Body Corporate 384825 v Queenstown Lakes District Council

[2021] NZHC 1207

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-425-000029

[2021] NZHC 1207

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 RALSTON & ORS [2021] NZHC 1207 [27 May 2021]

AND

ELLIOTT ARCHITECT LIMITED

Eleventh Defendant

AND

STEPHEN BRUCE MCLEAN

First Third Party

AND

ELLIOTT ARCHITECT LIMITED

Second Third Party

AND

ROSS MCGREGOR WENSLEY

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

Judgment:

(On the papers)

27 May 2021

JUDGMENT OF DOOGUE J

This judgment was delivered by me on 27 May 2021 at 12.00 pm pursuant to Rule 11.5

of the High Court Rules

Registrar/Deputy Registrar Date:

The application

[1]        This proceeding concerns a claim in tort brought by the body corporate and owners of a 44-unit (70 apartment) hotel complex in Queenstown named Oaks Club (the Oaks).

[2]        The plaintiffs claim in tort against the Queenstown Lakes District Council (QLDC), project managers, insurers of the structural engineer and the architect.

[3]        The first and second plaintiffs apply to the Court for an order granting them leave to adduce the supplementary briefs of evidence of five witnesses which were served on the other parties on 22 April 2021.

[4]        QLDC opposes the application on the grounds that it would cause significant prejudice to QLDC.

Background

[5]        The  proceeding  has  been  allocated   a   16-week   trial   commencing  on 27 September 2021.

[6]        In  November  2020  the  plaintiffs  served  their   briefs  of  evidence.   On  22 April 2021 the plaintiffs served five supplementary briefs of evidence pursuant to r 9.8 of the High Court Rules, being four expert briefs and one brief from the Oaks’ general manager.

[7]        On 7 May 2021 counsel for QLDC filed a memorandum submitting that the supplementary briefs changed the case QLDC was required to meet and submitting that in the event the Court gave leave for the filing of the supplementary evidence the trial would need to be adjourned.

The supplementary briefs

[8]I turn now to consider the supplementary evidence.

[9]The supplementary briefs of evidence are from the following witnesses:

(a)Graeme John Calvert;

(b)Robin Nicholas Wakeling;

(c)Benjamin James Holliss;

(d)Dr Ruth Nichole Williams; and

(e)Rebecca Maree Caswell.

Supplementary evidence of Mr Calvert

[10]      In November 2020 Mr Calvert provided a 161-page brief of evidence in which he addressed water-tightness defects associated with the balconies, roof, bathrooms, cladding junctions and the driveway at the Oaks. The vast majority of this evidence relates to the waterproofing of the balconies. These are defects 1 to 3 in the statement of claim (schedule 5).

[11]      In that brief Mr Calvert exhibits a large number of photographs, 3-D diagrams and test results relating to the balcony waterproofing and about 2,200 photographs relating to the balcony defects and resulting damage. There were about 220 3-D diagrams relating to the balcony defects and resulting damage. There were 67 laboratory sample results across six laboratory reports in relation to damage arising from the balcony defects. Mr Calvert’s balcony investigation spanned all 49 apartments with balconies.

[12]      In his supplementary brief Mr Calvert describes investigations he undertook within five units on 18 March 2021, after further leaks emerged at the development. This evidence occupies six paragraphs and includes an exhibit with 34 photographs. Mr Calvert’s brief records that in the course of his investigation he identified further examples of balcony defects 1 – 3 and resulting damage. He sent three samples to the biodeterioration consultant, Dr Robin Wakeling,  for  testing.  On  28  March 2021 Dr Wakeling provided a single report on the three samples. Mr Calvert also provides a marked-up photograph and two side elevation diagrams showing the location of key

drainage and waterproofing features described in his first brief, to assist the Court in understanding his evidence.

[13]      It is significant that Mr Calvert undertook his investigation on one day and was in receipt of the test report within 10 days.

Supplementary brief of Dr Robin Wakeling

[14]      This brief is annexed to Mr Calvert’s affidavit sworn 17 May 2021. It exhibits his report on the three samples from unit 601 that he tested.

Supplementary brief of Dr Ruth Williams

[15]      By way of background, the plaintiffs’ experts reached the conclusion that the significant amount of water and water damage within the Oaks was (apart from the bathrooms) caused by moisture ingress from the exterior. The plaintiffs engaged a building performance engineer, Dr Williams, to advise whether condensation may have contributed to the damage in any significant way. Dr Williams undertook modelling and concluded that it did not.

[16]      On 20 November 2020 the plaintiffs served Dr Williams’ brief on the defendants. In March 2021 QLDC requested information in relation to the modelling, including on 26 March 2021 a more detailed request.

[17]      In her supplementary brief served 22 April 2021 Dr Williams provided further information in order to satisfy this request by QLDC and to comply with her obligations under the code of conduct.

[18]      In her affidavit sworn 7 May 2021 QLDC’s façade engineer, Ms Craig, states she required further information in relation to Dr Williams’ modelling in order to complete her own modelling. In her affidavit sworn 17 May 2021, Dr Williams records that she has since contacted Ms Craig directly and that between them they have resolved the issue. Dr Williams gave evidence that her modelling took three weeks.

Supplementary brief of Benjamin Holliss

[19]      In his supplementary brief the structural engineer, Mr Holliss, describes the test he undertook on the de Geest bathroom pod floor slab from another property and its relevance to the deficient Oaks de Geest pod floors (he gives evidence that the pods are the same in all material respects).

[20]      Having undertaken the test on the floor slab at the other property and gaining knowledge relevant to the Oaks, Mr Holliss says he could not ignore the knowledge that he has acquired. He provides it now so that all parties have an opportunity to review it and respond, rather than raising it an experts’ conference or in the course of examination at trial.

[21]      Mr Holliss states in his affidavit that it took him less than five days over a three-week period to take measurements at the Oaks, remove the pod floor slab from the other property, undertake the testing, receive the test report and undertake calculations.

[22]Mr Hollis did not disclose any identifiers of the property.

Supplementary evidence of Rebecca Caswell

[23]      In her supplementary brief Ms Caswell describes the impact of the pilot project in units 903 and 904 on the neighbouring properties, 803, 804 and 902, including lost rental suffered by the owners of unit 902.

[24]      In November 2020 the plaintiffs’ valuer, Mr Stephen MacKisack, provided a brief in which he calculated the lost rental suffered during the pilot project, and estimated the lost rental in  the  course  of  the  upcoming  main  remedial  works.  Mr MacKisack’s assessment did not include the lost rental for unit 902 in the course of the pilot project.

[25]      Ms Caswell’s supplementary brief also provides information in relation to the heating of the units, which is relevant to Dr Williams’ evidence on condensation.

[26]      This supplementary evidence was omitted from the main evidence served in November 2020 in error. The error was by the plaintiffs’ solicitors, not the witnesses themselves.

QLDC’s opposition

[27]      QLDC submits the threshold for the exercise of the discretion conferred  by   r 9.8(2) of the High Court Rules is not met in this case and says there is no good reason for this late evidence.

[28]      QLDC says if the supplementary briefs are allowed in, the trial will need to be adjourned to allow QLDC sufficient time to adequately respond to the briefs. Furthermore, QLDC submits the plaintiffs have had five years to get their case in order and an eleventh-hour attempt to bolster their case should be resisted.

[29]QLDC opposes the application on the following specific grounds:

(a)QLDC’s experts are currently completing preparation of their briefs of evidence and have had just six months to respond to the plaintiffs’ briefs of evidence. Those briefs address the plaintiffs’ case as it currently stands. QLDC will be prejudiced in preparing its evidence if it has to respond to the supplementary briefs.

(b)Three and a half weeks is not enough time (while already preparing substantive briefs of evidence) for QLDC’s experts to:

(i)review and consider the supplementary evidence;

(ii)to undertake further testing and investigations at the Oaks complex during a week-long site visit;

(iii)obtain results of any testing undertaken;

(iv)analyse the results of any testing;

(v)address the follow-on effects of the results, including repair solutions and the cost of any repair solutions; and

(vi)draft or amend briefs of evidence to respond to the supplementary briefs of evidence.

[30]      QLDC’s expert witnesses, Clinton Smith and Gemma Craig, in affidavits dated 7, 20 and 21 May 2021 say it is simply not possible for QLDC to address this new evidence in either the three weeks before QLDC’s briefs are due or the four months before the trial starts.

[31]      In summary, QLDC submits it cannot be in the interests of justice to force a defendant facing a claim for $74 million to go to trial on evidence it has not had the opportunity to answer.

The law – r 9.3 of the High Court Rules

[32]      The Court is given a wide discretion under r 9.8 to allow supplementary written statements to be accepted and used. The following principles guide the exercise of the discretion:

(a)Leave will necessarily depend on the particular facts and circumstances of the case.1

(b)A balancing of where the overall justice of the case lies is required, weighing the prejudice to the party that served the supplementary brief if leave is reserved against that to other parties if leave is granted;

(c)The fact that the supplementary brief improves the evidential case of the party seeking to offer it is not, without more, a basis for refusing leave;

1      Signal v Berry [2016] NZHC 1126 at [24].

(d)The prejudice may be especially significant where the supplementary brief is provided at a late stage in the proceeding;

(e)Granting an adjournment to allow more time to respond and/or ordering costs that reflect the extra work required in responding to the supplementary evidence may minimise prejudice resulting from a grant of leave;

(f)The effect on public resources if a trial needs to be vacated due to the supplementary evidence being provided at the last minute.2

(g)To the extent that further evidence is a response to evidence adduced by the defendants, the plaintiff is entitled to provide that further evidence orally.3

(h)Leave to adduce further evidence that improves a party’s position may be allowed if the trial date is a sufficient time away.4

Discussion

[33]      The content of the supplementary briefs is not in reply. It substantially, but not exclusively, contains fresh evidence and results of recent testing. QLDC was not advised that further testing was being undertaken by the plaintiffs’ experts and was not, therefore, given an opportunity to be present. This is unsatisfactory.

[34]      The primary objections of QLDC appear to be that the plaintiffs are attempting to bolster their case too late in the day and that responses will require significant time because they will involve expert witnesses testing and modelling their own results from the testing.

[35]      Having regard to the authorities filed by QLDC in support of their opposition, it is self-evident that the exercise of the discretion is very fact dependent.

2      Body Corporate 354085 “Perspective Apartments” v Auckland Council (No 1) [2016] NZHC 200 at [9].

3      Currie v Goodwin HC Auckland CIV-2002-404-001820, 27 August 2004.

4      Madretsma Farm Ltd v Frizzell HC Napier CP 9/94, 28 March 2001 at [5].

[36]      In this case the evidence that the first and second plaintiffs seek to adduce is highly relevant to the defect and quantum issues before the Court. It goes without saying that it is important that all relevant evidence is before the Court.

[37]      The evidence relates to 4 of the 13 pleaded defects only and requires consideration of a limited scope of issues. The evidence is minor when compared to the evidence-in-chief.

[38]      The supplementary evidence is served well before the defendants’ evidence and well before trial.

[39]      The time taken by the plaintiffs’ experts to compile the supplementary evidence suggests the defendants can file within a relatively short timeframe.

[40]I now set out my reasons for coming to that conclusion.

Supplementary brief of Graeme Calvert

[41]      In relation to the supplementary brief of Graeme Calvert, there are no changes to the pleaded balcony defects, the supplementary evidence merely provides further examples of the defects and resulting damage already pleaded. There is no change to any of the liability evidence against the defendants. Thus there is no change to the case against QLDC.

[42]      Mr Calvert undertook his investigation in one day and was in receipt of his test report within 10 days. It is not clear to me then why Mr Smith says QLDC needs an additional 12 weeks to respond.

Supplementary brief of Dr Robin Wakeling

[43]      The supplementary evidence of Dr Robin Wakeling is annexed to Mr Calvert’s affidavit. Again, there is nothing in this evidence that changes the pleaded balcony defects.

Supplementary brief of Dr Ruth Williams

[44]      I have already referred to the fact that the request for further information by QLDC from Dr Williams has been resolved.

[45]      Ms Craig states in her affidavit that her modelling will take four to six weeks. Dr Williams gives evidence that her modelling took three weeks. It is significant that the period of time between the service of the supplementary briefs, 22 April 2021, and the due date for the defendants’ briefs of 16 June 2021 is eight weeks.

Supplementary brief of Benjamin Holliss

[46]      This is, in effect, fresh evidence. QLDC’s experts will need to undertake a full analysis of Mr Holliss’ calculations and visit the Oaks to conduct their own testing. The extent of this defect was not understood at the time of the investigations being undertake throughout the pilot project.

[47]      Mr Holliss says the testing took him less than five days over a three-week period, to take measurements at the Oaks, remove the pod floor slab from the other property, undertake the testing, receive the test report and undertake calculations.

[48]      Mr Smith asserts there is not sufficient time to do this but I am unclear why that is the case when there is still approximately four to five months to trial and they were served with the evidence almost four weeks ago.

Supplementary brief of Rebecca Caswell

[49]      The supplementary evidence of Ms Caswell was omitted from the main evidence served in November 2020 in error by the plaintiffs’ solicitors, not the witness.

[50]Again, it does not change the scope and nature of any of the pleaded defects.

[51]      I note that the plaintiffs offered access to QLDC’s experts to inspect the same units Mr Calvert inspected on 18 March 2021 to enable QLDC to remove a slab from the  bathroom  floor  for  testing  prior  to  the  hotel’s  busy  period  beginning  on  20 June 2021. QLDC rejected this offer.

[52]      QLDC submit it was unreasonable to expect them to commit time and money undertaking testing to respond to evidence that had not been accepted by the Court. There is some force to their submission in this respect.

[53]In summary:

(a)the overall justice of the case requires that leave be granted to adduce the supplementary evidence; and

(b)there is no undue prejudice to QLDC to require them to respond as the time taken by the plaintiffs’ experts to compile the supplementary evidence suggests the defendants can respond well before the trial.

Conclusion

[54]      I consider that leave to adduce the supplementary briefs of evidence should be granted.

What effect should that have on the existing timetabling orders and trial date?

[55]      QLDC say if leave is granted it will take at least 12 to 13 weeks for QLDC to respond to the evidence. They say this is an optimistic timeframe given the steps involved in the process. This allows for:

(a)two to four weeks to organise a site visit at the Oaks at a time the required experts are available;

(b)one week to undertake the site visit and obtain the required samples;

(c)three weeks to have samples tested and to obtain results;

(d)two weeks for QLDC’s experts to analyse the results and consider their position on the alleged defects;

(e)two weeks for QLDC’s experts to consider the impact on its remedial scope; and

(f)two weeks to cost any revised remedial response.

[56]      QLDC says that in order to respond to the supplementary brief of evidence of Graeme Calvert, QLDC’s expert witnesses will need to inspect unit 601 and consider taking samples. This will require liaising with more than one of QLDC’s expert witnesses and scheduling time for a site visit. The other units inspected by Mr Calvert will also need to be inspected. The further testing by QLDC will need to occur following a heavy rainfall.

[57]      To respond to the supplementary brief of evidence of Dr Robin Wakeling QLDC will need to get its timber biodeterioration consultant to review and possibly re-examine samples taken from comparable locations. QLDC’s timber biodeterioration consultant is based in Australia so any timber samples would need to be delivered to Australia to be tested.

[58]      QLDC say there are serious difficulties in responding to the supplementary brief of Benjamin Holliss because the plaintiffs have not even disclosed the location of the unknown property.

[59]      QLDC will need to attend the unknown property, inspect the bathroom pod at the unknown property (which may require demolition of the bathroom pod) and compare the bathroom pod from the unknown property with the Oaks’ bathroom pod.

[60]      Dealing with the supplementary brief of evidence of Dr Ruth Williams, QLDC says it has still not received the further information to enable it to respond. This is, however, disputed by Dr Williams. In relation to the supplementary evidence, QLDC’s expert will need to input the information into her own modelling system and address her findings.

[61]      Nothing is advanced that will need to be done in relation to the supplementary brief of evidence of Rebecca Caswell.

[62]      In addition, QLDC says there will need to be site visits. They will require their building surveyors (QLDC has engaged two building surveyors), structural engineer,

membrane specialist and expert co-ordinator to attend the site and undertake further testing and investigations.

[63]      It is not a simple task to find a date that multiple experts are available to attend the site and is made more difficult because the Oaks is run as a hotel complex.

[64]      In summary then, there are three stages of response that will be required by QLDC’s experts to the supplementary evidence:

(a)Stage 1 – QLDC’s experts will need to analyse the results of testing, reach an opinion as to the defects alleged by the plaintiffs based on that testing and set out that opinion in a brief of evidence;

(b)Stage 2 – QLDC’s experts will need to determine whether a revised remedial response is required and, if necessary, provide that remedial response;

(c)Stage 3 – QLDC’s experts will need to cost any remedial response and consider its impact on the remedial programme, which then must be fed into the consequential loss analysis.

[65]QLDC say this will take approximately six weeks.

[66]      If the defendants’ date to serve briefs of evidence is extended by the six weeks QLDC says is  required,  this would leave the third party  evidence being filed on   24 September 2021, the last working day before the trial commences. There would then be no time for expert conferences in advance of the trial.

[67]      Given the lateness of the filing of the supplementary briefs relevant to the date of commencement of the trial, it is only fair that QLDC be afforded some latitude in filing responses, given that involves testing and modelling by their experts.

[68]      Taking this into account, I consider the trial should commence three weeks later.

Result

[69]      The application for leave to file the supplementary briefs of evidence is granted.

[70]The trial shall commence 18 October 2021.

[71]      I direct the Registry to retain the week of 11 October 2021 for the purposes of my familiarising myself with the evidence and undertaking any site visits that may be necessary.

Doogue J

Addendum

[72]      This morning I convened a telephone conference wherein I asked the parties to review the previous timetabling directions only insofar as is necessary to deal with the supplementary evidence and the new commencement date for the trial.

[73]      I direct that a further telephone conference be convened at 9.00 am on 2 June 2021.

Doogue J

Solicitors:

Grimshaw & Co, Auckland (for Plaintiffs)
Wynn Williams, Christchurch (for First Defendant)

White Fox & Jones, Christchurch (for Fourth and Fifth Defendants)

Counsel: K T Dalziel, Barrister, Christchurch

DLA Piper, Auckland (for Sixth to Tenth Defendants and Fourth to Seventh Third Parties) RVG Law (Stephen Brent), Christchurch (for First Third Party)

Counsel: Kelly Quinn, Bankside Chambers, Auckland

Greig Gallagher & Co, Wellington (for Second Third Party)

Counsel: J M Morrison, Barrister, Wellington