Avondale Golf Club Inc v Lumley General Insurance (NZ) Limited
[2015] NZHC 1627
•13 July 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-000896 [2015] NZHC 1627
BETWEEN AVONDALE GOLF CLUB INC
Plaintiff
AND
LUMLEY GENERAL INSURANCE (NZ) LIMITED
Defendant
Hearing: 25 June 2015 Appearances:
J E Bayley for the Plaintiff
C R Langstone for the DefendantJudgment:
13 July 2015
JUDGMENT OF NATION J
The applications
[1] These proceedings have been set down for hearing over two weeks beginning
3 August 2015. The parties have begun exchanging briefs. The defendant (Lumley) has filed an application for orders ruling inadmissible all the evidence of Mr Keys for the plaintiff (Avondale) and part of the evidence of Mr Turnbull. In the alternative, they seek orders with regard to further discovery.
Background
[2] From the pleadings, from information contained in briefs provided to the Court with Lumley’s application and from submissions, it is apparent that certain aspects of the background to this application are not in dispute.
[3] Avondale has, for many years, owned and run a golf club in the north eastern area of Christchurch.
AVONDALE GOLF CLUB INC v LUMLEY GENERAL INSURANCE (NZ) LIMITED [2015] NZHC 1627 [13
July 2015]
[4] Avondale’s facilities, including the buildings which are its most valuable assets, were significantly damaged in the earthquakes of 4 September 2010 and 11
February 2011. They also suffered damage in other significant earthquakes including those of 13 June 2011 and 23 December 2011.
[5] Despite that damage and subsequent periods of disruption associated with particular earthquake events, Avondale continued to use the course and its associated facilities including most of the buildings. It is committed to remaining on that site.
[6] Pursuant to cl 2.2 of the insurance policy (the Policy), Lumley agreed to indemnify Avondale for any loss that happened to the insured property, subject to the terms of the Policy.
[7] Lumley also agreed to provide replacement cover in respect of certain property which Avondale had chosen to insure for replacement or reinstatement value. Avondale’s buildings were insured for replacement/reinstatement value in that way.
[8] Pursuant to cl 2.2.1, Lumley’s liability in respect of each event and loss was limited to certain maximums in relation to property damage. In respect of buildings, that maximum was approximately $2,012,000. There is disagreement between the parties as to the extent of damage sustained to Avondale’s buildings in each event.
[9] Clause 2.2.2 of the Policy states:
2.2.2 Basis of indemnity applicable to this section
Payment/Repair/Replacement
We will indemnify You by payment, repair or replacement of your Property at Our option.
(1) For the following Property We will indemnify You on the following basis.
[There is then a reference to certain categories of property which are not at issue.]
(2) For all other Property, we will indemnify You on the following basis:
(a) the reasonable cost of repairing the Property to the condition it was in immediately preceding the Loss; or
(b) the cash amount equal to the reasonable cost of repairing it; or
(c) replacing the Property with similar Property in a similar condition;
or
(d) the cash amount equal to the market value of the Property; or
(e) the replacement cost, but only for that Property designated in the Schedule as being insured for replacement value, subject to the reinstatement clause in the Policy.
[10] Lumley says they have elected to meet their liability under the Policy by making a payment to Avondale. Lumley says that it has done this to the extent of its current liability by making a payment to Avondale for certain repair costs that Avondale has already incurred and by paying $877,306.25 on 11 July 2013 which it said was the pre-event market value of the buildings, less the excess and payments made by EQC. Lumley acknowledges that it has a liability to pay further repair costs for the building up to the maximum available under the Policy when those costs are incurred.
[11] Clause 2.4.2 of the Policy sets out Lumley’s obligations in respect of property which has been insured for replacement or reinstatement value. In that section, reinstatement means:
Where Property is damaged but not Destroyed, the restoration of the damaged portion of the Property to a condition substantially the same as, but not better or more extensive than, its condition when new.
[12] The obligation to provide such reinstatement cover does not apply:
If You elect not to reinstate the Property;
If the work of Reinstatement is not commenced and carried out with reasonable despatch;
Until the cost of Reinstatement has been actually incurred.
[13] Although there was a suggestion in the pleadings that Lumley might be contending Avondale would not be entitled to reinstatement cover because it had not already undertaken the appropriate repairs with reasonable dispatch, Mr Langstone confirmed this was not Lumley’s position. Rather, Lumley has referred to this
limitation because it says its obligation to pay for the cost of repairs will not arise until the cost of reinstatement has been actually incurred.
[14] Avondale has pleaded that Lumley has elected to indemnify by payment and accordingly now owes either:
(a) the cost of repair for each event limited by the sum insured per event; or alternatively
(b) the depreciated cost of repair for each event, again limited by the sum per event (with depreciation being determined after consideration of the age and condition of the elements comprising the buildings).
[15] On that basis, its claim is presently for $5,202,114.41.
[16] Risk Worldwide New Zealand Limited (Risk Worldwide) entered into a consulting agreement with Avondale dated 10 April 2012. Risk Worldwide have been employed as Avondale’s consultant to assist in presenting and settling Avondale’s claims for loss suffered in the Canterbury earthquakes. Avondale has agreed to pay “for such services in the amount of 35 percent of the total payments of any amounts recovered by settlement, or award or judgment plus expenses advanced, exclusive of GST, over and above the likely offer of $2,012,000” by Lumley. That fee is to be calculated on the proceeds received before expenses are deducted and reimbursed. If there is no recovery from Lumley, Avondale will not be responsible for paying the consultancy fee or expenses to Risk Worldwide. If the sums recovered do not cover all expenses advanced, Avondale will not be responsible for any shortfall. Avondale will be responsible for all expenses if it elects to settle the insurance claim or if it instructs Risk Worldwide to stop the presentation of the claim against the advice of Risk Worldwide.
Mr Keys’ evidence
[17] In his evidence, Mr Keys advances the proposition that Lumley’s liability is to pay the repair or replacement cost of the buildings, less depreciation. He adopts an elemental approach to assessing that depreciation, putting forward a percentage
for depreciation against replacement/repair cost. Rather than consider an allowance for depreciation for the buildings as a whole, he calculates it item by item. This has involved looking at different parts of different buildings, referring to alterations or improvements made to the buildings at certain times, estimating the age of the particular parts, estimating the future period over which those parts could still be used and then arriving at a percentage by which the cost of replacement for those particular parts should be depreciated.
Mr Turnbull’s evidence
[18] Mr Turnbull is the President of Avondale. Lumley objects to those parts of the evidence in which Mr Turnbull refers to various parts of the buildings and summarises work or improvements made to them at certain times in the past and says when those changes occurred. The evidence is to be presented in support of Mr Keys’ evidence as to the allowance which he says should be made for depreciation. Those parts of Mr Turnbull’s evidence will be relevant and admissible if Mr Keys’ evidence is relevant and admissible.
Submissions for Lumley
[19] Lumley objects to all Mr Keys’ evidence and part of Mr Turnbull’s evidence, firstly, on the basis that such evidence is irrelevant to the issues which have to be determined and is thus inadmissible.1 Further submissions were as follows:
(i)The evidence from Mr Keys is irrelevant because, pursuant to cl 2.2.2 of the Policy, Lumley can choose how it meets its obligation to indemnify.
(ii)The situation involving these parties and this policy can be distinguished from that dealt with by the Supreme Court in Tower Insurance Ltd v Skyward Aviation 2008 Ltd.2 Given the wording of this Policy, only Lumley has the choice as to how it will indemnify
Avondale.
1 Evidence Act 2006, s 7(2).
2 Tower Insurance Ltd v Skyward Aviation 2008 Ltd [2014] NZSC 185.
(iii)Lumley has chosen how it will indemnify Avondale: by paying the cash amount equal to the pre-event market value of the property in accordance with cl 2.2.2(2)(e) of the Policy. Lumley also agrees it will pay the repair costs for the buildings when those costs have been incurred, subject to limitations under the Policy for each event or each policy period. Mr Keys’ evidence is not relevant to any assessment of market value and his evidence as to depreciated value is irrelevant as to what Lumley might have to pay for replacement or repair costs if Avondale does carry out repairs.
[20] Mr Langstone explained that Lumley was challenging the admissibility of Mr Keys’ evidence to avoid the burden and cost which Lumley would incur in having to brief its own expert to address the issues which Mr Keys is dealing with in his evidence. He said there would be a real benefit to Lumley and to the interests of justice generally, as the exclusion of this evidence could potentially shorten the scheduled hearing by at least one and a half days.
[21] Mr Langstone acknowledged that Lumley could choose not to call expert evidence in response to Mr Keys’ evidence on the basis that, if they are right in the way they are approaching the proceedings, Mr Keys’ evidence will be irrelevant to the determination of issues in the case. He said that Lumley would, nevertheless, have to provide such evidence to the Court out of an abundance of caution.
[22] Avondale has been put on notice as to the potential irrelevance of Mr Keys’ evidence. Mr Langstone acknowledged that, if Lumley’s approach is right, the financial consequences for Lumley of having to address Mr Keys’ evidence could potentially be wholly or partly remedied through an order for costs against Avondale.
[23] Lumley also challenged the admissibility of Mr Keys’ evidence on the basis that he does not have the expertise to express an opinion about the way in which Avondale’s should be calculated, the way in which Lumley should have to meet a liability to pay repair costs, the way in which any allowance should be made against the cost of repairs or what the appropriate allowance should be for depreciation in respect of either the whole or parts of a building. Mr Langstone says that Mr Keys’
involvement in making allowances for depreciation on numerous material damage insurance claims does not mean that he has any expertise in the area.
[24] Mr Langstone submitted Mr Keys’ lack of expertise is reflected in the fact that there is no general professional acceptance of the method of depreciation which he uses. He submits that, to the extent Mr Keys has experience that might qualify him as an expert, it is experience which is almost entirely based outside New Zealand, mainly in the United States.
[25] Consistent with his alleged lack of expertise, Mr Langstone says Mr Keys’ elemental approach to assessing depreciation was criticised by Dunningham J in Prattley Enterprises Limited v Vero Insurance New Zealand Limited.3 In her Honour’s substantive judgment, she stated:
[133] Given my findings as to the appropriate method of calculating Prattley’s loss, I do not need to discuss, in any detail, the differences between the approach of Mr Keys, and the local valuers. However, I observe that the approach used by Mr Stanley is an orthodox approach mandated by the International Valuation Standards and New Zealand valuation practice. The Australian and New Zealand Valuation Guidance Note 13 does not provide support for an elemental approach to depreciation as it consistently refers to the physical life of an asset not of its component parts.
[134] I also record that I placed little, if any, reliance on Mr Keys’ assessment of the appropriate depreciation rate to apply to the individual items. No clear rationale was articulated for the adopted depreciation rate for each element (whether 0 per cent, 10 per cent, 25 per cent or 50 per cent). In the absence of a clear and full explanation of the evidence and assumptions that were relied on to support each depreciation rate adopted, I did not find his evidence about the depreciation rate to be applied to each of the various elements of the building either reliable or helpful.
[26] Lumley also objects to Mr Keys giving evidence on the basis he cannot give evidence as an independent expert because, through Risk Worldwide, he has a direct financial interest in the outcome of the case.
Submissions for Avondale
[27] For Avondale, Mr Bayley submits that, under the Policy, Lumley must immediately indemnify Avondale for its loss or damage. He submits that Avondale
3 Prattley Enterprises Limited v Vero Insurance New Zealand Limited [2015] NZHC 1444.
is entitled to indemnity by way of payment because Lumley has already elected to meet its liability for indemnity in that way. Mr Bayley submitted that depreciated repair costs are the appropriate measure of indemnity under the Policy. Consequently, he submits Mr Keys’ evidence concerning the age of the buildings, repairs and allowance for depreciation is fundamental to an issue in the proceedings. Further submissions on this point were:
(i)Mr Bayley acknowledges Avondale’s entitlement to recover full reinstatement costs, through the replacement or reinstatement cover, only arises once the reinstatement costs have been incurred. He nevertheless contends that, once Lumley elected to meet its liability to indemnify by payment, it was Avondale who could choose the basis on which that payment should be assessed, having regard to the options in cl 2.2.2(2). He submitted, relying on Skyward Aviation 2008 Ltd v Tower Insurance Ltd, that the applicable measure of indemnity under cl
2.2.2(2) must be dictated by the circumstances of Avondale and its election, rather than any election by Lumley.4
(ii) Avondale has chosen to have that payment assessed on the basis of cl
2.2.2(2)(a), that is, on the reasonable cost of repairing the property to the condition it was in immediately preceding the loss.
(iii)Basing the indemnity payment on a market value for the building was inappropriate, particularly where the buildings were damaged from multiple earthquake events. In a situation where it was agreed the buildings had not been “destroyed” within the meaning of the Policy wording but, rather, where the property is repairable, a payment based on market value, is not the appropriate measure of indemnity. Mr Bayley referred to some overseas judgments which supported his argument that market value will not be the appropriate measure of indemnity value where a property can be repaired and the insured has
no intention of selling the property.5
4 Skyward Aviation 2008 Ltd v Tower Insurance Ltd [2014] NZCA 76, [2014] 2 NZLR 713.
5 Lucas v New Zealand Insurance Company Limited [1983] 1 VR 698 (VSC) at 701 per Crockett
(iv)There have been cases in New Zealand where the Court or the parties had recognised that, in terms of the relevant policy, the principles of indemnity required indemnity value to be based on the cost of repair or reinstatement of the property to the condition it was in before the event.6
(v)If the Policy is to be interpreted and applied in the way Avondale contends, all evidence addressing the age and condition of the buildings will be relevant, as would be Mr Keys’ assessment of depreciation. If the Policy is applied in the way Avondale contends for, Mr Keys’ assessment of depreciation will be fundamental to the assessment of the indemnity payment which Avondale says it is entitled to.
[28] With regard to Mr Keys’ ability to give evidence as an expert, Mr Bayley referred to Mr Keys’ involvement in assessing depreciation in more than 10,000 material damage insurance claims over 35 years of handling claims. He said this experience qualified Mr Keys as an expert. He also referred to the recent judgment in Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd, where Dunningham J said that, in respect of depreciation, Mr Keys has “the expertise to assist the Court in
determining the proper approach to take on this issue”.7
[29] With regard to Mr Keys’ independence, Mr Bayley acknowledged that Mr Keys does have a direct pecuniary interest in the outcome of the litigation but says, referring to authority, there is no requirement that an expert be independent. He submitted that Mr Keys’ interest in the outcome of the proceedings should be relevant only to the weight which might be attached to his evidence rather than the
admissibility of that evidence.
J; TJK (NZ) Ltd v Mitsui Sumitomo Insurance Co Ltd [2013] NZHC 298; Reid v Tasmanian
Government Insurance Board [1990] TASSC 26.
6 Marriott v Vero Insurance Limited HC Christchurch CIV-2013-409-1310, 26 November 2013 at [77]; Vero Insurance New Zealand Ltd v Morrison [2015] NZCA 246 at [16]; Morrison v Vero Insurance New Zealand Ltd [2014] NZHC 2344 at [25].
7 Prattley Enterprises Limited v Vero Insurance New Zealand Limited [2015] NZHC 411 at [10].
[30] Mr Bayley referred to observations by the Court of Appeal that relevance can be difficult to assess at a pre-trial stage. He submitted that this Court should be mindful of the Court of Appeal’s observation that:8
Rulings on admissibility are better made at trial, where the Judge has an understanding of the nature and scope of the issues in the litigation and the evidence tendered by both parties.
Discussion
[31] I am not willing to rule Mr Keys’ evidence or, consequently, the disputed
parts of Mr Turnbull’s evidence inadmissible at this stage.
[32] As to Mr Keys’ lack of independence, the Court of Appeal has stated:9
… there may be cases in which the position of the proposed expert is so lacking in independence as to make it obvious that an opinion he or she expresses in evidence will not be able to be substantially helpful, and in those circumstances it may be appropriate to rule out the evidence at the pre- trial stage in order to avoid the costs which may otherwise be incurred in responding to it.
In all the present circumstances of this case, I am not willing to take that step.
[33] To the extent that Mr Keys is giving evidence as an expert, it is his claimed expertise not his independence which qualifies him to do so.10
[34] Other Judges have recognised that the way in which evidence is ultimately given can be relevant in deciding whether a lack of independence requires a Court to reject evidence presented by an expert.11
[35] In Jarden v Lumley General Insurance (NZ) Ltd, there was an attack on the evidence given by a witness called as an expert.12 Kós J stated:13
8 Commissioner of Inland Revenue v BNZ Investments Ltd [2009] NZCA 47, (2009) 19 PRNZ 553 at [45].
9 At [22].
10 Geddes v New Zealand Dairy Board HC Wellington, CP52/97 at [73]-[74], per Wild J;
Commissioner of Inland Revenue v BNZ Investments, above n 8, at [21]-[22].
11 Vero Insurance Limited v Morrison above n 6, at [83]; Morrison v Vero Insurance NZ Limited
above n 6, at [25].
12 Jarden v Lumley General Insurance (NZ) Ltd [2015] NZHC 1427.
13 At [39].
But at the end of the day the hallmarks of an expert witness are two: the objective accuracy of their assessments, and their willingness to consider alternative perspectives. In the case of the former, Mr Cowie’s measurements (if not all his conclusions) were accepted by all other experts as accurate. As to the latter, he made appropriate concessions under cross- examination. I was left with no concerns about Mr Cowie’s compliance with schedule 4 of the High Court Rules, the code of conduct for expert witnesses.
[36] At this stage, Mr Keys’ lack of independence is a matter which may affect the weight to be attributed to his evidence. As the Court of Appeal has noted, an assessment as to the weight to be given to expert evidence where there is a lack of independence “is properly to be made by the Judge in his role as a fact finder”.14
Necessarily, that assessment by a Judge in the role of fact finder has to be at trial.
[37] As to his expertise, Mr Keys claims to have had considerable experience in assessing depreciation in relation to material damage claims. Whether or not that experience is of particular relevance in the New Zealand context may depend ultimately on how the Policy is to be interpreted and applied and the approach required to be taken under New Zealand law on these issues. Only when decisions have been made on those matters of law can the relevance of Mr Keys’ previous experience be properly assessed.
[38] I note that, in Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd, Dunningham J stated:15
It is clear that the approach to depreciation is a live issue in the proceeding, and both Mr Key and Mr Stanley have the expertise to assist the Court in determining the proper approach to take to this issue.
Despite her ultimate criticisms of Mr Keys’ evidence, referred to earlier, Dunningham J did not conclude that his evidence should be simply disregarded as irrelevant and thus inadmissible. In that case, Mr Keys was permitted to give evidence as to his elemental approach to allowing for depreciation.
[39] I am not willing to rule Mr Keys’ evidence inadmissible at this stage either on
the basis of insufficient expertise or lack of independence. Whether or not his
14 Commissioner of Inland Revenue v BNZ Investments Ltd, above n 8, at [23].
15 Prattley Enterprises Limited v Vero Insurance New Zealand Limited, above n 7, at[10].
evidence should ultimately be rejected on either basis will depend on the assessment I make as to the way in which he gives his evidence as an expert and the extent to which that evidence is thus helpful to me in determining the issues I have to deal with. That assessment should be made in the context of all the evidence that is given at trial and the issues as they ultimately emerge.
[40] It will be apparent from the submissions I have referred to earlier that the relevance and thus admissibility of Mr Keys’ evidence will depend on whether or not, in terms of the Policy, the indemnity value of the buildings can, at the option of Avondale, be assessed on a depreciated replacement/repair cost basis. Whether or not that is so will turn firstly on how I interpret and apply the Policy and its relevant clauses.
[41] Avondale’s case, that it can choose how the value of indemnity is to be assessed, also depends on if and how the Supreme Court judgment in Tower Insurance Limited v Skyward Aviation 2008 Limited is to be applied.16 This will determine, in turn, whether it is Avondale or Lumley can choose how an indemnity payment is to be assessed with regard to the options referred to in cl 2.2.2(2).
[42] A number of the observations made by the Court of Appeal in Commissioner of Inland revenue v BNZ Investments are pertinent. There, the Commissioner was seeking to have evidence of certain experts ruled inadmissible in advance of trial. It was submitted for BNZ Investments that, if those witness statements were ruled out, there would be no real possibility of challenging that finding. Further, if it ultimately turned out that the exclusion of the evidence was incorrect, that would occur after the trial and lead to the need for a rehearing.
[43] It was relevant to the Court of Appeal that there were difficulties for the Court in expressing a view on relevant legal tests in advance of the trial, given they did not have a full understanding of all the issues which would arise at the trial or the
evidence that would be presented and there was a high degree of likelihood the
16 Tower Insurance Ltd v Skyward Aviation 2008 Ltd [2014] NZSC 185, [2015] 1 NZLR 341.
outcome in the High Court would be subject to a subsequent appeal to the Court of
Appeal.17
[44] I face those difficulties in being asked to effectively decide now how the Policy should be interpreted and applied and how, if at all, the judgments in Tower Insurance Limited v Skyward Aviation 2008 Limited might be applied to the present situation. I also have regard to the likelihood that, if I make rulings at this stage significantly limiting the way in which Avondale wishes to pursue its claim, those rulings could well be challenged on appeal, resulting in a need either to adjourn the current hearing or a need for a complete rehearing of all issues if such an appeal were to ultimately succeed.
[45] In Commissioner of Inland Revenue v BNZ Investments, MacKenzie J declined to rule on the admissibility of the challenged statements or particular paragraphs of the statements at an interlocutory stage in the proceedings. The Court of Appeal agreed with McKenzie J’s statement “that such rulings on admissibility are better made at trial, where the Judge has an understanding of the nature and scope of
the issues in the litigation and the evidence tendered by both parties”.18
[46] I consider, in the context of this case, my rulings as to how the Policy should be interpreted and applied and as to the relevance of the judgments in Tower Insurance Limited v Skyward Aviation 2008 Limited will be best made when I know what all the evidence is to be in relation to the Policy, the way in which claims have been pursued and the potential costs or losses for which Avondale is to be indemnified in terms of the Policy.
[47] The Courts have noted there may be circumstances in which a ruling as to the admissibility of evidence may be justified to remove the burden and costs which a party will otherwise face in dealing with that evidence.19 In this instance, Mr Langstone has said that, if Mr Keys’ evidence is admitted, Lumley will be able to brief witnesses to respond to it. He has said that he considers the admission of Mr
Keys’ evidence could potentially lengthen the proceedings by approximately one and
17 Commissioner of Inland Revenue v BNZ Investments Ltd, above n 8, at [22]-[24].
18 At [45].
19 Parihoa Farms Ltd v Rodney District Council (2010) 20 PRNZ 8 (HC) at [5].
a half days. It is possible that Mr Keys’ evidence will ultimately be irrelevant to the issues which have to be determined at trial. The potential costs which Lumley will incur in responding to Mr Keys’ evidence are likely to impact on a costs award if Avondale’s claim, based on Mr Keys’ evidence, is unsuccessful.
[48] Lumley has indicated that, in addition to the indemnity payment it has already made, it will meet the repair costs to the maximum extent of its liability under the Policy when those costs have been incurred. In his brief, Mr Turnbull says Avondale intends to continue to operate and reinstate the buildings.
[49] There may ultimately be a real issue as to why Avondale needs to pursue an increased indemnity payment based on the basis which makes Mr Keys’ evidence relevant.
[50] At this stage, it appears to me that, to the extent a trial might result in an award to Avondale of more than $2,012,000.00 by way of an indemnity payment, the major beneficiary of that will be Risk Worldwide. The costs of obtaining that award will be borne by Avondale. Thirty five per cent of the excess over and above
$2,012,000.00 will go to Risk Worldwide. Those costs and the amount payable to Risk Worldwide will then reduce the amount Avondale has available to it for the cost of the repairs or replacement which it is committed to. If those costs are not part of an indemnity payment, they would still be payable by Lumley, subject to the extent of their liability under the Policy when those costs are incurred. Those potential consequences will not necessarily affect my judgment as to how the Policy is to be interpreted and applied in the context of the claim which is currently being pursued. They may ultimately have an impact when/if I have to deal with costs.
[51] The defendant’s application to have all Mr Keys’ evidence and certain parts
of Mr Turnbull’s evidence ruled inadmissible is thus declined.
[52] I do note that, despite the ruling of Dunningham J in Prattley Enterprises Limited v Vero Insurance New Zealand Limited, Mr Keys is intending to give evidence as to how his elemental depreciation approach was used by the valuers in the Morrison v Vero case. In seeking to admit in evidence the depreciation joint
report, Mr Keys is seeking to put in evidence the opinion of other valuers involved in that case without their being called to give evidence in this case. For the reasons articulated by Dunningham J in her judgment, I consider the evidence Mr Keys is proposing to give in paragraph [16] of his brief of evidence is likely to be inadmissible.20 Counsel should consider this further before that brief is read into evidence at trial.
Discovery
[53] Lumley also sought an order requiring Avondale to make discovery of its annual accounts for the years since 1993 and for discovery of all documentary evidence relating to repairs and maintenance carried out on its buildings, including invoices and quotes. Lumley says, with justification, that such documents are relevant. Mr Keys, in his evidence, assumes that such maintenance and repairs were carried out. He also says that the nature and extent of that work affects the extent of the depreciation that should be offset against the cost of repairing the damage done in the various earthquakes, thus affecting the indemnity value which Avondale says Lumley is obliged to make to Avondale. Mr Langstone says these documents were requested from Avondale by letter dated 19 May 2015, without response.
[54] Mr Bayley said that Avondale was endeavouring to obtain those documents that still exist and that he would be doing what he can to ensure they are made available to Lumley by Friday 3 July 2015. He suggested that the Court simply note that discovery was to be made on this voluntary basis and that leave be reserved to Lumley to seek a further order with regard to discovery if that is necessary.
[55] In the hope that it will avoid the need for either of the parties to have to make a further application to the Court, I will make orders now:
(a) granting leave to Lumley to make a further application for discovery; and
(b) requiring Avondale to make discovery to Lumley by no later than 15 July
2015 of:
20 Prattley Enterprises Limited v Vero Insurance new Zealand Limited, above n 7, at [15].
(i) all annual financial statements for Avondale for the years from 31
March 1993 to date; and
(ii)all documents including invoices and quotes relevant to the repairs, maintenance, alterations which are referred to in the evidence of Mr Keys and Mr Turnbull and the evidence they give in relation to Mr
Keys’ elemental depreciation approach.
Costs
[56] The plaintiff will be entitled to costs on this application. Given the initial categorisation of these proceedings, my tentative view is the plaintiff is entitled to costs on this application on a 2B basis. If costs cannot be agreed, submissions can be made in relation to costs for this application after judgment has been given in relation to the substantive proceedings which are to go to hearing on 3 August 2015.
Solicitors:
Rhodes & Co., Christchurch
Jones Fee, Christchurch
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