Body Corporate 325261 v McDonough

[2014] NZHC 1821

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-8000 [2014] NZHC 1821

BETWEEN

BODY CORPORATE 325261

Plaintiff

R W COOKE AND OTHERS Second Plaintiffs

AND

JAMES MCDONOUGH First Defendant

Continued…

Hearing:	28 and 29 July 2014
Counsel	G J Kohler QC and C Baker for Plaintiffs J R J Knight and D J Barr for Third Defendant D S McGill for Fifth Defendant (attendance excused) S Mills QC, B O'Callahan and A C Poole for Sixth and Seventh Defendants
Judgment:	29 July 2014

ORAL JUDGMENT OF KATZ J

Solicitors:        Price Baker Berridge, Auckland

Simpson Grierson, Auckland

Carter Kirkland Morrison, Auckland

Duncan Cotterill, Auckland

Counsel:          G J Kohler QC, Shortland Chambers, Auckland

S Mills QC, Shortland Chambers, Auckland

Copy to:           James McDonough

BODY CORPORATE 325261 v MCDONOUGH & ORS  [2014] NZHC 1821 [29 July 2014]

MAUNGA REI NZ LIMITED

Second Defendant AUCKLAND COUNCIL Third Defendant

GARY BICKERTON Fourth Defendant RACHEL VENABLES Fifth Defendant

STEPHEN         MITCHELL         ENGINEERS LIMITED

Sixth Defendant

STEPHEN ROBERT MITCHELL

Seventh Defendant

MACDONALD       BARNETT       PARTNERS LIMITED

Eighth Defendant MICHAEL SIMPSON Ninth Defendant

FRAMERITE INSTALLATIONS LIMITED

Third Third Party

Introduction

[1]      These proceedings concern a 130 unit residential apartment building, known as the C-Vu apartments, on the corner of Hopetoun and Day Streets in Auckland. The first plaintiff is the body corporate of the unit title development and the second plaintiffs are the various individual apartment owners.

[2]      The proceeding was initially commenced as a leaky building claim, although claims relating to structural and seismic issues were subsequently added.  There are currently nine defendants and five third parties.  Recently, shortly before a 10 week trial of the proceedings was due to commence, the plaintiffs settled with all of the defendants save for the structural engineers, Stephen Mitchell Engineers Limited and Mr Stephen Robert Mitchell (together referred to as “SML”).  The plaintiffs claim that SML’s failings contributed to weathertightness defects in the building and, in addition, that SML are primarily liable for certain structural seismic defects.

[3]      The trial between the remaining parties is now scheduled to commence on

4 August 2014, with an estimated hearing time of eight weeks. This judgment relates to an application by the plaintiffs for leave:

(a)       to discontinue their claims against those defendants they have reached settlement agreements with;

(b)      to file an amended statement of claim; and

(c)       to call certain supplementary evidence. [4]      I will consider each issue in turn.

Discontinuance

[5]      The plaintiffs seek leave to discontinue their claims against the defendants they have settled with (the first, second, third, fourth, fifth, eighth and ninth defendants).  The matter is complicated somewhat by the fact that SML has cross claims against the first to fifth defendants.

[6]      SML does not oppose the plaintiffs discontinuing their claims against the various defendants they have settled with, provided that the first to fifth defendants remain parties to the proceedings and the claims as pleaded against them in the ninth amended statement of claim (“9AMSOC”) remain on foot to the extent necessary for the purposes of SML’s cross claims.

[7]      I am satisfied  that granting leave to the plaintiffs to discontinue their claims against  the  first,  second,  third,  fourth,  fifth,  eighth  and  ninth  defendants  is appropriate.    SML will  not  be prejudiced,  as  r 15.25  of  the  High  Court  Rules provides that if a plaintiff discontinues a proceeding in which a defendant has previously issued a cross claim, the discontinuance does not affect the continuation of the proceeding in relation to that cross claim.

[8]      Accordingly, regardless of any discontinuance by the plaintiffs of their claims against  the  first  to  fifth  defendants,  those  parties  will  remain  parties  to  the proceedings for the purposes of SML’s cross claims.  For the avoidance of doubt, as a condition of leave to discontinue, any current pleadings relating to the plaintiffs’ claims  against  the  first  to  fifth  defendants  are  to  remain  on  foot  to  the  extent necessary to enable the relevant parties to either pursue or defend SML’s cross claims against the first to fifth defendants.

The plaintiffs’ application for leave to file a 10th amended statement of claim

Leave to amend pleadings – relevant legal principles

[9]      No amended pleading may be filed after the close of pleadings without the leave of a Judge.1     The plaintiffs accordingly seek leave to file a 10th  amended

statement of claim (“10AMSOC”) as pleadings have closed.

1      High Court Rules r 7.7.

[10]     Previous case law has identified a number of factors that should be taken into account in determining whether it is appropriate to grant leave to file an amended statement of claim.   It is generally recognised that the paramount consideration is that the parties should have every opportunity to ensure that the real controversy

goes to trial so as to secure the just determination of the proceeding.2    Due regard

must also be had to whether the proposed amendment will cause significant delay or prejudice another party.3    Even where serious prejudice and significant delay will arise, an amended pleading may nevertheless be permitted if the proposed claim has substantial merit and will not cause injustice to the defendants.4

[11]     The Court of Appeal in Elders Pastoral Ltd v Marr stated that an applicant must surmount three hurdles in order for leave to amend pleadings to be granted:5

(a)       The amendment must be in the interests of justice.

(b)      The amendment must not significantly prejudice the other party. (c)   The amendment must not cause significant delay.

[12]     Another relevant factor in considering whether to grant leave or not is the merit, or absence thereof, in a proposed amended pleading.6   The impact of granting the   amendment   on    case   management   issues   must   also   be   taken   into account.  Consideration  must  also  be  given  to  whether  a  proposed  amendment includes a fresh cause of action and whether or not any fresh cause of action is

statute barred. The timing of an application for leave to amend is also relevant.

2      See Shanton Apparel Ltd v Thornton Hall Manufacturing Ltd [1989] 3 NZLR 304 (CA) at 309; Chilcott v Goss [1995] 1 NZLR 263 (CA) at 272-273; Marr v Arabco Traders Ltd (No 8) HC Auckland A1195/77, 12 March 1987 affirmed on appeal in Elders Pastoral Ltd v Marr (1987) 2

PRNZ 383 (CA).

3      Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA).

4      Body Corporate 177519 v Auckland City Council HC Auckland CIV-2005-404-5563, 24 May

2011.

5      At 385 and as set out by Ellis J in Body Corporate 177519 v Auckland City Council HC Auckland CIV-2005-404-5563, CIV-2006-404-3267, 24 May 2011 at [12].

6      Fordham v Xcentrix Communications Ltd (1996) 9 PRNZ 682 (HC) at 683.

[13]     As Mr Mills QC submitted, on behalf of SML, in reliance on Swain-Mason v Mills, there is a heavy burden on a party who seeks to raise a new and significantly different case at the opening of the trial.7   In that case the trial Judge had allowed an amendment at the commencement of the trial which resulted in the trial having to be adjourned.  The English Court of Appeal allowed an appeal, noting that a heavy onus lies on a party seeking to make a very late amendment to justify it, as regards his

own position, that of the other parties to the litigation, and that of other litigants in other cases before the Court.  The continuing inadequacy of the pleading in that case, even post amendment, was also a significant factor.

Overview of proposed amendments

[14]     Many of the proposed amendments to the 9AMSOC are uncontroversial, as they arise out of the settlement that has been reached between the plaintiffs and the other defendants and the associated discontinuance of the plaintiffs’ claims against those defendants.   Other proposed amendments are of an updating or corrective nature.  Indeed some of the changes result in a reduction of the claim against SML. Several changes are, however, objected to as either introducing new causes of action or unfairly prejudicing SML, given the imminence of the trial date.

[15]     I will address each of the specific changes objected to in further detail.  I note

at the outset, however, that I do not accept SML’s submission that the proposed

10AMSOC raises any new causes of action.   Rather, I accept Mr Kohler QC’s submission on behalf of the plaintiffs that the core pleadings regarding the duties of care owed, the defects in the building, the alleged breaches by SML and the remedial works  required,  are  the  same  in  the  proposed  10AMSOC  as  they  were  in  the

9AMSOC.

7      Swain-Mason & Ors v Mills & Reeve [2011] EWCA Civ 14 (citing Worldwide Corporation Ltd v

GPT Ltd & Anor [1998] EWCA Civ 1894).

[16]     In particular, the core allegations are as follows:

Plea	9AMSOC	10AMSOC
SML owed  a  duty  of  care  to  exercise reasonable care and skill in: -    Plans -     Observation -    Producer Statement	Paras 90 and 98	Paras 42 and 50
SML breached duty of care re: -     design -    construction	Paras 91 and 99	Paras 43 and 51
Defects particularised: Defects 27-48	Para 27	Para 25
Breach:   plea   of   breach   of   Building Act/Building Code	Para 28	Para 26
Breaches specific to sections of Building Code	Para 28	Para 27
Plea of remedial works required	Para 31	Para 29

[17]     I do not overlook SML’s submission that although the proposed changes to the  pleading  may  appear  relatively  minor  on  their  face,  appearances  can  be deceiving.    Further,  I  accept  that  amendments  to  a  pleading  can  have  a  very significant prejudicial effect even if they do not raise a new cause of action.   I also note SML’s submission that it is only when some of the proposed amendments are viewed together with the plaintiffs’ proposed supplementary evidence, that the true magnitude and significance of the changes objected to can be seen.

[18]     Against that background, I now turn to consider SML’s specific objections to

the proposed amendments.

Claim for general damages

[19]    The 9AMSOC pleads that the plaintiffs have and will suffer stress and inconvenience in the future such that they are entitled to general damages.8    The

amounts sought are as set out in Schedule I of both the 9AMSOC and proposed

8      Refer paras 97 and 105 of the 9AMSOC.

10AMSOC.  The quantum sought in relation to each individual plaintiff is said to be in accordance with the “general damages tariff” as generally applied following the Court of Appeal judgment in Byron Avenue.9    In particular the sum of $25,000 is sought by owner occupiers and the sum of $15,000 for investment owners.

[20]     In the 9AMSOC it is pleaded at [97] and [105] that each of the plaintiffs has suffered stress and inconvenience arising as a consequence of SML’s breaches of duty  including,  amongst  other  things,  “general  anxiety  from  the  uncertainty  of owning and/or living in a building affected by moisture ingress and consequential rot and decay”. Presumably reflecting the increased focus on structural and seismic issues  following  the  settlement  with  all  of the  defendants  other  than  SML,  the plaintiffs seek leave to amend the relevant passages (now at [49](b)(iii) and [57](b)(iii) of the proposed 10AMSOC) to refer to “general anxiety from the uncertainty of owning and/or living in a building affected by moisture ingress and consequential rot and decay and anxiety and uncertainty about the structural safety of the building” (proposed amendment underlined).

[21]     The  plaintiffs  say  that  the  additional  words  do  not  add  anything  of significance.  They say that the relevant paragraphs of the statement of claim, when viewed in their totality, already sufficiently plead an entitlement to general damages as a consequence of the defects pleaded against SML. The amendment is simply providing  an  additional  particular.  The  plaintiffs  say  that  such  an  amendment cannot be said to prejudice SML.

[22]     SML,  on  the  other  hand,  submits  that  the  change  reflects  a  real  and meaningful  shift  in  the  focus  of  the  general  damages  claim.    Further,  there  is currently no evidence from the second plaintiffs that would support the claim that they have suffered anxiety regarding the structural safety of the building, as opposed to the weathertightness issues.  This further reinforces that the proposed change is a real one and was not the original focus of the pleading.  SML notes that it appears that it is now the plaintiffs’ intention to seek leave for supplementary evidence to be

adduced from each of the large number of second plaintiffs to support the claim that

9      Byron Avenue [2010] NZCA 65, [2010] 3 NZLR 486.

their anxiety relates to structural issues with the building in addition to weathertightness issues.

[23]     SML submits that there has been no explanation for the plaintiffs’ delay in pleading this issue, nor for the delay in providing updated briefs of evidence if this is what is intended.   This is particularly so given that all of the structural defects alleged by the plaintiffs (prior to the further amendment now sought) had been pleaded by 8 November 2013 and a significant number of them had been pleaded by

31 October 2013.

[24]     Having carefully considered the parties’ respective arguments, it is my view that leave to make this particular amendment should be declined.  If, as the plaintiffs say, the proposed change does not add anything of significance, as the pleading already  sufficiently  covers  the  relevant  claim,  then  the  plaintiffs  will  not  be prejudiced if the amendment is not made.

[25]     On  the  other  hand,  if  the  existing  pleading  does  not  extend  to  anxiety regarding structural issues, which certainly appears to be arguable, then allowing the proposed amendment would, in my view, be prejudicial to SML at this late stage, given the potential need for further evidence as to the second plaintiff’s alleged anxiety about structural issues.

[26]     There is no apparent reason why the issue of the second plaintiffs’ alleged anxiety regarding  structural  safety issues  could  not  have  been  squarely  pleaded sooner.  Given the real risk of the amendment being prejudicial to SML it is not, in my view, appropriate to grant leave.   Leave is accordingly declined to make the proposed amendments to the wording of [49] and [57] of the proposed 10AMSOC. The precise scope of the existing pleading is a matter that can be addressed further at trial, if necessary, within the framework of the existing evidence.

Changes to estimates regarding structural remedial work – floor diaphragm issue

[27]     The pleadings issue of greatest concern to SML relates to alleged structural defects relating to the floor diaphragms in the C-Vu building.

[28]     Two of the structural defects alleged against SML in the 9AMSOC relate to the floor diaphragms. The relevant defects are pleaded as follows:

Defect 45: The floor starters to most of the shear walls between levels 2 and

6 have insufficient capacity to transfer the seismic shear force from the floor diaphragms: B1.3.1, B1.3.2, B1.3.3, B1.3.4

Defect 46: The floor diaphragms are severely overstressed under seismic loads: B1.3.1, B1.3.2, B1.3.3, B1.3.4.10

[29]     Schedule B of the 9AMSOC sets out the “estimated” costs of remedial work for the C-Vu building under a number of headings.   Item 17, under the heading “Structural Repairs” is described as “Floor diaphragm strengthening” for which an estimated cost of $300,000 is given.  Item 24, under the heading “Structural Extras Weathertight Repairs” is described as “Floor diaphragm”, for which an estimated cost of $49,000 is given.

[30]     Assuming  the  plaintiffs  are  successful  in  their  claims  against  SML  the question will arise as to what extent the building is to be remedied.  The damages sought in the draft 10AMSOC are advanced on two alternative bases.  The plaintiffs assert that they are entitled to a building that was (in 2002-2004) fully code compliant.  The alternative basis of damages advanced is that, at the very least, the building  needs  to  be  at  least  67  per  cent  code  compliant.    Schedule  B  of  the

10AMSOC includes the estimated remediation costs of both possible scenarios.

[31]     There is an increase in the estimated direct costs of achieving a fully code compliant  solution. The full  code cost  is  pleaded  at  $8,685,844,  an  increase of approximately 25 per cent over the costs pleaded in Schedule B to the 9AMSOC. The total estimated costs of the alternative 67 per cent code compliance scenario is pleaded at $3,499,155.   That is a substantial reduction over the estimated costs pleaded in Schedule B to the 9AMSOC.

[32]     Within that overall damages envelope, the issue of particular concern to SML

is that there has been a substantial increase in the estimated floor diaphragm remediation costs.   Although defects 45 and 46 (relating to floor diaphragms) are

10     The references to B1.3.1 and so on are references to the sections of the Building Code that have allegedly been breached by these defects.

pleaded in identical terms in the 9AMSOC and draft 10AMSOC, the estimated remediation costs in relation to floor diaphragm issues in Schedule B have been significantly increased.  The line item “floor diaphragm strengthening” (as described in the 9AMSOC) has been split into two parts – “upper floor diaphragm strengthening”  and  “basement  floor  diaphragm  strengthening”. No  particular objection was taken to that change.

[33]     SML strenuously objects, however, to the overall increases in estimated costs for the floor diaphragm strengthening, as set out in Schedule B.  In particular, in the draft 10AMSOC it is estimated, under the heading “Structural Repairs to Code” that upper floor diaphragm strengthening will cost $730,000.   The estimated cost of basement floor diaphragm strengthening is $692,000.  Under the heading “Structural Extras Weathertight Repairs” the estimated cost of upper floor diaphragm strengthening is given as $738,000 and basement floor diaphragm strengthening is given as $15,200 (the same estimates are given for the alternative 67 per cent code compliance scenario).

[34]     SML  submits  that  what  the  plaintiffs  are  proposing  to  do  “is  to  very significantly amend the remedial costs claimed in respect of the remedial costs for the diaphragms without amending the pleading to provide SML with a proper claim to which it is able to respond”.

[35]     SML filed an affidavit from one of its expert witnesses, Dr Murray Jacobs, in opposition to the plaintiffs’ application for leave to amend.  Dr Jacobs’ evidence is that, based on discussions that have taken place between experts, he believes that a very  different  claim  is  now  intended  by  the  plaintiffs  in  relation  to  the  floor diaphragm  issues.    The  revised  estimates,  Dr  Jacobs  believes,  are  linked  to  an entirely new remediation proposal that is radically different to the plaintiffs’ original remediation  proposal  for  the  floor  diaphragm  issue.     If  a  radically  different (and much more expensive) solution is required then, SML submits, the plaintiffs must be intending to advance an “entirely different claim” in relation to the floor diaphragm issues to the one pleaded in the 9AMSOC and referred to in the plaintiffs’ (current) briefs of evidence.  Dr Jacobs’ evidence is that he would need at least six weeks to analyse this “new claim” and prepare appropriate expert evidence in reply.

[36]     For various case management reasons, the plaintiffs’ reply briefs of evidence covering, amongst other things, the floor diaphragm issues, are not due to be served until  1 August  2014.  The  structural  experts  are  then  required  to  meet,  without lawyers, to produce a report similar to that done by the weathertightness experts (and which  has  resulted  in  a  significant  downwards  adjustment  of  the  quantum claimed in the draft 10AMSOC in relation to weathertightness issues).  Included in that exercise will be the issue of precisely what remedial work (if any) is required.

[37]     At the heart of SML’s objection to the proposed increase in Schedule B of the

10AMSOC to the costs of remedial work in relation to the floor diaphragms is SML’s concern that the plaintiffs’ “reply” evidence on this issue will not truly be reply evidence, but will raise essentially new matters.    In particular, SML submits that if this new pleading is intended to be supported by the reply briefs of evidence from the plaintiffs’ structural engineering experts that are to be served on 1 August

2014, they will not be reply briefs and will require further expert investigation, analysis and evidence on behalf of SML, none of which can occur within the current trial envelope.

[38]     The present position, however, is that the reply evidence has not yet been served.   For present purposes I must assume that any reply evidence will be in compliance with the High Court Rules and any directions previously made in these proceedings.  Any objections to the reply evidence, on the basis that it is not strictly in reply or otherwise, must await service of that evidence.   SML’s argument in opposition to the proposed amendment to the pleading to some extent conflates issues  of  evidence  and  pleading.  Although  there  would  potentially  be  some advantage in waiting until after 1 August 2014 (when the reply evidence is due to be served) so that the two issues can be addressed together, the parties’ preference is that the plaintiffs’ application for leave to amend the statement of claim is dealt with now given the imminence of the trial date.   I will therefore consider the proposed amendments on a “stand alone” basis.

[39]     Defects 45 and 46 relate to the floor diaphragm issues.  The description of defects 45 and 46 in the current pleading and the proposed new pleading is identical. SML was therefore aware, from the 9AMSOC, of the nature of the alleged defects

and has had an opportunity to address the alleged defects in its evidence and appears to have done so in some detail.  Not surprisingly, SML denies the existence of the alleged defects.  The initial hurdle for the plaintiffs will therefore be to establish that the pleaded defects exist and that they are attributable to failings on the part of SML. That issue is not impacted by the proposed amendments to the pleading.  There is no change in the nature of the alleged defects.

[40]     In the event that the plaintiffs establish that defects 45 and 46 do exist, and that they are attributable failings on the part of SML, then it will be necessary for the Court to move on to the issue of quantum and determine how much it will cost to remedy those defects.  It is not unusual in major litigation of this nature for issues of quantum to be somewhat of a moving feast.  As I have noted above, the proposed

10AMSOC significantly reduces the quantum claimed in some areas and also proposes an alternative basis for assessing quantum which results in significantly lower damages than those currently pleaded.  Many of these changes reflect the fact that experts have met and exchanged information, calculations and views.   As a result the focus with respect to remedial work appears to have narrowed somewhat.

[41]     The proposed amendment to Schedule B which is of particular concern to SML, however, significantly increases the estimated costs of the remedial work relating to floor diaphragm issues.  The issue before me is whether I should allow that amendment.  I have concluded that I should.  Any potential prejudice to SML will not arise, in my view, from allowing the proposed amendment.   Rather, any potential prejudice will arise if, as SML fears, reply evidence is served that is not strictly in reply.  If such evidence were to be admitted, and SML is constrained by time or resources in its ability to fully respond to it within the current trial envelop, then there is obviously the potential for unfair prejudice to arise at that stage.  That issue cannot be addressed pre-emptively, however, in the context of an application to amend the statement of claim.

[42]     I have not had an opportunity to review and analyse in any detail, in the limited time available, the existing expert evidence on the costs of remedying the alleged floor diaphragm issues, to the extent that such evidence is currently before the Court.  Allowing the proposed amendment to the pleading does not, however,

alter the fundamental position that the plaintiffs’ evidence on floor diaphragm issues has closed, save for any evidence that it is entitled to file in reply to SML’s evidence. If, subject to those evidential constraints, the plaintiffs are able to prove that the remediation costs are greater than those currently pleaded the proposed amendment will facilitate the just determination of the real controversy between the parties. SML will not in my view be unfairly prejudiced in such circumstances.  On the other hand, if the plaintiffs need to rely on evidence that has not already been filed or which is not strictly in reply in order to prove the level of quantum pleaded in the draft 10AMSOC, then the potential for unfair prejudice may arise.  Whether that is the case or not, however, can only be ascertained once the reply evidence has been served.

Other proposed amendments

[43]     During the course of the hearing SML identified several additional, relatively minor, proposed amendments to which it objects.  Counsel for the plaintiffs advised that it would not pursue the application for leave to make those changes which are at [51](b) and [51] particular (i) of the draft 10AMSOC.

Supplementary evidence

[44]     The plaintiffs also sought leave to call supplementary evidence and provided three draft supplementary briefs to the Court, outlining the proposed new evidence it seeks to adduce.  There was no opposition to the proposed supplementary evidence of Kristan Roussow and leave to adduce that evidence is granted accordingly. Objection was taken, however, to aspects of the proposed supplementary evidence of Matthew Taylor and Peter Gillingham.

Supplementary evidence from Matthew Taylor

[45]     Schedule F to the 9AMSOC sets out the stigma losses claimed in relation to each unit, which were assessed as being 7.5 per cent of the value of each unit.  This is allegedly the loss the plaintiffs will suffer in the reduction in the capital value in each of their units after remedial works have been undertaken, as the apartment block and the units will be stigmatised.

[46]     Matthew Taylor’s draft supplementary brief addresses stigma issues, amongst other matters.  He states that if the 7.5 per cent stigma discount figure were to be apportioned he would apportion it 5 per cent to weathertightness issues (the leaky building history) and 2.5 per cent relating to structural repairs, on the basis that they would be fixed.  In other words, even if the structural issues were remedied, there would be a 2.5 per cent price discount going forwards to reflect that the building once had structural issues.  If the structural issues were not fixed, then Mr Taylor’s proposed evidence is that there would be stigma discounting of 10 per cent, split evenly across weathertightness and structural issues.

[47]     SML submits that it is not in the interests of justice that leave be given at this late stage to allow Mr Taylor to give such supplementary evidence.   I accept that submission.   Briefs  of  evidence  addressing  stigma  issues  have  already  been exchanged between the parties.  The focus of the previous evidence appears to have been on leaky building stigma and the alleged price discounting associated with this. Mr  Kohler  submits  that  aspects  of  Mr Taylor’s  earlier  evidence  also  addressed structural stigma issues, albeit somewhat tangentially.  To the extent that is so, then the plaintiffs will be able to rely on such evidence.

[48]     Ultimately,   however,   there  needs   to   be  an   evidential   cut   off  point. Mr Taylor’s supplementary brief addresses structural stigma issues in a much more direct way and would clearly require that leave be granted to SML to file evidence in response. An earlier trial date was adjourned and we are now within the second trial window, albeit the start date of the trial was deferred for two weeks to enable issues arising from the partial settlement to be addressed.    If Mr Taylor’s supplementary evidence on stigma issues were admitted then SML would need to conduct further inquiries and brief further expert testimony on the extent to which price discounting occurs in relation to structural issues, once they have been remedied, as a result of stigma.   It is not realistic, in my view, to expect SML to have to prepare such evidence on an urgent basis, during the course of a long and complex trial.

[49]     Leave is accordingly declined to adduce the proposed further evidence from

Mr Taylor on stigma issues.

Supplementary evidence from Peter Henry Gillingham

[50]     SML    opposes    the    admission    of    supplementary    evidence    from

Peter Gillingham concerning water ingress to the units arising from defect 28.

[51]     Defect 28 in both the 9AMSOC and the proposed 10AMSOC pleads that:

Cracking has occurred between the pre-cast concrete elements and insitu concrete beam/column joints allowing water to enter, causing deterioration of the concrete substrate and potential corrosion of the reinforcement.

[52]     Mr Mills submits that, unless the plaintiffs intend to seek leave to amend the

9AMSOC to allege that the cracking has allowed water to enter the units and is responsible for the weathertightness damage, the proposed evidence is irrelevant to the claim pleaded against SML and is therefore inadmissible.  Mr Kohler advise that the plaintiffs do not intend to seek leave to amend the pleading in relation to defect

28.

[53]     In   my   view,   however,   it   is   premature   to   exclude   Mr   Gillingham’s supplementary evidence at this preliminary stage. On its face, most of his supplementary brief, which is fairly brief (two and a half pages) appears to be of an updating nature.   It may well be that all or most of his evidence is irrelevant, as Mr Mills submits.  The Court will be in a better position to assess the relevance of his  evidence,  however,  at  trial,  when  it  is  able  to  be  considered  in  a  broader evidential context.

[54]     If the proposed evidence is relevant it would not be in the interests of justice to   exclude   it   at   this   stage.  I   therefore   propose   to   provisionally   admit Mr Gillingham’s supplementary evidence, on the basis that the matter can be further reviewed as the trial proceeds.   If the evidence indeed proves to be irrelevant, as Mr Mills submits, then no prejudice will result from its provisional admission.  I am not willing to exclude the possibility at this preliminary stage that Mr Gillingham’s evidence may prove to be relevant on the basis of the existing pleading, once the full factual context is before the Court.

Result

[55]     I order as follows:

(a)      The plaintiffs are granted leave to discontinue their claims against the first, second, third, fourth, fifth, eighth and ninth defendants on or about 9 August 2011, save that the first to fifth defendants are to remain parties to the proceedings for the purposes of SML’s cross claims. Any current pleadings relating to the plaintiffs’ claims against the  first  to  fifth  defendants  are  to  remain  on  foot  to  the  extent necessary to enable the relevant parties to either pursue or defend SML’s cross claims against the first to fifth defendants.

(b)      Leave is granted to file a 10th amended statement of claim in the form

annexed  to  counsel  for the plaintiffs’ memorandum  dated 24 July

2014,  save  for  the  proposed  amendments  at  [49],  [51](b),  [51]

particular (i) and [57] of that document.

(c)       Leave   is   granted   to   adduce   supplementary   evidence   from Peter Gillingham in the form of his draft supplementary brief, on a provisional basis.  The admissibility of that evidence will be further reviewed as the trial proceeds.

(d)Leave to adduce supplementary evidence from Matthew Taylor on stigma issues is declined.   Leave is granted to adduce the other evidence included in his draft supplementary brief.

(e)       Leave    is    granted    to    adduce    supplementary    evidence    from

Kristian Roussow in the form of his draft supplementary brief.

(f)       Costs are reserved, for determination together with substantive costs

issues at the conclusion of trial.

Katz J