By Nieva Connell, Partner, Holly White, Associate and Gregor Campbell, Lawyer

Eastbound Estate Pty Ltd v DC Consolidated Investments Pty Ltd [2024] VSC 40

Background

Eastbound Estate (Eastbound) entered into a contract of sale to purchase land from DC Consolidated Investments (DC). Within the contract, was a clause granting a conditional power to DC to terminate the contract if the local council imposed conditions on its planning permit approval that were, in DC’s opinion (and in its “absolute discretion”), too onerous.

DC purported to terminate the contract of sale pursuant to this clause (following the imposition of restrictions by the Council related to access to the land in question) and Eastbound rejected the validity of DC’s termination. Eastbound brought proceedings in the Supreme Court of Victoria regarding the construction of the clause.

Expert Evidence

Relevantly, Eastbound relied on two expert reports of Valentine Gnanakone, a senior traffic engineer, and Andrea Pagliaro, a town planner. DC responded with an expert report of Jason Lee Walsh, a senior traffic engineer, in response to the expert report of Mr Gnanakone, and an expert report of David Crowder, a town planner, in response to the expert report of Mr Pagliaro.

During the trial, DC’s experts faced lengthy cross examination about their impartiality; with Eastbound tendering email correspondence which purported to show Mr Crowder identifying arguments DC could reply upon in advancing their case.

Eastbound’s cross examination of DC’s experts further made it clear that both experts had been influenced by factors outside of their expertise, and by instructions provided to them by DC’s solicitors including:

1. how the conditions imposed by the council would affect tenants on the land;
2. whether leases affecting the land would have to be renegotiated if the conditions were complied with; and
3. DC’s reluctance to further subdivide the land.

Findings

The Court found that DC’s experts’ tendency to stray into areas outside their expertise diminished the probative value of their evidence, and rejected certain areas of their evidence as a result.

The Court also criticised the instructions DC’s solicitors had provided to their experts, stating that they made it inevitable that DC’s experts would be required to opine on areas outside their expertise, and rely entirely on assumptions provided by DC’s solicitors.

Ultimately, the Court favoured the evidence of Eastbound’s experts and found in Eastbound’s favour, concluding that DC’s purported termination of the contract of sale was invalid.

Key Takeaways

This case acts as a cautionary tale to instructing solicitors (and their clients). It highlights the importance of ensuring experts confine themselves to their expertise lest the value of their evidence be undermined, and in particular, that proper impartial instructions must be given.