Body Corporate 384825 v Queenstown Lakes District Council
[2021] NZHC 2327
•7 September 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2016-425-000029
[2021] NZHC 2327
BETWEEN BODY CORPORATE 384825
First Plaintiff
AND
GEORGE FRASER RALSTON & ORS
Second Plaintiffs
AND
QUEENSTOWN LAKES DISTRICT COUNCIL
First Defendant
AND
YEO CONTRACTING LIMITED
Second Defendant
AND
JK’S & WBE LIMITED (Discontinued) Third Defendant
AND
STUART IAN CRUICKSHANK
Fourth Defendant
AND
PAREMATA CONSTRUCTION LIMITED
Fifth Defednant
AND
HOLMES STRUCTURES LIMITED (IN LIQUIDATION)
Sixth Defendant
AND
ARCH UNDERWRITING LIMITED AT LLOYD’S LIMITED
Seventh Defendant
AND
ASTA MANAGING AGENCY LIMITED
Eighth Defendant
AND
HARDY (UNDERWRITING AGENCIES) LIMITED
Ninth Defendant
AND
LIBERTY MANAGING AGENCY LIMITED
Tenth Defendant
BODY CORPORATE 384825 v QUEENSTOWN LAKE DISTRICT COUNCIL [2021] NZHC 2327
AND ELLIOTT ARCHITECT LIMITED
Eleventh Defendant
AND
STEPHEN BRUCE MCLEAN (DISCONTINUED)
First Third Party
AND
ELLIOTT ARCHITECT LIMITED
Second Third Party
AND
ROSS MCGREGOR WENSLEY (DISCONTINUED)
Third Third Party
AND
ARCH UNDERWRITING AT LLOYD’S LIMITED
Fourth Third Party
AND
ASTA MANAGING AGENCY LIMITED
Fifth Third Party
AND
HARDY (UNDERWRITING AGENCIES) LIMITED
Sixth Third Party
AND
LIBERTY MANAGING AGENCY LIMITED
Seventh Third Party
AND
STEPHEN BRUCE MCLEAN (DISCONTINUED)
Eighth Third Party
AND
ROSS MCGREGOR WENSLEY
Ninth Third Party
Hearing: 2 September 2021 By VMR Appearances:
R W Raymond QC and G B Lewis for Plaintiffs
C M Meechan QC and R M Saunders for First Defendant
Judgment:
7 September 2021
JUDGMENT OF DOOGUE J
This judgment was delivered by me on 7 September 2021 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Introduction
[1] This proceeding concerns a building defects claim brought by the body corporate and owners of a 44-unit (70-apartment) hotel complex in Queenstown named “Oaks Club”.
[2] The plaintiffs claim in tort against the Queenstown Lakes District Council (1st defendant) (the Council), the project managers (4th and 5th defendants), insurers of the structural engineer (7th to 10th defendants) and the architect (11th defendant).
[3] The proceeding has been allocated a 16-week trial, commencing 18 October 2021. This hearing was concerned with a number of pretrial matters which require urgent consideration given the imminence of the trial date.
[4] On 11 August 2021 the plaintiffs filed and served two applications, the first for leave to amend their statement of claim and the second to file and serve four further briefs of evidence.
[5] The Council strenuously opposes both applications. They say this is not a case where the Court is being asked to grant leave to amend a claim against a stable evidential landscape. Here they say, a matter of weeks before a 16-week trial is to commence, the plaintiffs seek leave to make significant amendments to their statement of claim and to the evidential landscape of the case.
[6] The plaintiffs also seek directions concerning the filing and service of their briefs of evidence in reply to the affirmative defences. The Council opposes some of the timetabling proposed by the plaintiffs in this regard.
[7] Finally, the plaintiffs and the Council agree a further pretrial conference should be allocated for the first available date before 5 October 2021 to consider trial logistics.
Leave to bring interlocutory applications after close of pleadings
Application to amend the statement of claim
[8] The plaintiffs seek leave to amend their statement of claim in relation to (a) quantum and (b) a breach of a further Building Code clause in relation to the complex’s balconies.
[9] So far as quantum is concerned, they seek to amend their statement of claim as follows:
(a)An update to the investigation, design and remedial costs incurred to date (updated from $5,554,316 to $5,835,592, an increase of approximately 5 per cent;
(b)An update to the cost of carrying out the balance of the repairs (updated from $52,813,931 to $57,639,330, an increase of approximately 9 per cent);
(c)Consequential amendments to the amounts claimed against the insurers of the structural engineer (7th to 10th defendants) and the architect (11th defendant), in relation to repair costs and consequential losses.
[10] So far as the breach of the additional Building Code clause is concerned, the plaintiffs seek leave to amend their statement of claim to include Building Code clause E1 (surface water). In other words, they seek to add a further Building Code breach to the third defect already pleaded.
Application to file four further supplementary briefs of evidence
[11] The plaintiffs seek leave to file and serve four supplementary briefs of evidence.
[12] The first is a brief from Mr Steven Garland, the Body Corporate manager of the Oaks Club. It exhibits a schedule which updates the costs the Body Corporate has
incurred to date in relation to further investigation and repair costs. This represents an increase of approximately $280,000.
[13] The second is from the Body Corporate’s quantity surveyor, Mr James White. He gives evidence of cost escalations for the remedial work considering current market conditions and the impact of COVID-19 on the costs of materials. This represents an increase of just over $5 million.
[14] The third is from Mr Matthew Keesing, a materials scientist. His evidence is more in the nature of a reply as he responds to evidence given by Dr Jonathan Smith on the cause of corrosion to steel work in the Oaks Club.
[15] The fourth is from Mr Graeme Calvert, a building surveyor. He explains the breach of Building Code clause E1 which he says arises from Defect 3, namely that the roof balconies, side roofs and cantilevered balconies do not shed precipitated moisture and snow.
In what order the two applications should be considered
[16] Ms Meechan QC for the Council submitted leave to amend the pleadings follows from whether or not leave to file the supplementary evidence is granted, because it is futile to grant leave to amend a claim unsupported by relevant admissible evidence.
[17] That argument was rejected by Bell AJ in Body Corporate 366567 & Ors v Auckland Council & Ors (Gore St) in the following terms:1
[30] The council says however that there is no evidence to support the new allegation. That is based on its opposition to the other application. It says that because the court should not allow the plaintiffs to replace their experts’ briefs with new evidence, including evidence that the B1 standard is relevant to defect 2, the plaintiffs should not be given the opportunity to amend and put the matter in issue.
[31] That puts matters back to front. Pleadings come before evidence. With pleadings, a plaintiff states the case that it hopes to prove. Evidence comes later, to see if it can prove its allegations. The soundness of pleadings does not turn on the adequacy of the evidence to prove them. A pleadings
11 Body Corporate 366567 & Ors v Auckland Council & Ors [2021] NZHC 491.
decision goes to whether the party should be given the opportunity to prove the matters that they wish to put in issue. The council’s objection is unsound. The amendment is accordingly allowed.
[18]On review in Gore St, Walker J again rejected this Council argument.2
[19] I agree it is entirely logical to determine the application for leave to amend the pleadings (in this case the statement of claim) first and the application for leave to file the four supplementary briefs of evidence second.
[20] Having reached that conclusion, it is also obvious that the amendments to the pleadings and the supplementary briefs are inextricably linked in the Court’s assessment in this case. For example, it will be necessary for the Court to critically examine the supplementary briefs to see whether the nature of what is sought in the amendments to the statement of claim insofar as quantum is concerned is merely updating, as Mr Raymond QC submitted, or is, as Ms Meechan QC submitted, an entirely new methodology that substantially changes the case and unfairly prejudices the Council.
[21] If the nature of the amendments as to quantum are purely updating, then rule 7.7(2) will apply and leave is not required. If the nature of the amendments amounts to a fundamental change to the case, then the plaintiffs will need to meet the stringent test the authorities demand when considering leave to amend pleadings after the close of pleadings date.3
[22] Similarly, it is appropriate for the Court to critically examine the relevant supplementary brief to the proposed amendment to Defect 3 to identify whether it fundamentally changes the case or not.
Application for leave to amend the statement of claim
Legal principles
[23]Rule 7.7 of the High Court Rules 2016 provides:
2 Body Corporate 366567 & Ors v Auckland Council & Ors [2021] NZHC 1481 at [46]-[48].
3 High Court Rules 2016, r 7.7(1).
7.7 Steps after close of pleadings date restricted
(1)No statement of defence or amended pleading or affidavit may be filed, and no interlocutory application may be made or step taken, after the close of pleadings date without the leave of a Judge.
(2)Subclause (1) does not apply to—
(a) an application for leave under that subclause; or
(b) a pleading or an affidavit that merely brings up to date the information before the court; or
(c) an application for amendment of a defect or an error under rule 1.9.
[24] In Body Corporate 325261 v McDonough & Ors the Court summarised the legal principles applying to applications for leave to file an amended statement of claim after the close of pleadings, as follows:4
[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. Due regard must also be had to whether the proposed amendment will cause significant delay or prejudice another party. 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.
[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:
(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. 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.
4 Body Corporate 325261 & Ors v McDonough & Ors [2014] NZHC 1821 (footnotes omitted).
[25] Cull J summarised the principles applying to the amendment of pleadings with reference to the authorities in Monster Energy Company v Ox Group Global Pty Ltd.5 She identified the relevant principles as follows:6
(a)the merits of the proposed amended pleading;
(b)whether irreparable damage would be suffered by the applicant;
(c)the timing of the application and magnitude of, and reasons for, delay;
(d)the risk of significant prejudice to other parties;
(e)the effect on public resources reflected in the impact on case management and the timetable to trial;
(f)the importance of the principle 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; and
(g)the overarching requirement is to exercise the discretion in the interests of justice.
[26] Leave to amend pleadings going beyond bringing up to date the information before the Court may be refused when the trial is imminent, especially if the amendment changes the complexion of the case.7
[27] Leave to amend has been granted as late as closing submissions, with provision for the defendant to address any new items of damage pleaded.8
[28] If leave is granted, the Court may compensate adversely affected parties through a wasted costs order, impose conditions, or both.9
Quantum
The plaintiffs’ submissions
[29]To recap, the updates to quantum that the plaintiffs seek relate to:
5 Monster Energy Company v Ox Group Global Pty Ltd [2016] NZHC 2124.
6 At [28].
7 Joyce v Hooton [2019] NZHC 3356 at [54]-[59].
8 Goodier v Earthquake Commission [2018] NZHC 2980.
9 EBR Holdings Ltd (in liq) v van Duyn [2016] NZHC 1169 at [59]; Wu v Moncur [2014] NZHC 2776; and Lyttelton Port Company Ltd v AON New Zealand [2019] NZHC 726 at [74].
(a)further costs incurred since November 2020 in respect of investigation, design and remedial costs incurred to date; and
(b)adjustment to the cost escalation allowances, the cost of contract works insurance and the division of costs between common and unit property.
[30] The plaintiffs characterise these amendments to quantum as intrinsically updating in nature.
[31] Mr Raymond QC, for the plaintiffs, submitted the amendments the plaintiffs seek to quantum are in the interests of justice because, if the defendants are found liable, it is just the damages awarded to the plaintiffs reflect the true cost of repairs and not an outdated or inadequate cost.
[32] As to any prejudice arising, Mr Raymond QC submitted the Council’s quantum expert recently produced his own estimate of costs to repair Oaks Club and there is no reason to conclude that reviewing the “updated” quantum would present any undue effort or prejudice, even when the Council and its experts are concentrating on the onerous work of preparing for a trial that is to commence very soon.
[33] In addition, Mr Raymond QC submitted it is likely quantum will be heard at the end of the trial or possibly at a subsequent hearing once the precise scope of repairs and liability have been established. That said, he submitted there is ample time for the Council to consider the updated quantum and to prepare their case accordingly.
The Council’s submissions
[34] Ms Meechen QC submitted the proposed amendments are significant and go far beyond simply updating the claim. She submitted it is erroneous to classify the amendments as updates.
[35] Ms Meechen QC submitted the increase in quantum and the amendments sought arise from a significant change in methodology. She submitted the evidence underpinning the proposed amendment is actually the introduction of a novel methodology for forecasting construction costs.
[36] Ms Meechan QC submitted it is unreasonable for the plaintiffs to significantly change the methodology used to estimate the total cost of repairs so soon before trial.
[37] Ms Meechen QC relied on the case of McDonough.10 In that case leave was granted to amend the pleading. However, Katz J observed the position might be different if reply evidence was required and if a defendant was constrained by time or resources in its ability to fully respond within the current trial envelope, observing in that situation the potential for unfair prejudice may arise.11 Ms Meechen QC submitted that is precisely the case here: the plaintiffs seek leave to amend and file new evidence in support without the Council having the opportunity to fully respond and the rationale for granting leave in McDonough does not exist on these facts.
Discussion
[38] I am satisfied the amendments to the costs of investigation, design and remedial costs to date are intrinsically updating in nature and the amendments can and should be made.
[39] The question of whether or not to grant the remaining amendments to quantum is more problematic because I do not agree with Mr Raymond QC’s characterisation of these amendments as being intrinsically updating in nature. They are predicated on a new methodology as Ms Meechan QC submitted.
[40] In determining this issue, I must come to the critical balance of the Elders Pastoral Ltd v Marr12 principles and the considerations listed by Cull J in Monster Energy Company.13
Are these amendments in the interests of justice?
[41] As a matter of principle, the plaintiffs must be entitled to the actual cost of repair if successful on liability.
10 Body Corporate 325261 & Ors v McDonough & Ors, above n 4, at [10]-[12].
11 At [41]-[42].
12 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA).
13 Monster Energy Company v Ox Group Global Pty Ltd, above n 5.
[42] There are very good reasons in this case for the plaintiffs needing to employ a new methodology. The impact of new market forces and, in particular, the impact of COVID-19 is highly relevant. It is a matter of common knowledge that COVID-19 has added cost pressures to the construction industry such as supply chain issues, increased transportation costs and demand outstripping supply for basic construction materials as timber, concrete and steel.
[43] These are external factors beyond the parties’ control. They derive from recent circumstances. They could not have been foreseen when the original cost estimates were made. For these reasons, it would be wrong in principle and unfair for the Court to deny leave to amend the proceeding.
Do these amendments significantly prejudice the Council?
[44] Whilst I accept there will be additional burden on the Council in responding to these amendments if leave is granted, I do not consider they will suffer irreparable damage nor be unduly disadvantaged in their trial preparation.
[45] I turn now to the timing of the application and the magnitude of and reasons for delay. The trial is due to start on 18 October 2021. It is estimated to take 16 weeks. There will be a month’s recess during January 2022.
[46] Quantum evidence will necessarily follow the evidence on the scope of liability and repairs. There is, in my view, ample time for the Council to retain and brief the necessary expert evidence. If I am wrong in that assessment, although undesirable the trial could be bifurcated and an adjournment granted for quantum to be heard at a later date. It does not, however, seem to me this will be necessary given the timeframes referred to above.
[47] Despite the seemingly large increase in the quantum that will be pleaded if leave is granted, it derives from the same causes of action. The increase amounts to a modest 9 per cent. The plaintiffs could not have anticipated the factors that have caused the need for a new methodology to be necessary nor the size of the increase before relatively recent events.
[48] The final Elders principle is delay.14 That is answered by the same reasoning as explained in the previous paragraph.
[49] I am satisfied any potential prejudice to the Council in respect of the increased quantum and the need for them to respond can be ameliorated if necessary by bifurcating the trial into a two-stage process: stage one on issues of scope and liability and stage two on issues of quantum and costs.
[50] In summary, I am satisfied the plaintiffs have met the very high threshold required for the granting of leave and I grant them leave to make the amendments sought in relation to quantum.
Additional Building Code breach to Defect 3
[51] The plaintiffs seek leave to amend the statement of claim to add a further Building Code breach arising from Defect 3 (the roof balconies, side roofs and cantilevered balconies do not shed precipitated moisture and snow). The Building Code clauses currently pleaded are E2 (external moisture) and B2 (durability). The plaintiffs seek to add clause E1 (surface water).
[52]The relevant clause, clause 51(d), of the current statement of claim reads:
(v)Falls on balcony roofs and cantilevered balconies: The Council did not have reasonable grounds to be satisfied the falls on the balcony roofs and cantilevered balconies complied with clauses E2 and B2 of the Building Code and the Consent Building Code Requirement, as:
(1)It was apparent to a reasonably skilled council inspector the balcony roofs and cantilevered balconies and gutters/outlets did not have sufficient falls to shed precipitated moisture;
(2)The Council did not obtain verification that the falls on the balcony roofs and cantilevered balconies would shed precipitated moisture and would comply with the Building Code and the Building Consent.
[53] Clause E1 concerns surface water and is relevant in this case to the alleged ponding of water on the balconies which causes a slip hazard. Similarly, it is relevant
14 Elders Pastoral Ltd v Marr, above n 12.
to the allegation that the balconies have been constructed in such a way that surface water is not conveyed to an appropriate outfall.
Plaintiffs’ submissions
[54] Mr Raymond QC submitted the addition of clause E1 makes no change to the wording of Defect 3 and does not introduce a new cause of action.
[55] Further, he referred to the fact the Council’s experts have already provided evidence in relation to the ability of the balconies to drain surface water and this is therefore not a new defect for the Council to address.
[56] In addition, he submitted it is just the Court considers all relevant Building Code clauses when it hears evidence on Defect 3 and, further, if the Court is unable to take account of any potentially relevant Building Code provisions it will not be able to determine the real issues between the parties.
Council’s submissions
[57] Ms Meechan QC submitted the plaintiffs’ proposed amendment to Defect 3 introduces an entirely new element to Defect 3 which has not previously been considered or responded to by the Council.
[58] She submitted the amendment expands the scope of the defect significantly. Instead of Defect 3 concerning only E2 (external moisture) and B2 (durability), the amendment would include clause E1 (surface water) as a further alleged breach. She submitted the focus of the E2 requirement has been on the fall to the balconies, whereas the E1 requirements concern the drainage system as a whole.
Discussion
[59] Ms Meechen QC appears to have interpreted some language used by Mr Calvert (the plaintiff’s expert) as suggesting the proposed amendment is referring to a much broader allegation of defects in the general drainage associated with the balcony roofs and cantilevered balconies. She explained that “drain” in the Building Code means the pipes that convey foul water or surface water to an outfall (being itself
defined as that part of the disposal system receiving surface water from the drainage system).
[60] She explained further that the term “drain” is also defined in E1 as a pipe that carries water to an outfall. There is no reference to decks or roofs in E1 except for the purposes of calculating the appropriate size of drains from those areas.
[61] Mr Clinton Smith, one of the Council’s experts, explains that the amendment introduces an entirely different aspect to Defect 3 which has not previously been considered by me or any of the Council’s other experts. He says he would need a further eight weeks to complete his investigation into the proposed new defect.
[62] Three of the Council’s expert witnesses have already given evidence on the falls on the balcony roofs and cantilevered balconies and the ability or otherwise of the falls to shed moisture (or, in other words, convey the moisture to an outfall). It is unclear what further testing would in fact be required.
[63] I do not accept there is any broadening of the scope of the defect or a new cause of action arising from the proposed amendment in this respect. It seems tolerably clear to me that the amendment is simply to put a further relevant Building Code clause before the Court, one which relates to the falls on the balcony roofs and cantilevered balconies and the failure to shed surface water.
[64] I therefore conclude there is no prejudice to the Council in granting leave to make the amendment to include reference to E1 of the Building Code.
[65] In summary, it is in the interests of justice that all potential issues between the parties are ventilated in the upcoming trial. Declining leave would also run the risk of exposing the parties to further rounds of litigation, contrary to the object of the High Court Rules.
Application for leave to serve supplementary briefs
[66]Rule 9.8 states:
9.8 Supplementary briefs
(1)A party wishing to offer a supplementary brief must serve it as soon as possible.
(2)The acceptance and use of the supplementary brief in court will be at the discretion of the trial Judge.
[67]To reiterate, the four additional briefs the plaintiffs seek leave to serve are from:
(a)Steven Garland, Body Corporate manager for Oaks Club, who gives evidence of the further investigation and repair costs incurred since the plaintiffs’ evidence was served in November 2020 (this mirrors the proposed amendment to the pleading of the costs incurred to date).
(b)James White, a quantity surveyor, who updates his evidence served in December 2020 in relation to repair cost escalation to reflect current market conditions and the cost of contract works insurance (this mirrors the proposed amendment to the pleading). Mr White also adjusts his calculation of the repair costs relating to unit and common property.
(c)Graeme Calvert, a building surveyor who gives evidence on the additional Building Code breach, clause E1 (surface water), arising from Defect 3.
(d)Matthew Keesing, a materials scientist, who gives evidence in response to evidence by the Council’s expert, Dr Jonathan Smith, served 11 August 2021, in relation to the cause of corrosion to structural steel at Oaks Club.
Legal principles
[68] The Court has a wide discretion to allow supplementary briefs. The matters to be considered include the interests of justice, the prejudice to either party (the amount
of time before trial being relevant) and the fact any additional work may be reflected in the costs award at the end of trial. The fact supplementary evidence improves a party’s evidential case does not of itself constitute prejudice.15
[69] The following comment made by Hammond J in Air Chathams Ltd v Civil Aviation Authority of New Zealand in the context of a challenge to the admissibility of expert evidence is also relevant:16
[48] … Secondly, Judges do not lightly turn away from the seat of justice matters of “evidence” which one side would like to have before the Court. This leads to a sense of grievance on the part of plaintiffs that they have not had their full day in Court.
[49] But there is another side to it. A defendant has to meet what is put into Court. …
[70] The Court is given a wide discretion under rule 9.8 to permit supplementary written briefs, but they are to be served as soon as possible after the party wishing to use them becomes aware of the new or further evidence. A balancing of overall justice is required, weighing the prejudice to the party that served the supplementary brief if leave is refused against that to other parties if leave is granted.
[71] In Body Corporate 366567, Lang J declined the plaintiffs’ application for leave to serve the supplementary briefs of evidence noting “the time has now well and truly passed for the plaintiffs to serve further briefs of evidence of this type”.17
[72] In a later decision on Body Corporate 366567, Bell AJ allowed consolidated briefs which included new expert structural/fire modelling evidence (which was from a different witness and of a completely different in nature to that Lang J had declined to grant leave to serve), but noted that the six-month period in which the council had to reply “should be long enough”.18 In that case the trial was some 14 months after the application.
15 Western Park Village Ltd v Baho [2013] NZHC 1909 at [12]; Signal v Berry & Ors [2016] NZHC 1126 at [24]-[27]; Total Air Supply Company Ltd v Total Air Supply Company (2007) Ltd HC Auckland CIV-2008-404-7627, 24 May 2011 at [60]; and Fitzgerald v IAG New Zealand Ltd [2017] NZHC 2705 at [7]-[8].
16 Air Chathams Ltd v Civil Aviation Authority of New Zealand & Anor (2003) 16 PRNZ 676 (HC) at [48].
17 Body Corporate 366567 v Auckland Council & Ors [2019] NZHC 3260 at [17].
18 Body Corporate 366567 v Auckland Council & Ors [2021] NZHC 491 at [68].
[73] Rule 9.8 does not appear to preclude supplementary evidence in the nature of reply evidence.
Plaintiffs’ submissions
[74] Mr Raymond QC relied on the reasoning in Air Chathams Ltd and submitted it is in the interests of justice for the supplementary briefs to be admitted in evidence.19
Council’s submissions
[75] Ms Meechen QC submitted the threshold for the exercise of the discretion conferred by rule 9.8(2) is not met in this case because the plaintiffs cannot point to any valid reasons for producing the evidence so late in the piece.
[76] Ms Meechen QC submitted that after five years and many indulgences granted to the plaintiffs, the most recent of which being when I granted leave to file further supplementary briefs on 11 May this year, enough is enough and the plaintiffs should not be allowed to expand their evidence in anyway.
[77] Further, she submitted, properly analysed, this is not “updating” evidence but rather is a case of the plaintiffs realising belatedly there are gaps in their evidence and trying to fill them.
[78] Referring to the cases above, Ms Meechen QC submitted that leave had been denied in contexts where the commencement of trial was some months off, not as here where it is a matter of just over one month away. She submitted there is now simply no time for the Council analyse, understand the full implications of the supplementary evidence and prepare their response. Furthermore, she referred to the fact the Council should not be interrupted in preparing for the expert conferencing scheduled on 13 to 17 September and 21 to 24 September 2021 and the trial itself, which starts on 18 October 2021.
[79] Finally, Ms Meechen QC submitted that while rule 9.8 does not expressly restrict supplementary evidence to new matters, it would undermine the purpose of the
19 Air Chathams Ltd v Civil Aviation Authority of New Zealand & Anor, above n 16.
rules governing reply if a supplementary brief could be used to introduce reply evidence by the “backdoor”. She submitted in the earlier decisions of the two Associate Judges who have case managed the matter there was a deliberate decision not to order reply briefs and the evidence of Mr Kessing is clearly reply evidence.
Discussion
[80] It would be unfair for the Court to deal with the generalised objections raised by the Council without regard to the specifics of each individual witness’s proposed supplementary evidence. Approaching the matter from a generalised pejorative perspective (as the Council would have the Court do) could lead to an injustice in that evidence that ought to be before the Court so the issues in contention are properly ventilated may be unfairly excluded.
[81] Parties quite rightfully look to the Court as a forum where light will shine on the essential and relevant facts of each parties’ case so that the issues for determination are fully aired. To turn a blind eye to evidence solely on the basis it is presented late in the piece in litigation as complex as this is a simplistic and punitive approach that I choose not to adopt.
[82] Therefore in this respect I propose to deal with the arguments for and against the granting of leave at the individual level, by examining the proposed supplementary briefs first and then moving to a consideration of the broader questions of fairness as between the parties having regard to the content and implications of that proposed evidence.
Mr Garland
[83] Mr Garland is the Body Corporate manager. In his supplementary brief he attaches a schedule which updates the costs the Body Corporate has incurred to date. This results in an increase in these costs from $5,554,316 to $5,835,592. Mr Raymond QC submitted there is no prejudice to the Council arising from this evidence, which is by way of update only, and it is in the interests of justice that updated quantum information is before the Court.
[84] Mr Garland’s primary brief was served on 9 December 2020. Mr Garland’s new evidence purports to produce invoices that cover the period from October 2020 to May 2021. Ms Meechen QC submitted there is no reason why this new evidence could not have been served, at the latest, by May 2021 as part of the plaintiffs’ previous application for leave to serve supplementary evidence.
[85] Additionally, she submitted the invoices for investigation and repair works are discoverable documents, therefore by withholding until 11 August 2021 invoices dating back as far as October 2020 the plaintiffs are in breach of their continuing discovery obligations.
[86] I am satisfied this evidence is intrinsically updating evidence. The discovery of an additional 21 invoices (some that back date a previous affidavit) is not surprising in litigation such as this. I do not consider the plaintiffs are culpable of any deliberate withholding of discovery.
[87] I grant leave to the plaintiffs to file and serve Mr Garland’s supplementary brief.
Mr White
[88] Mr White is the Body Corporate’s quantity surveyor. Mr White calculates escalation allowances for the remedial work cost to take into account current market conditions. He provides his calculations for contract works insurance cost using information from another project he is familiar with and provides a revised division of the repair cost between unit and common property. He calculates the escalation allowances on a different basis to that advanced in his previous evidence.
[89] Mr Raymond QC submitted that as Council’s quantum expert provided repair cost estimates in August 2021, there is no reason to believe the Council’s quantum expert would have difficulty reviewing this updated information and it is likely he has done so already (or at least he has had sufficient time to do so). He submitted the Council and its experts would be well able to respond to the new quantum information at the experts’ conference or at trial (particularly with quantum being dealt with at the end).
[90] Ms Meechen QC submitted Mr White’s evidence is not intrinsically purely updating evidence because of the new methodology he employs.
[91] Ms Meechen QC submitted the Council have not had sufficient time to understand the full implications of the new methodology employed by Mr White in his supplementary brief. She submitted further, in light of the increase from $2.9 to
$6.5 million for this aspect of the claim, if leave were given the Council would need to address the new position by evidence from an economist or other expert.
[92] Mr White’s new brief also includes new evidence to justify a significant uplift in insurance costs from $74,000 to $330,000. Previously there was no explanation whatsoever by Mr White as to how he had derived the $74,000 he had included in his table of cost for insurance.
[93] Ms Meechen QC pointed to deficits in the supplementary brief where Mr White purports to “update” the contract works insurance evidence by reference to another unnamed project allegedly of a similar nature but in respect of which not a single document has been discovered. How and when that project was undertaken and when and how Mr White came into possession of this new information is not addressed at all.
[94] Lastly, she submitted there are no good reasons for the delay in Mr White’s supplementary brief as the market conditions should have been apparent to Mr White as early as the start of 2021. At the very least, the April to July 2021 publications he refers to could have supported an earlier application.
[95] Mr White’s evidence as to the cost escalation for carrying out the balance of the repairs is highly germane to the plaintiffs’ ability to get fair compensation if they prove liability. He also has good reason to change the methodology he has employed in light of recent global and domestic events caused by the COVID-19 pandemic. Given he now seeks to rely on information only recently published, I do not see how he could have filed his evidence much, if any, earlier.
[96] The evidence on the increase to contract works insurance is contained in one paragraph, as is the supplementary evidence of his adjustments for the common and unit property split. Whilst Ms Meechen QC’s observation that the information is scant appears accurate, the consequence is there is also not a great deal of material to respond to or investigate in these two respects.
[97] The most significant aspect of Mr White’s supplementary brief is, of course, the change in approach to the assessment of the cost of repairs and cost escalation. I consider Mr Raymond QC is perhaps a little bullish in his predictions as to what will be required of the Council and its experts in responding to Mr White’s evidence.
[98] However, having said that, there are ways in which to mitigate any potential undue prejudice to the Council and its experts from having to respond to this evidence and I refer to those at paragraph [49] herein.
Mr Keesing
[99] Mr Keesing is a materials scientist. His supplementary brief is entirely by way of reply to the brief of evidence of Dr Jonathon Smith, a materials scientist, an expert for the Council who was asked to provide his expert opinion on alleged corrosion to structural steel at the Oaks Club.
[100] Whilst potentially far reaching in its implications Mr Keesing’s supplementary brief is essentially confined to one point, which is that the efflorescence in the ceiling voids confirms in his opinion that water is entering the top of the concrete structure from the exterior.
[101] The plaintiffs submitted they could have had Mr Keesing respond to Dr Smith orally at trial, but by producing this supplementary brief they have given the defendants advance notice of his evidence on this point.
[102] They submitted it is in the interests of justice this important evidence is heard and there is certainly no prejudice to the Council in having Mr Keesing’s response early and in writing.
[103] Ms Meechan QC submitted no provision was made for the filing of written briefs in reply and that it was a deliberate decision of the Judges who case managed the previous interlocutory phases of the proceeding there should not be written briefs in reply. On that basis alone Ms Meechen QC submitted leave should not be given to put in reply evidence when the timetable never allowed for it.
[104] Second, Ms Meechen QC submitted Mr Keesing’s original evidence does not address efflorescence in any depth, even though the presence of efflorescence would have been apparent to him at the time of his site inspections.
[105] I do not consider the supplementary brief raises any potential prejudice to the Council. The evidence is intrinsically by way of reply and puts the Council on advance notice of what could legitimately have been led in oral evidence at the trial. It is also of advantage to the Court to have this information.
Mr Calvert
[106] Mr Calvert is a building surveyor. In his one-page supplementary brief Mr Calvert explains the additional relevant Building Code breach, clause E1, which he says is relevant to Defect 3.
[107] Mr Calvert relied on his existing investigations and photographs and has not produced any new exhibits.
[108] As discussed above at [59] to [65] it is in the interests of justice that any relevant alleged Building Code breach is identified for the Court. Mr Calvert does no more than bring the matter to the Court’s attention. There is no new evidence to which the Council will need to respond. I consider it of benefit to the ventilation of issues to have this evidence before the Court, and for reasons already expressed I do not see that its introduction will prejudice the Council.
Affirmative defences
[109] The plaintiffs seek the following directions in relation to their briefs of evidence in relation to affirmative defences:
Affirmative Defence Proposed Due Date Expert evidence in response to Andrew Logan 7 September 2021 6 Year Limitation 24 September 2021 Contributory Negligence 24 September 2021 Failure to Mitigate 24 September 2021 Betterment 10 September 2021 Diminution in Value 10 September 2021
[110] The Council plead affirmative defences, namely the six-year limitation period (Limitation Act 1950), 10-year limitation period (Building Act 1991 and 2004), contributory negligence, failure to mitigate, betterment and diminution in value.
[111] On 21 May 2021 the Court ordered the Council to provide further particulars of the six-year limitation, contributory negligence, failure to mitigate and betterment affirmative defences. These were not provided by the Council until 18 August 2921.
[112] The plaintiffs’ proposed timetabling means the Council will have the evidence three weeks before trial. This should not cause difficulties for the Council. To the extent that it may do so, it is simply a consequence of the Council failing to comply with a notice to provide particulars and then failing to provide particulars ordered by the Court.
[113] I am satisfied the proposed timetabling directions are appropriate in the circumstances.
Summary of Conclusions
[114] For the reasons provided at [23] to [65] I grant leave to the plaintiffs make the amendments to their statement of claim.
[115] For the reasons provided at [66] to [108] I grant leave to the plaintiffs to file their supplementary briefs.
[116]I consider that it is appropriate to adopt the prosed pretrial directions set out at
[109] herein.
[117]There shall be a further pretrial conference to consider the following:
(a)the Court’s preference on the use of screens in the Courtroom for counsel to display relevant documents from the hyperlinked electronic bundle for the Court, witnesses, and other counsel to view;
(b)whether some written briefs of evidence-in-chief of the second plaintiffs can be taken as read;
(c)pre-emptive oral evidence directions to allow evidence by video link if some witnesses’ travel is restricted by Covid-19 alert levels;
(d)alternative trial arrangements in the event of an increase in Covid19 alert levels;
(e)the sequencing of evidence-in-chief at trial (particularly when and how expert evidence is to be heard, for example whether clustering of experts with a discipline is desirable);
(f)whether an indicative timetable of the parties’ evidence and submissions within the trial can be agreed including the order in which the parties will be heard; and
(g)any timetable issues before trial (one such issue concerning the plaintiffs’ briefs of evidence on the Council’s affirmative defences is raised in more detail below).
Orders and directions
[118] Leave is granted to the plaintiffs to amend their statement of claim as set out in the affidavit of Russet Dewy Mendoza Sacayan dated 11 August 2021.
[119] Leave is granted to the plaintiffs to file and serve the supplementary briefs of evidence of:
(a)Steven Garland;
(b)James White;
(c)Matthew Keesing; and
(d)Graeme Calvert.
[120] Timetabling directions in respect of the filing of replies to the affirmative defences shall be as follows:
(a)expert evidence in response to Andrew Logan to be filed and served by 7 September 2021;
(b)in respect of six-year limitation to be filed and served by 24 September 2021;
(c)in respect of contributory negligence to be filed and served by 24 September 2021;
(d)in respect of failure to mitigate to be filed and served by 24 September 2021;
(e)in respect of betterment to be filed and served by 10 September 2021; and
(f)in respect of diminution in value to be filed and served by 10 September 2021.
[121]The Registrar shall set the matter down for a Microsoft Teams conference at
10.00 am on Friday, 1 October to discuss those matters referred to at [117] together with any other matters arising.
[122]The issue of costs is reserved.
Doogue J
Solicitors:
Grimshaw & Co, Auckland (for Plaintiffs)
Counsel: R Raymond QC, ChristchurchWynn Williams, Christchurch (for First Defendant)
Counsel: C Meechan QC, Auckland
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