Body Corporate 366567 v Auckland Council

[2021] NZHC 3578

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-000716

[2021] NZHC 3578

IN THE MATTER OF

The GORE STREET APARTMENTS also

known as “HARBOUR OAKS”

BETWEEN

BODY CORPORATE 366567

First Plaintiff

AMER LIMITED & ORS
Second Plaintiffs

AND

AUCKLAND COUNCIL

First Defendant

CLARK BROWN ARCHITECTS LIMITED

(In Liquidation) Second Defendant

P M DEVELOPMENTS LIMITED (STRUCK OFF)

Third Defendant

EQUUS INDUSTRIES LIMITED
Fourth Defendant

MAPEI NEW ZEALAND LIMITED

Fifth Defendant

Hearing:	14 December 2021
Appearances:	G Illingworth QC, G Lewis and S Zellman for the Plaintiffs C Meechan QC, S Price, and A Lloyd for the First Defendant E Tucker for the Fourth Defendant
Judgment:	21 December 2021

JUDGMENT OF WALKER J

[Leave to file applications]

This judgment was delivered by me on 21 December 2021 at 12 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

BODY CORPORATE 366567 v AUCKLAND COUNCIL [2021] NZHC 3578 [21 December 2021]

AQUASTOP LIMITED

Sixth Defendant

CHARLES NORAGER & SON LIMITED (In

Liquidation) Seventh Defendant

HOLMES FIRE & SAFETY LIMITED
Eighth Defendant

FIREPEL KIDD LIMITED
Ninth Defendant

MACDONALD    BARNETT     PARTNERS LIMITED

Tenth Defendant

HOLMES       STRUCTURES       LIMITED (DISCONTINUED)

Eleventh Defendant

CHENERY CONTRACTING LIMITED
Twelfth Defendant

BROOKFIELD CONSTRUCTIONS	(NZ)	MULTIPLEX LIMITED    (In
Liquidation)
First Third Party

DE BOER WATERPROOFING SOLUTIONS NV (DISCONTINUED)

Second Third Party

Introduction

[1]    This long running building defect case is scheduled to proceed to trial in early May 2022. This is the fourth trial date scheduled. Earlier trials were vacated because of lack of readiness, which the defendants attribute to the plaintiffs. The estimated trial duration is 20 weeks. The stakes are high. The current quantum of the claim is said to approach $200 million. Contested interlocutory applications have already absorbed much hearing time and the parties are now in the throes of intensively preparing for what will be a complex trial.1

[2]    The close of pleadings date has remained 18 November 2018 despite the various shifting trial dates. Ms Meechan QC submits that this was purposeful and reflects particular reasons why trial dates have been vacated. Mr Illingworth QC suggests otherwise. But what this means is that the parties must seek leave for any interlocutory application or step taken. This is the effect of r 7.7(1) of the High Court Rules 2016. To obtain leave, an applicant must show that granting leave:2

(a)is in the interests of justice;

(b)does not significantly prejudice the other parties; and

(c)will not cause significant delay.

[3]The purpose of the close of pleadings date is crisply explained by Wylie J in

NZ Iron Sands Holdings Ltd v Toward Industries Ltd:3

[33]  The close of pleadings date has a clear purpose.  It is intended to  ensure that pleadings have been completed and that all interlocutory matters have been attended to, so that the parties can concentrate on preparing for trial. Preparation for trial is demanding work which requires clear time and attention, and the rules are directed to ensure that that time should not be subject to disruption by interlocutory matters. … The closer the application is to trial, the more formidable those hurdles will become.

[4]    Although the purpose of the close of pleadings date is universal, the balancing exercise for a court faced with a leave application is highly fact and context dependent. Factors such as the reasons for delay, timing of the application, and nature and

1      There is still a tranche of expert evidence limited to alleged defects other than waterproofing defects to be served in March 2022.

2      See Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA) as cited in Body Corporate 172108 v Gundry [2014] NZHC 954 at [40].

3      NZ Iron Sands Holdings Ltd v Toward Industries Ltd [2019] NZHC 2883 (footnotes omitted).

materiality of the application in the context of the proceeding as a whole are relevant. Of critical importance too is the length of time between the application and trial.4

Procedural context

[5]    The procedural context is outlined in my judgment issued on 23 June 2021. It is unnecessary for present purposes to provide more than a brief overview.

[6]    This claim is brought by a body corporate and owners in a 406 unit, 40 level apartment building in Gore Street, Auckland City. The building is commonly known as “Harbour Oaks”. The plaintiffs say the building was constructed with fire, structural, weathertightness and internal moisture defects. Thirteen groups of defects are identified. The plaintiffs contend, among other things, that the defective construction arose from negligence on the part of the defendants.

[7]    Building consent for proposed remedial works has been issued by Auckland Council. The plaintiffs currently claim damages of approximately $160 million for the cost of the remedial works, together with general damages, interest and costs—a total in excess of $170 million. More recently, the suggestion is that the claims may approach $200 million due to cost escalation. Evidence has been served in tranches. Since the close of pleadings date the plaintiffs have served further evidence on multiple occasions culminating in ‘consolidated’ or ‘replacement’ briefs in March 2021 which also comprised supplementary evidence. There have also been multiple discovery affidavits filed by the plaintiffs between December 2018 and December 2021, the latterdisclosing historical documents not previously discovered.

[8]    The fragmented approach, although necessary, and a complicated and drawn out remedial design and tender process, has accentuated some procedural and preparation difficulties.

[9]    On 26 February 2021 after a two day hearing, Associate Judge Bell permitted the plaintiffs to serve the consolidated expert briefs incorporating the supplementary evidence referred to above and granted leave to file and serve an amended statement of claim. The application before the Judge had been vigorously contested in large part

4      Lyttelton Port Co Ltd v AON New Zealand [2019] NZHC 726 at [22].

because of concerns that the shape of the case was shifting, potentially threatening the May 2022 trial date.

[10]   Auckland Council applied to review the Associate Judge’s decision. On 23 June 2021, I declined the review application but indicated that I was prepared to vary the timetabling directions. A new timetable was imposed by consent. It too was subsequently varied by consent. The varied timetable directed that the plaintiffs’ reply briefs to the affirmative defence evidence relating to betterment and mitigation, then due on 30 October 2021, were to be served no later than 21 November 2021. The restricted scope previously defined remained unchanged; that is, responding only to the affirmative defences of betterment and failure to mitigate.

[11]   There is a full program of timetabling directions occupying the first quarter of 2022 and various procedural contests have engaged the parties since June 2021. The following is merely a snapshot providing grist to the defendants’ complaints about disruption to trial preparation.

[12]   Modelling data was provided by the plaintiffs late in June 2021 which Auckland Council say has significantly increased the burden of evidence preparation. A fifteenth supplementary affidavit of documents  was  filed  by  the  plaintiffs  on 10 November 2021. The plaintiffs described the late provision as an oversight rectified as soon as the documents came to counsel’s attention.5 This caused the first and fourth defendants to raise concerns about, among other things, what this late provision of relevant documents may say about the adequacy and reliability of the discovery process thus far undertaken. I directed that more detail was required as to precisely when, by whom and how the newly discovered material came to light.

[13]   The plaintiffs signalled another discovery issue in early October but informed the Court that they would endeavour to have frank and meaningful discussions to try to resolve the issue without the intervention of the Court. At a status conference in late October 2021, various outstanding issues were identified and a timetable directed for the filing of signalled interlocutory applications. Subsequently Auckland Council filed an interlocutory application for non-party discovery from Barfoot & Thompson

5      I was informed at the hearing that more recently a sixteenth supplementary affidavit of documents has been filed.

Ltd.   The parties reached a measure of agreement after initial opposition by the plaintiffs including as to leave to file and serve the application.

[14]   Some of the court directed expert witness conferences have taken place. Issues have arisen in relation to the participation from experts on matters said by Auckland Council and the fourth defendant to be outside the scope of served briefs. I dealt with those issues in a telephone conference on 10 December 2021 and again on an urgent basis on 15 and 17 December 2021.6

[15]   Excluding the Christmas period, the trial is approximately 16 working weeks away. Auckland Council is working towards serving its briefs relating to fire and structural defects in March 2022. Maintaining the trial date is of paramount importance.

[16]   On 19 November 2021, the plaintiffs filed this omnibus interlocutory application seeking the following orders:

(a)Leave to file this interlocutory application after close of pleadings.

(b)The first defendant to provide further and better discovery.

(c)Leave for the plaintiffs to serve supplementary briefs of evidence in respect of updated quantum.

(d)The first defendant to provide further and better particulars of its affirmative defence of betterment.

(e)Leave for the plaintiffs to serve reply evidence to the first defendant’s affirmative defence of betterment, in respect of defects numbered 8 and 10–13, within 20 working days after receipt of the further and better particulars of the first defendant’s affirmative defence of betterment.

(f)Leave for the plaintiffs to serve evidence in response to other affirmative defences.

6      Minutes of Walker J dated 10 December 2021, 15 and 17 December 2021.

(g)A direction that the parties’ experts confer in respect of defect 12 and prepare and sign a joint witness statement stating the matters on which they agree and do not agree, including the reasons for their disagreement.7

[17]   Auckland Council and Equus Industries Ltd (Equus), the fourth defendant, oppose the applications save in one minor respect. Although not all the applications directly relate to Equus, Ms Tucker makes the point that any step taken which risks jeopardising the trial date causes prejudice to Equus.

[18]   At a further conference, I directed that the threshold question of leave to file the various interlocutory applications should be dealt with first and separately to the substantive applications.8 I was persuaded by Ms Meechan’s submission that this was the more principled and pragmatic step in the light of the proximity to trial, the availability of hearing time (meaning in this context the difficulty of finding hearing time at this late stage of the year) and the difficult procedural history of this case.

[19]   On 29 November 2021, Auckland Council filed its application seeking leave to file and serve a notice to answer interrogatories on each of the second plaintiffs who acquired ownership of their units in Gore Street apartments after 25 June 2009.

[20]   This judgment determines then the bifurcated issue of whether leave should be granted after close of pleadings to permit these respective interlocutory applications to be heard.

[21]   I deal with each application in turn as each must separately meet the threshold before it may proceed to be substantively heard.

Further and better discovery

[22]   This relates to the first plaintiff’s application to Auckland Council seeking building consent for the proposed remedial works. The consent was granted in January 2021. The expectation of the plaintiffs is that during the consent application process, documents would have been generated and/or acquired by Auckland Council which

7      This last issue has been dealt with in conjunction with the other conferral issues rather than in this judgment.

8      Minute of Walker J dated 25 November 2021.

bear on the issues in the proceedings. They rely on the affidavit of David Klosser, an architect with over 20 years’ experience in the construction industry.

[23]   Mr Klosser is the architect responsible for the preparation and co-ordination of designs for remedial works to address the alleged defects for the Gore Street development. He deposes:

[7]        I am aware from my dealings with the Auckland Council and the requirements of the Building Act, that in reviewing applications for building consent for projects of this nature the Auckland Council will ordinarily generate a number of internal documents which assess and comment on the purpose and adequacy of the proposed building works and, in all likelihood, the Council will engage external experts to comment on the nature and adequacy of the proposed works.

[8]        In my experience of dealing with the Auckland Council in relation to projects where there is litigation on foot, the Auckland Council employees and experts they engage to assess the application for building consent are likely to take a more conservative approach to the adequacy of the proposed repair works than the experts the Council engages for the purposes of the litigation. The Council employees and the consultants it engages are more likely to ask whether the proposed remedial work goes far enough and record the basis for any concerns regarding the adequacy of the works. This will be reflected in the internal documents the Council generates and the reports from within and outside the Council which comment on the building defects and building consent application.

[24]   Mr Klosser then identifies categories of documents which he expects Auckland Council to hold relating to the body corporate’s application for building consent. Of the categories listed in schedule A of the interlocutory application, I observe that three describe documents which the first plaintiff must possess.9 One category is a non- specific catch all.

[25]   The plaintiffs assert that these documents fall within the documents listed in both the joint memorandum of counsel dated 2 April 2015 and ordered as tailored discovery by Faire J on 15 April 2015, namely the following categories:

(a)Internal and external documents and correspondence which formed part of any building consent application(s) including the processing of any building consent application(s).

9      The application for consent; information provided by the first plaintiff or its representatives; and building consent itself.

(b)Internal and external documents and correspondence relating to the processing and issuing of building consents.

(c)All other records, documents and correspondence relating to the Gore Street Apartments generated after the Code Compliance Certificate was issued (excluding clearly irrelevant documents such as noise and animal complaints).

[26]   The plaintiffs’ solicitors initiated correspondence on this issue on 30 July 2021 and again in late September 2021. A stream of correspondence then followed. Auckland Council disputed that the documents were relevant and/or discoverable. There was some attempt between the parties to resolve their differences on this question in early October. Those attempts failed. The plaintiffs’ legal advisors then wrote seeking copies under the Local Government Official Information and Meetings Act 1987. Auckland Council responded that the information requested was on the property file which could be purchased. The plaintiffs duly purchased it but found it did not contain documents within the categories identified by Mr Klosser.

[27]   The application is styled as one for further and better discovery under r 8.19 but the grounds relied on include the ongoing discovery obligations of litigants. It was only likely to be made after the close of pleadings date because the consent was granted after close of pleadings, although documents were presumably generated over a lengthy period.

[28]   Ms Meechan forcefully argues that this material, even if it exists, cannot be relevant. She submits that Auckland Council’s function in respect of the remedial consent is dictated by statute and its role is concerned only with whether the works proposed by the owner will, if properly completed, comply with the code. Conversely, the issue for trial will be what remedial works are reasonably required in respect of the alleged defects. She points to the plaintiffs’ utterances to the Court in October 2020 that they were in the final throes of obtaining a building consent and the steps that remained to be taken would not affect their evidence. The plaintiffs thus did not consider that the purported further documentation was required for them to finalise their evidence.

[29]   In my assessment, the hurdles identified for the grant of leave are met in respect of this discovery application. I observe, without deciding the issue, that the orders for

tailored discovery are arguably wide enough to encompass this material notwithstanding it was not in existence as at 15 April 2015. But, I also accept that would not necessarily override a secondary relevance filter.10 Materially, the application engages the question of ongoing discovery obligations. That is a particularly cogent aspect of the leave application. Auckland Council has expressly been on notice since July 2021 which is the material time for assessing proximity to trial. The potentially oppressive impact on trial preparation brought about by the scale of this task, or put another way, the question of proportionality, are matters for hearing on the substantive application. It is certainly not immediately apparent to me that any and all material falling within the identified categories cannot be relevant. It may well be relevant to put this material to the experts in cross-examination by way of comparison. Again however, that is merely a provisional view and in no way intended to determine the issue.

[30]   In conclusion, I grant leave in respect of the discovery aspect in paragraph [1(b)] of the application.

Updated quantum briefs

[31]   The plaintiffs seek leave to serve supplementary briefs updating quantum from a quantity surveyor (Mr White) and an economist (Mr Kiernan). Auckland Council’s opposition is limited to Mr White’s supplementary brief so long as an appropriate timetable is put in place for Auckland Council’s evidence in response.11

[32]   The plaintiffs contend that due to unexpected market conditions and following advice from the contractor engaged, an update to the estimated cost escalation for remedial work is required. The economist’s brief is focused on broad issues at a macro level. Mr White’s proposed evidence is intended to be at a more granular level.

[33]   The unexpected market conditions referred to are essentially the impact of Covid-19 on the construction industry. The inexorable rise in building costs in recent times is generally well known.

[34]   The grounds stated in the notice of opposition are that the proposed brief from Mr White is either inadmissible or sets out positions based on inadmissible evidence.

10     See for example About Image Ltd v Advaro Ltd [2017] NZHC 3264.

11     No “appropriate” timetable has been proposed by the parties.

[35]   Mr White prepared a brief of evidence in March 2021 in which he set out his estimate of the cost of the upcoming remedial works for the Gore Street Apartment development. In his affidavit filed in support of the application for leave, he exhibits his proposed supplementary brief of evidence in addition to providing a response to Auckland Council’s betterment claim. The essential point he makes on the latter is an inability to determine from the evidence served what advantage Auckland Council alleges the plaintiffs would acquire if awarded the costs set out in his estimate.

[36]In the proposed brief, Mr White considers:

(a)the likely inflation impact on what he terms the “Brosnan tender” dated September 2020, until a hypothetical project start date of June 2022 and during the construction period; and

(b)advice from Brosnan on its proposed method of calculating inflation and notification by Brosnan of an increased allowance for its traffic management plan.

[37]   Conscious of the bifurcated approach previously directed, I do not propose to analyse Mr White’s proposed evidence in any detail. I note the criticisms advanced by Ms Meechan who describes the proposed brief as essentially anticipatory and not the end of the story in relation to quantum revision. She invites me to “triage the evidence”. In short, to form some provisional view on admissibility or quality in the interests of justice assessment.

[38]I am not prepared to take that approach.

[39]   There are cogent reasons why the quantum claim has increased and continues to increase. The evidence of the economist may be helpful but, broadly speaking, the trial judge will be better assisted by updating evidence from a quantity surveyor. It is inevitable in litigation of this sort that quantum is a moving feast as other judges have observed. It would be unjust to proceed to trial on outdated quantum evidence and I am not prepared to deny the plaintiffs the ability to update it on this leave application. I make no observations about the particular evidence in Mr White’s proposed brief and whether it fits the description of updating evidence. I observe only that it will be highly relevant to the substantive application that the evidence is truly updating as opposed to reflecting a change in approach or methodology.

[40]   Accordingly, I grant leave for the application to serve updating quantum evidence to proceed.

Further particulars of defence (betterment affirmative defence)

[41]   The plaintiffs’ essential complaint is that the affirmative defence of betterment is pleaded in generalised terms and it is not apparent from Auckland Council’s evidence what advantage it is alleged the plaintiffs will acquire, including the relevant items and amounts. That evidence was served on 21 October 2021. Counsel for the plaintiffs addressed it in correspondence on 9 November 2021. The plaintiffs argue they are unable to serve evidence in response as the Court previously directed because of the inability to identify the details of the alleged advantage.

[42]   In my view, this pleading issue has arisen too late. The betterment pleading has been in place and unchanged for three years. Particulars could have and should have been sought much earlier. If the plaintiffs’ view as to Auckland Council’s evidence is correct, then Auckland Council is on risk in respect of establishing betterment. That will be a matter of proof at trial.

[43]   I accept Ms Meechan’s submission that to now request particulars would be immensely disruptive to the other steps Auckland Council is currently taking to meet its timetabling obligations.

[44]   I decline leave to apply for further and better particulars of the defence of betterment.

Leave to allow plaintiffs to serve reply evidence to the affirmative defence of betterment in respect of defects 8 and 10–13 within 20 working days after receipt of further and better particulars of the affirmative defence

[45] I apprehend that this application is hitched to that seeking further and better particulars and, as far as I can see, stands or falls with that application. Accordingly, I deny leave in view of the conclusion set out at [44] above.

Leave to apply to serve evidence in response to other affirmative defences

[46]   The notice of application seeks leave to serve evidence in response to affirmative defences, including:

(a)a proposed brief from Trevor Jones in response to the affirmative defence of contributory negligence alleged by the fourth defendant in relation to defects 8 and 10–13; and

(b)briefs of evidence in response to all affirmative defences as they relate to defects 1–7 and 9 in respect of which the defendants are due to serve evidence on 14 March 2022.12

[47]   Auckland Council’s opposition records that it does not oppose leave to reply to  any  betterment/mitigation  evidence  served   by   Auckland   Council   in   its   14 March 2022 tranche of evidence, provided this is genuinely in reply.13 This is a proper acknowledgement. I accordingly direct that any evidence strictly in reply to betterment or mitigation evidence served by Auckland Council in its 14 March 2022 tranche of expert evidence be served no later than 14 April 2021.

[48]   Both Auckland Council and Equus oppose leave for further tranches of evidence from the plaintiffs other than as noted in [47] above.

[49]   Mr Illingworth refers to the directions made on 11 October 2019 that the plaintiffs were to serve evidence responding to the affirmative defences of failure to mitigate and betterment.14 He contends that subsequent directions for evidence in tranches led to an omission in the timetable for the plaintiffs to serve responsive evidence to the remaining affirmative defences and to the briefs of evidence to be served by the remaining defendants, contrary to the interests of justice.

[50]   Ms Meechan emphasises that the plaintiffs’ delay has not been satisfactorily explained given the length of time the affirmative defences have been on foot. She contends that the evidence to which this part of the application relates was served on the plaintiffs nearly two years ago and the extensive replacement briefs recently served unilaterally took the opportunity to include extensive “reply” evidence without addressing the other affirmative defences.

12 The affirmative defences noted are failure to mitigate/betterment alleged by the first and ninth defendants; contributory negligence alleged by the eighth, ninth and tenth defendants; voluntary assumption of risk alleged by the ninth defendant and limitation alleged by the first, eight, ninth and tenth defendants.

13 Equus records that it has no interest in those matters and does not oppose leave in that respect.

14 Amended minute of Lang J dated 11 October 2019. I note that the fourth, fifth, ninth and tenth defendants expressed no issue with the suggested timetable in a minute dated 9 October 2019 and did not attend the conference on 11 October 2019.

[51]   Equus echoes this submission. It argues that the plaintiffs have been aware of its affirmative defences for nigh on seven years. Having not taken up the opportunity to adduce primary evidence (not reply evidence) in relation to the defence of contributory negligence, it is contrary to the interests of justice to now grant leave.

[52]   It is material in my view that the plaintiffs have previously sought similar directions relating to affirmative defences in the timetable but this was expressly declined by Lang J in these terms:15

[3] I record that I have not given the second plaintiffs leave to include  within their supplementary briefs any evidence relating to other affirmative defences. If they wish to respond to matters contained in the defendants’ briefs that they could not have foreseen when preparing their first briefs of evidence, they will need to seek leave to file supplementary evidence in response.

[53]   I accept that the direction by Lang J is conditional permission of a different sort. It opens the door to seek leave in respect of supplementary evidence where the condition is met rather than permission more generally for evidence “in response” to affirmative defences. It has not been argued before me that there are matters in the defendants’ briefs that could not have been foreseen in respect of other affirmative defences (nor could it be in respect of the briefs yet to be served).

[54]   In my assessment, the interests of justice, and more particularly protection from disruption in the critical trial phase, point against addressing this matter afresh so late in the day. The direction of Lang J stands.

[55]   I therefore decline leave in respect of the application for reply evidence to other affirmative defences (as presented). In the event the remaining briefs to be served in March 2022 contain unforeseeable matters, as per Lang J’s minute, leave to adduce would need to be sought on that basis.

Council’s application for leave to file and serve notice to answer interrogatories

[56]   Auckland Council seeks to have owners of recently acquired apartments in the complex answer three questions concerning information they had before entering into agreements for sale and purchase or settlement and whether they had an interest in other units at that point. There are three main proposed questions and sub-questions under each main question.

15     Minute of Lang J dated 26 July 2019.

[57]   Rule 8.34 of the High Court Rules provides that a party may file and serve on another party who has filed a pleading a notice requiring that party to answer specified interrogatories relating to any matter in question in the proceeding. The rule stipulates that such notice may be filed after a statement of defence is filed.

[58]   The objective of these particular interrogatories is to identify those second plaintiffs whom Auckland Council requires at trial for cross-examination in view of its pleaded affirmative defences of contributory negligence and voluntary assumption of risk. Notably, these affirmative defences were only introduced after the majority of the second plaintiff owner briefs of evidence were served. Essentially, Auckland Council asserts that certain of the second plaintiffs who acquired their units after a certain date did so with knowledge of defects and/or failed to take steps that would lead them to having that knowledge.

[59]   A process was developed to deal with this issue by Lang J.16 Under that process:

(a)Auckland Council was to serve a brief of evidence identifying those unit owners who acquired their units after 25 June 2009 who either did or did not obtain copies of the minutes before doing so;

(b)the second plaintiffs were to have an opportunity to place before the Court any evidence they might wish the Court to consider regarding the obtaining or failure to obtain copies of the minutes;

(c)the defendants were to notify counsel for the plaintiffs which of the second plaintiffs they wished to have for cross-examination once they had an opportunity to consider that further evidence; and

(d)a week of the trial (then scheduled in March 2020) was to be set aside by the Court for the cross-examination of those second plaintiffs who were required for cross-examination.

[60]   Although Auckland Council served its brief of evidence as directed, identifying the relevant second plaintiffs, the plaintiffs only served an expert brief from a

16     Minutes of Lang J dated 28 June 2019; 25 July 2019 and 26 July 2019.

conveyancing expert. Auckland Council served its own expert brief in response. No supplementary evidence was served from the second plaintiffs.

[61]   The issue was raised in a case management conference in early 2020. Auckland Council noted then its difficulties, primarily that it had no way of knowing which body corporate minutes any of the second plaintiffs received prior to purchase.

[62]   If Auckland Council is required to cross-examine each second plaintiff to meet its obligations under s 92 of the Evidence Act 2006, it will take up a considerable (and disproportionate) part of the trial. The current estimate is that there are 309 such owners; each may take up to an hour. This means that a disproportionate number of weeks of trial will be absorbed if all owners were cross-examined. It will also mean that the second plaintiffs will be required to attend trial (in person or by AVL) just to answer that narrow issue.

[63]   In its memorandum dated 30 January 2020, Auckland Council first sought leave to issue interrogatories to each second plaintiff whose claim is based on a purchase after 29 June 2009. When that memorandum was filed, the trial date was looming in July 2020. Lang J pointed out then that the Court is unlikely to view with favour any application for interrogatories at that late stage. The trial was subsequently adjourned.

[64]   Attempts were then made to identify and limit those second plaintiffs required for cross-examination by other means. That required cooperation and agreement between the parties. Auckland Council at that stage identified 159 second plaintiffs for cross-examination but indicated that number could be reduced if they responded to questions in advance.17 Counsel for the plaintiffs sought confirmation that any second plaintiff who answers the questions provided will not be called by Auckland Council for cross-examination at trial. The response was equivocal. Counsel for Auckland Council said that that assessment would depend on their particular answers. This is not surprising.

[65]   Solicitors for the second plaintiffs then wrote saying that there was little or no utility in a questionnaire since the owners will either state that they do not recall, or, if

17     Based on the early approximation, cross-examining 159 such owners may absorb somewhere in the region of four weeks of trial time.

they state they do recall, their answers will have no evidential value given the passage of time. They acknowledge that this means that a large number of witnesses will need to be cross-examined. An alternative was proposed: the preparation of a schedule listing, in respect of each unit, the documents relating to the building discovered by that owner or the body corporate which predate the sale and purchase agreement.

[66]   Other alternatives explored included circulating a question to the relevant second plaintiffs seeking to confirm memory of the body corporate minutes prior to purchase. This was declined by Auckland Council which pointed out it would expect that a witness would need to refresh their memory before answering the question. Auckland Council also said that while it anticipated dispensing with most (if not all) plaintiff witnesses that respond, “cannot now recollect”, it will not be in a position to make that commitment until assessment of witnesses’ responses. It also required acknowledgement from the plaintiffs that it would be exempt from obligations under s 92 of the Evidence Act though it did not accept the matters stated in the briefs of those witnesses.

[67]   None of the various proposals from either side have achieved resolution although it is very clear that it is in the best interests of all concerned to find a practical solution to this issue.

[68]   Ms Meechan submits that the questions are short. Three questions are asked with three narrow follow up questions based on documents which have been or ought to have been discovered. If not addressed this way, then the second plaintiffs and their solicitors will have to prepare the witnesses for trial anyway (which they acknowledge).

[69]   Mr Illingworth says the issue of interrogatories would cause significant disruption and the information would serve little purpose given the ability of witnesses to accurately recall events up to a decade earlier, the existing availability of the discovered documents and the first defendant’s reservation of the right to cross- examine the relevant owners at trial. He asserts that having left interrogatories until well after the owner evidence was prepared puts the plaintiffs to significant additional cost and under immense pressure now given the proximity to trial.

[70]   I conclude that, on balance, I must decline leave notwithstanding the impact on the trial itself. My reasons are these. First, I accept that the proposed

interrogatories go beyond the questions anticipated back in 2019 and would involve significant investigation and review work at a crucial stage of trial preparation. I have considered whether this preparatory work would need to be carried out anyway so that it would not be an additional burden but am not persuaded that this is necessarily so. It would be unfairly disruptive to the plaintiffs’ trial preparation. Secondly, there is the question of proportionality. Either those owners who obtained copies of the minutes and/or other relevant material pre purchase voluntarily assumed risk or those who did not obtain copies were contributorily negligent. Auckland Council can ask the Court to draw conclusions although, as Ms Meechan pointed out, the legal consequences are different in that a finding of contributory negligence leads to apportionment only. Apportionment tends to be approached at trial in a broad-brush way. There is no guarantee that issuing and answering interrogatories will necessarily significantly reduce the number of witnesses to be called for cross-examination.

[71]   Taking these factors collectively, I accept the submissions made on behalf of the plaintiffs that the amount of work involved in administration of interrogatories would significantly prejudice the plaintiffs’ preparation for trial at a crucial stage in the proceeding and would complicate an already compressed trial preparation phase. It is simply too late in the day for this step.

[72]   Accordingly, I decline leave for the application to issue interrogatories to proceed to a hearing

Summary of result

[73]   I decline leave in respect of the following interlocutory applications to proceed to a substantive hearing:

(a)for further and better particulars of the defence of betterment;

(b)service of evidence in response to the first defendant’s affirmative defence of betterment, in respect of defects numbered 8 and 10–13;

(c)response/reply to other affirmative defences; and

(d)the first defendant’s application to file and serve interrogatories.

[74]   I grant leave to proceed to an interlocutory hearing for the following applications:

(a)discovery of consent related documentation by Auckland Council; and

(b)service of updated quantum evidence.

[75]   I direct that the plaintiffs’ evidence in reply (and strictly in reply) to any betterment/mitigation evidence served by Auckland Council in its 14 March 2022 tranche of evidence is to be served no later than 14 April 2022.

[76]   In view of the slimming of the interlocutory applications by this judgment,     I direct the Registry to arrange a half day hearing for those interlocutory applications for which leave is granted on the first available date in 2022.

Costs

[77]   All parties have had a measure of success. I will hear from the parties on costs (by way of memoranda) in the event there is no agreement. Memoranda may be filed no later than 30 January 2022, with responsive memoranda within 14 days thereafter.

............................................................

Walker J