relevant opinion and should also therefore be excluded.
15	It follows that, insofar as Mr Haggis' affidavit describes how the plaintiffs could and would have performed the contract, it is, subject to any questions of form, admissible; but insofar as attempts to give evidence of the costs of completing the contract, it is not and insofar as it sets out assumptions on which those costs are based, those assumptions are irrelevant.
16	The parties should now review their objections and responses in the light of this ruling. To the extent they remain unable to agree where any particular objection falls, I shall review it.

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