Body Corporate 169791 v Auckland City Council HC Auckland CIV-2004-404-005225

[2010] NZHC 2407

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2004-404-005225

BETWEEN  BODY CORPORATE 169791 & ORS First Plaintiffs

ANDMAGDA FODERMAYER & ORS Second Plaintiffs

ANDAUCKLAND CITY COUNCIL First Defendant

ANDLINES DESIGN LIMITED Second Defendant

AND  STEVE MITCHELL

Third Defendant (Claim Discontinued)

ANDSYMPHONY GROUP LIMITED, SYMPHONY PROJECTS LIMITED, WAIMARIE MANAGEMENT LIMITED AND GLANVILLE INVESTMENTS LIMITED

Fourth Defendants

AND  ONYX GROUP LIMITED

First Third Party (Claim Discontinued)

ANDGENERAL MANUKAU ENTERPRISES LIMITED

Second Third Party (Claim struck out)

ANDALUMINIUM CITY (PENROSE) LIMITED

Third Third Party (Claim Discontinued)

ANDMATTHEW VESEY (T/A CLADRITE DEVELOPMENTS)

Fourth Third Party

ANDFIRE ENGINEERING CONSULTANTS LIMITED

Fifth Third Party (Claim Discontinued)

ANDGREG ANTHONY THOMPSON (T/A HITEX PLASTERING)

Sixth Third Party (Claim Discontinued)

BODY CORPORATE 169791 & ORS V AUCKLAND CITY COUNCIL HC AK CIV-2004-404-005225 21

December 2010

AND  RON WRIGHT & ASSOCIATES

Seventh Third Party (Claim Discontinued)

AND  VERO LIABILITY INSURANCE

Eighth Third Party (Claim Discontinued)

Hearing:         14 December 2010

Appearances: L J Douglas for First Defendants

G J Beresford for Plaintiffs
S A Grant and B R Saldanha for Fourth Defendants

Judgment:      21 December 2010 16:00:00

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 21 December 2010 at 4:00 pm

pursuant to R 11.5 of the High Court Rules.

Registrar / Deputy Registrar

Date.....................................

Solicitors:           Grimshaw & Co, P O Box 6646 Wellesley Street, Auckland 1141

Fax: [phone] – G Beresford
Heaney & Co, P O Box 105391, Auckland 1143

Fax: [phone] – L Douglas

Lowndes Associates, P O Box 7311 Wellesley Street, Auckland 1141
Fax: [phone]

Counsel:             S A Grant, P O Box 4338 Shortland Street, Auckland 1140

Fax: [phone]

[1]      The plaintiffs are the body corporate and unit owners of an apartment block in Auckland.  It has suffered damage from water ingress and will require substantial remedial work.  An eight-day fixture is to begin in April 2011.  Recently, however, the plaintiffs have settled with the first defendant, the Auckland City Council, and the second defendant, Lines Designs Limited.   They wish to continue their claim against the fourth defendants who are now in liquidation and against whom they have obtained leave to continue.  It appears that, until recently, the fourth defendants have done as little as possible by way of preparing for trial.   They last filed a statement of defence in 2005 (notwithstanding amendments since then to the statement of claim) and have not served evidence.  The apparent strategy has been to “piggy back” on the work done by other parties, particularly the Auckland City Council.  Now, however, with the Auckland City Council exiting the proceedings as a result of the settlement agreement, the fourth defendants wish to amend their pleadings and also to call witnesses previously briefed by the Auckland City Council and for whom briefs of evidence have already been provided.

[2]      I have been asked to determine the following applications:

(a)       By the first defendant for leave to adduce further evidence; (b)           Directions regarding subpoenaed witnesses;

(c)       Leave to amend their statements of defence.

[3]      There are, in addition, the following applications extant:

(a)       By the fourth defendants for a stay of execution of Lang J’s costs

award;

(b)By plaintiffs to strike out the fourth defendants’ defence for non- payment of the costs.

First defendant’s application for leave to adduce further evidence

[4]      Having  settled  with  the  plaintiffs  the  Auckland  City  Council  wishes  to continue its cross-claim against the fourth defendants.   However, it seeks leave to

adduce evidence of the settlement agreement between it and the plaintiffs, which will form the basis for its cross-claim.

[5]      That application is not opposed and I make the order by consent that the Auckland City Council has leave to adduce the evidence of Sally Margaret Grey. Also by consent, costs are reserved.

[6]      The fourth defendants, however, may wish to file evidence in reply in relation to the reasonableness of the settlement.  This is resisted by the plaintiffs and the first defendant largely because of the long and unsatisfactory history of the fourth defendants’ performance in this case.  It is possible, however, that the parties may be able to agree on this issue.   The matter is to be listed in the Duty Judge List at

10:00 am on 28 February 2011 on this point alone, in the expectation that parties will have agreed as to what further evidence, if any, the fourth defendants should be able to adduce.

Fourth defendants’ application for directions regarding subpoenaed witnesses

[7]      Because of the first defendant’s changed focus in this proceeding it no longer intends to call all of the witnesses for whom briefs have already been provided. However, the fourth defendants are now in the position of having to assume primary responsibility for the defence of the claim and they wish to adduce evidence from some of the witnesses previously briefed by the first defendant.  They seek an order that they be permitted to call and lead evidence from such witnesses.

[8]      The first defendant is agreeable to the fourth defendants subpoenaing these witnesses but asks that the Court orders the fourth defendants to meet the reasonable professional fees that any of the professional witnesses would have been entitled to charge had they been giving evidence for the first defendant.  Ms Douglas, for the first defendant, submitted that jurisdiction to make such an order existed under Regulation 8(2) Witnesses and Interpreters Fees Regulations 1974, which provides that:

Where the amounts payable under these regulations are fixed by the Court, the Court may authorise those amounts to be increased in any case where it considers that by reason of exceptional circumstances it is desirable to do so.

[9]      Ms Grant did not disagree that there was jurisdiction to require a higher amount to be paid to the expert witnesses.   However, she submitted that the circumstances were not exceptional.

[10]     Mr Beresford opposed allowing the witnesses to be called together on the basis that it would be contrary to the scheme and objectives of the High Court Rules which envisage parties openly exchanging evidence and risking the consequences at trial if they fail to do so.  In essence, he submitted that the fourth defendants have done practically nothing throughout the proceedings, sought to “piggy back” on the work done and expense incurred by the first defendant and now wishes to take advantage of that evidence.

[11]     Whilst one can sympathise with the frustration the plaintiffs clearly feel about the tactics adopted by the fourth defendants in this case, this situation is far from uncommon.  This may be an extreme case but in principle there can be no objection to a party subpoenaing witnesses that were expected to be called and now are not because of a settlement between other parties.

[12]     Nor do I see the circumstances as so exceptional as to justify departure from the fees payable to expert witnesses under the regulations.

[13]     The order sought at paragraph 1(a)(d) of the fourth defendants’ application is

granted.

Fourth defendants’ application for leave to amend statements of defence

[14]     Since the fourth defendants last filed a statement of defence in 2005 there have been amendments to the statement of claim and amendments to the first defendant’s statement of defence and, of course, the settlement between the plaintiffs and first defendant.

[15]     The orders sought at paragraph 1(a)(i) and (ii) are granted by consent.

[16]     Leave to amend in accordance with paragraph 1(a)(v) of the application is also granted by consent, with the proviso (for the avoidance of doubt) that these changes do not include any new affirmative defences.

[17]     Leave  to  amend  under  paragraph  1(a)(iii)  is  opposed.    This  proposed amendment  would  see  eight  new  particulars  of  contributory  negligence  added. Ms Grant submitted that these pleadings have been taken straight from the first defendant’s  current  statement  of  defence  so  there  can  be  no  prejudice  to  the plaintiffs, who were already facing these allegations.  Mr Beresford, however, says that the proposed amendments would significantly prejudice the plaintiffs because they would substantially expand the scope of the trial.

[18]     It is true that the proposed amendments appear in the current statement of defence by the first defendant and to that extent are allegations already known to the plaintiffs.   However, these allegations were first made by the first defendant on

22 July 2010.    Negotiations  between  the  plaintiffs  and  first  defendant  began  in September 2010 and concluded with a settlement agreement in early October 2010. As a result, the plaintiffs have not, in fact, been facing these allegations for very long at all and, given the short time frame between the pleading in July 2010 and the commencement of negotiations in September 2010, would not have had the opportunity to compile a substantive response to them.   In these circumstances, I accept Mr Beresford’s concerns that they are effectively facing these allegations in a substantive way for the first time now.  I consider that it would be unfair to require the plaintiffs to deal with these allegations at such a late point.  Further, I think it likely that they will expand the ambit of the evidence.  I therefore decline leave to amend to add further allegations of contributory negligence.

[19]     The leave sought at paragraph 1(a)(iv) is to add further affirmative defences. The first is a further limitation defence.  However, Mr Beresford accepted that this effectively related to defects pleaded in amended statements of defence since 2005, when  the  fourth  defendants’ original  statement  of  defence  was  filed.    In  those circumstances I allow the proposed amendment to the sixth affirmative defence.

[20]     The fourth defendants then seek leave to add as a seventh affirmative defence the issue of betterment and as an eighth affirmative defence the issue of volenti. These allegations are also taken from the first defendant’s current pleading and also appeared for the first time in the first defendant’s amended statement of defence filed in July 2010.  I also consider that these are issues which the fourth defendants have simply raised too late.  Although they may have been raised by the first defendant in

July 2010, it is obvious from the settlement negotiations that followed soon after that the plaintiffs have not been required to turn their minds to these allegations and it is unfair to require them to do so now, so close to trial.  Leave is declined in respect of these proposed amendments.

Application by fourth defendants to stay execution of costs judgment and by

plaintiffs to strike out fourth defendants’ defence

[21]     In a decision 17 August 2010 Lang J made an award of costs against the fourth defendants in respect of the fourth defendants’ unsuccessful application to strike out the plaintiffs’ claim.   The costs have not been paid and, given that the fourth defendants are in liquidation, are not likely to be paid.   One of the fourth defendants, Pakenham Group Limited, has appealed the costs award and paid the security for costs on that appeal.  It wishes to stay any further action by the plaintiffs in respect of the costs award.

[22]     The plaintiffs, for their part, wish to oppose the application for stay and have in turn applied to strike out the fourth defendants’ defence for non-payment of the costs.   The fourth defendants wish to oppose that application but Ms Grant has indicated that they may wish to file evidence regarding the limitation defence and the reasons for non-payment of the costs.  The fourth defendants would need until mid- January 2011 to file such evidence.

[23]     By consent I adjourn both applications to a two-hour fixture in early February

2011, preferably before Lang J.  In addition, the fourth defendants may file evidence in support of their notice of opposition by 5 pm, 24 January 2011. The plaintiffs may

reply if they wish by 5 pm, 1 February 2011.

P Courtney J

Solicitors: