Body Corporate 366567 v Auckland Council

[2017] NZHC 1520

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-716 [2017] NZHC 1520

BETWEEN

BODY CORPORATE 366567

First Plaintiff

AMER LIMITED & OTHERS Second Plaintiffs

AND

AUCKLAND COUNCIL First Defendant

……continued over/

Hearing:

27 June 2017

Appearances:

C E Lane and S L Cachopa for Plaintiffs
S C Price and J H Morrison for First and Fourth Defendants
R J Hollyman and A J Steel for Second Defendant

B A Alcorn for Fifth Defendant D Newport for Ninth Defendant E Tobeck for Tenth Defendant

K Knealy for Second Third Party
D McLeod in Person

Judgment:

3 July 2017

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on

3 July 2017 at 4.30 p.m., pursuant to r 11.5 of the High Court Rules

Solicitors:

Grimshaw & Co., Auckland

Spencer Legal, Auckland

Morgan Coakle, Auckland
Robertsons, Auckland

Fee Langstone, Auckland

Minter Ellison Auckland
Copy to:

D McLeod, Auckland

Registrar/Deputy Registrar

Date:

BODY CORPORATE 366567 v AUCKLAND COUNCIL [2017] NZHC 1520 [3 July 2017]

CLARK BROWN ARCHITECTS LIMITED Second Defendant

P M DEVELOPMENTS LIMITED (Struck Off) Third Defendant

EQUUS INDUSTRIES LIMITED Fourth Defendant

MAPEI NEW ZEALAND LIMITED Fifth Defendant

AQUASTOP LIMITED Sixth Defendant

CHARLES NORAGER & SON LIMITED (In

Liquidation) Seventh Defendant

HOLMES FIRE & SAFETY LIMITED (Struck Off) Eighth Defendant

FIREPEL KIDD LIMITED Ninth Defendant

MACDONALD BARNETT PARTNERS LIMITED Tenth Defendant

HOLMES STRUCTURES LIMITED Eleventh Defendant

CHENERY CONTRACTING LIMITED Twelfth Defendant

BROOKFIELD MULTIPLEX CONSTRUCTIONS (NZ) LIMITED (In Liquidation)

First Third Party

DE BOER WATERPROOFING SOLUTIONS NV Second Third Party

Allocation of a Fixture Date – Interpretation of High Court Rule 7.6

[1]      Mr Lane’s opposition to this case being allocated a fixture in the third or

fourth quarters of 2019 turns significantly upon his interpretation of High Court Rule

7.6 which provides:

7.6      Allocation of key dates

(1)      If it appears to the Judge at the first case management conference that a proceeding can be readied for hearing or trial, the Judge must immediately allocate a date for hearing or trial.

(2)       If a proceeding has not been allocated a hearing or trial date at the first case management conference, the Judge  must allocate a date for its hearing or trial when the Judge is satisfied that it can be readied for hearing or trial.

(3)       A proceeding  can  be  readied  for  hearing  or  trial for  the purpose of subclauses (1) and (2) if it is reasonably anticipated that it will be able to proceed to hearing or trial without the need for—

(a)       any significant amendment of the pleadings; or

(b)      any significant interlocutory application; or

(c)       any  significant  refinement  of  the  issues  in  the proceeding.

(4)       In  addition  to  allocating  a  hearing  or  trial  date  under subclause (1) or (2), the Judge must fix a close of pleadings date.

(5)       It is the duty of all parties to a proceeding for which a date for hearing or trial has been allocated to notify the Registrar, without delay, if the proceeding is settled.

[2]      Mr Lane argues that against the terms of the above rule it is not possible for the Judge to allocate a date of trial now as there will be a need for significant amendment of the pleadings, to accommodate the outcome of a planned tender(s) for the remediation of the subject apartment block.

[3]      I agree that before trial the pleadings will have to be amended.  It is another question as to whether such amendments are so that a Judge cannot allocate a trial date.  Every rule is interpreted against the objective of the Rules set out in rule 1.2:

1.2      Objective

The objective of these rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.

[4]      All  the  subsequent  rules  are  subordinate  to  the  objective  of  a  just determination of any proceeding.  I agree with the learned editors of McGechan on Procedure1  that this Rule is the governing “yardstick” by which all the High Court Rules are to be interpreted.

Introduction

[5]      The first and second defendants have for some time been seeking this case to be set down for hearing.  The first defendant requested the High Court in late 2016 to set the case down for a ten week trial in early 2018.  Faire J refused to set the case down.  Faire J found it was not appropriate to fix a trial date at this stage.

[6]      In his minute, dated 2 September 2016, Faire J recorded that the plaintiff had not stated the sum of money they seek to recover “as precisely as possible” pursuant to rule 5.32.   He summed up the divide between the parties at that stage in these words:

[2]       The plaintiffs say they wish to proceed with the claim based on the result of a tender process and have set out the steps they anticipate following in paragraph 10 of the memorandum for this conference dated 25 August

2016.

[3]       Quite understandably, the defendants are concerned about the delay that this case is currently experiencing, particularly having regard to the advice that almost two years is required before the plaintiffs can be in a position to particularise the claim.

[7]      I understand that last phrase to be read in context as particularising the sum of money they seek to recover.

[8]      One should keep in mind that Faire J’s decision was made on 2 December

2016, and recorded advice that “almost two years is required before the plaintiffs can be  in  a  position  to  particularise  the  claim”.    The  Judge  interpreting  that  as  to

1      McGechan on Procedure HR 1.2.01 Importance of Rule.

particulars of the sum of money sought.  That was an estimate at that stage of being ready to particularise, some time prior to 2 September 2018.

[9]      Currently the second amended statement of claim in Schedule 5 pleads a large number of defects.  It is at once apparent that these pleaded defects have been identified by experts.

[10]     Leaky buildings notoriously reveal defects incrementally, as the remediation work proceeds.   It does not follow that every amendment of a defect is overall a significant amendment to the pleadings.

[11]     It is my practice to encourage ongoing sharing between the plaintiffs and the defendants of a data base of particulars to be incrementally amended as the state of the building is understood in more detail in the ongoing work of obtaining advice as to remediation, invasive inspection and other professional attendances.

[12]     From a study of Schedule 5 of the second amended statement of claim, I am satisfied that the scale and scope of the defects of the building are well understood.

[13]     Of course, it does not mean that further particulars will not be pleaded.  On the probabilities they will be.   But, those amendments in my view are not “significant” when placed against the cornerstone objective of the Rules being to secure the just, speedy and inexpensive determination of a proceeding.

[14]     The Registry can no longer offer fixtures for this sort of case in 2018, and can only offer a fixture in the third or fourth quarter of 2019.  The plaintiffs are saying that the case could not be ready for trial by that time.

[15]     The plaintiffs’ case on the pleadings and at trial is for general damages.  This is because there is no intention that the trial will follow after all the remediation is completed and the actual costs expended.

[16]     Mr Lane contends that the current apprehended sequence is that it will take until August 2018 to complete the remedial design, obtain a building consent and carry out a tender, from which the total general damages can be assessed.

[17]     The argument is that each ongoing amendment, development or refinement to the remedial design will have a knock on effect to the quantity surveyor’s estimate of cost.

[18]     However, counsel do not and cannot go so far as to say that the tender costs will equate to the final cost of remediating the building.

[19]     The plaintiffs’ expert, Mr T A Jones emphasises:

A quantity surveyor’s preliminary estimate only provides an indication of the likely cost and it is unlikely to reflect the end tender price because it is not prepared with reference to the consent documents.

[20]     Similarly tenders are frequently qualified as to price, and suggest different methods of remediation which may be adopted.

[21]     Mr Lane submitted that if the proceeding was allocated a trial date now the plaintiffs would be committed to quantify the general damages based on a quantity surveyor’s estimate.  I do not agree.  If these proceedings are allocated a trial date in the third or fourth quarter of 2019, it is not necessary to close the pleadings based on assessments by the quantity surveyors.

[22]     The work can go out to tender, and will do so, as I understand.   On the evidence and argument before me it is unlikely that the tenders will be offering a fixed price.  The construction companies will have their own views as to how the work should be done, which is likely to call for an inter action between themselves and the remediation engineers.

[23]     Essentially a plaintiff in these proceedings has to chose between going to trial seeking the remedy of general damages or going to trial after all the word is remediated and seeking special damages (the actual cost).

[24]     It is my understanding that the intention is to take the former and pursue general damages.

[25]     Were the intention to take the latter, there would be a significant argument in favour of the trial being divided into two trials, the first on liability, the second on quantum.

[26]     A general damages claim is inherently an assessment of loss.

[27]     I agree with the reasoning of Kòs J in Platt v Porirua City Council2 where the

Judge held at [32] that:

…the conventional approach to particularisation of negligent omission cases will be taken in relation to leaky building cases.  A detailed Scotch Schedule need not be submitted as part of the statement of claim.   The plaintiff’s pleadings need to show the general nature of the plaintiff’s case, give sufficient particulars of the matters in High Court Rule 5.26(b), enable the issues between the parties to be defined and enable the defendant to start briefing its evidence.

[28]     And at [36]:

To the extent it can, the plaintiff must particularise quantum.  In the normal course of such cases this may not be possible beyond indicative levels, which may be conveyed outside the pleadings.   If the quantum cannot be stated,  then  an  inquiry  may need  to  be  sought  or else  precise  quantum reserved to be proved at trial.

[29]     The context of that case was  the defendant Council seeking particulars as to the costs of the remedial work and consequent losses.

[30]     From my exchange with Mr Lane for the plaintiffs, I am satisfied as already recorded that the intention is to go to trial on the best possible estimate of loss, post tender but prior to remediation.

[31]     The critical fact which guides the resolution of this procedural dispute is the intent of the plaintiffs to seek general damages, albeit with the best possible assessments using a combination of quantity surveyors and prices tendered.   Not pressing that the tender prices will not change in the course of remediation.

[32]     Mr Lane, for the plaintiffs, reports that the plaintiffs’ experts have advised it will likely take until August 2018 to complete the remedial design, obtain a building consent and carry out a tender.

[33]     On that assessment the plaintiffs’ experts expect to have tender prices, albeit

qualified, by August 2018, in the third quarter of 2018.

[34]     This Court assumes that under the normal principles of ongoing discovery by that likely date of August 2018, particulars of the remedial design of the building consent and the results of the tender will be progressively discovered to the defendants, there being no solicitor/client privilege in respect of the same.  Mr Lane submits that the pleadings will need to be amended to plead the tender price for the remedial work and any uplift in the tender price to take into account inflation and/or increase in construction costs, together with the actual professional fees etc.

[35]     Mr Lane’s submissions proceed upon the assumption that once the case is allocated a trial date it is not possible to have amendments. That is not so.

[36]     It is always possible to amend pleadings in a case set down for trial, , with the leave of the Court.   It can be anticipated now that if a fixture is allocated by the Registry in the third or fourth quarters of 2019, that this Court will allow the general damages pleadings to be amended to reflect the best evidence of damages being the tender prices adjusted for increases and professional fees etc. just discussed, particularly if the plaintiffs provides ongoing changes in estimates as they are received.

[37]     At bottom, Mr Lane is concerned about taking a risk of not being able to obtain amendments after setting down, because of the terms of Rule 7.6 and some of the strong dicta in cases, against amendment.

[38]     Rule 7.6 requires that when a Judge is satisfied that the case can be allocated a trial date (the Judge must fix a close of pleadings date).3

[39]     To be sure there are strong dicta in the Court of Appeal decision Elders Pastoral Ltd v Marr4  saying that it is necessary to “surmount the three formidable hurdles” of showing that amendments would be in the interests of justice, would not significantly prejudice other parties, or cause significant delay”.

[40]     This Court takes into account, however, that it is the defendants who are asking for a fixture to be set down in 2019 now and accepting that the pleadings as to the  general  damages  being  sought  will  have  to  be  amended  to  the  plaintiffs’ advantage to reflect the outcomes of the ongoing quantity surveyor’s reports and tender results.

[41]     From the defendants’ point of view the importance of having a fixture date in

2019 is to establish a clear target against which the plaintiffs must work to ready their case for a hearing.

[42]     It is important to keep in mind that the dicta in Elders Pastoral Ltd arise out of the facts and that the Rule itself imposes no gloss of there being “formidable hurdles” to amendments to the pleadings.

[43]     If a fixture is not allocated now, in the way of things, in a few months or so, the earliest date that will be able to be offered by this Registry will be 2020 in respect of a building whose faults were apparent by 2009 and in respect of a claim lodged in 2012.

[44]     Part of the problem in my view is that the title “The High Court Rules” suggest that the applicable procedural law is a set of rules.  Not all are.  There are many rules in the High Court Rules.  But there are also “standards”, “principles” and “purposes” which require judgment in application and do not in fact perform as black letter rules.  For example, right at the start, immediately after the title saying that these Rules are the “High Court Rules” one has the objective 1.2:

The objective of these rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.  (i.e. to serve three “standards”.)

[45]     In Schmidt v BNZ5 Jefferies J said inter alia:

Procedural rules are to a very significant degree generalised in their words, for they are to cover all situations for which they are to be applied.  For that reason alone such an injunction as is contained in Rule 4 enjoins a liberal and large construction.

[46]     I would put it slightly differently.  Procedural Rules comprise a set of rules, standards and principles, to be applied to secure the just, speedy and inexpensive determination of any proceedings, of which the most important imperative is a just determination.  No Judge is going to apply any one “rule” without appreciating the consequence of the application to that “rule” of the ultimate duty of the Judge and the Court, which is to secure a just determination of a dispute.

Conclusion

[47]     For these reasons I think the best way of pursuing the objective of the High

Court Rules is to set this case down now for trial in the third or fourth quarter of

2019, conscious that  from time to time this Court will  need  to  grant  leave for amendment of particulars of the statement of claim;  arising out of new information to hand from the ongoing work of the quantity surveyor’s expert consultants and the market responses to tenders, and possibly, but hopefully not, the High Court might agree to vacate the trial if it becomes apparent that a just trial is not possible.

[48]     But my judgment today on the basis of the information and submissions before me is that this case can be justly tried in the third or fourth quarter of 2019, as a claim in negligence seeking general damages.

[49]     Therefore the parties are to endeavour to agree, via counsel, an estimated duration of the trial and failing agreement, the Registry is to confirm a telephone conference before me to settle the time to be  allowed for the 2019 fixture.   If the time is agreed I request the Registry to allocate a fixture, in the third or fourth quarter of 2019.

[50]     Costs are reserved.