Body Corporate 406198 v Argon Construction Limited

[2023] NZHC 1072

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-001772

[2023] NZHC 1072

IN THE MATTER OF

The Bianco Apartments

BETWEEN

BODY CORPORATE 406198 & HHTS LIMITED & ORS

Plaintiffs

AND

ARGON CONSTRUCTION LIMITED & ORS

Defendants

CALLANDER ELECTRICS LIMITED & ORS

Third Parties

PACIFIC CONSULTANTS BUILDING ENGINEERS LIMITED

(DISCONTINUED) & ORS

Fourth Parties

Hearing:

2 May 2023

Appearances:

D R Bigio KC, I J Stephenson, R D Butler and H Chung for Plaintiffs

W A McCartney and D A Cowan for First Defendant

S C Price, M J Ferrier and C M Fairnie for Second Defendant D W Grove for Fifth Defendant and Second Third Party (HW Coyle)

R J Latton for Sixth Defendant

D J Neutze for Seventh Defendant and Ninth Third Party (Beca) G R Grant for First Third Party

J C Dymock for Third Third Party

Judgment:

5 May 2023

REASONS JUDGMENT OF ANDREW J

[Plaintiffs’ supplementary briefs of evidence]

BODY CORPORATE 406198 & ORS v ARGON CONSTRUCTION LTD & ORS [2023] NZHC 1072 [5 May 2023]

[1]    On 3 May 2023, I issued a minute granting the plaintiffs’ applications to adduce reply/supplementary evidence from Mr August and Mr Hakin

[2]This judgment contains my reasons for granting the applications.

Introduction

[3]    This is defective building litigation. It involves the 157-unit residential unit title development (two towers) known as the Bianco Off Queen Apartments (Bianco Off Queen).

[4]    The Body Corporate and individual unit owners sue in negligence. The defendants include the building contractor, Argon Construction Ltd (Argon), and the Auckland Council.

[5]    The principal defects at issue are weathertight-related. The plaintiffs say the building was built with cantilevered balconies that have defective waterproofing (defect 1). They also say that the waterproofing on the ground level (including the podium common areas) suffers from similar problems (defect 2). The overwhelming majority of the damages sought relate to the cost of remedying defect 1.

[6]    The primary difference between the parties relates to the scope and cost to remedy defect 1 and who among the defendants/third parties bear responsibility for those remedial costs.

[7]    The trial has just commenced. It is scheduled for 14 weeks but it now appears that it will be of shorter duration. At this late stage, the plaintiffs seek leave to file two reply briefs of expert evidence relating to the scope of repairs in respect of defect 1 (waterproofing of balconies).

[8]    The application, which I shall treat as an application to file supplementary briefs under r 9.8 of the High Court Rules 2016 is opposed by the Auckland Council.

The application

[9]    The plaintiffs seek leave to adduce supplementary briefs of evidence from both Mr Darryl August, a building surveyor, and Mr Andrew Hakin, a façade engineer.

[10]   Mr August’s first brief of evidence is dated 4 February 2022. Mr August outlines what consequential works, in his opinion, would need to be undertaken in order to restore the cantilevered balconies (waterproofing defect) and put the plaintiffs back in the position they would have been but for the defective work. His proposed scope is a “jack-tile” system over a waterproof membrane.

[11]   Mr Hakin’s first brief of evidence was served on 3 February 2022. His evidence is that the existing “ExoTec” cladding needs to be fully replaced as a result of the remedial work. In his reply brief he responds to certain points made by the façade engineers called by the Auckland Council and Argon, namely Mr Winter and Mr Paget. Their evidence was served on 25 October 2022 and 2 November 2022 respectively.

Relevant legal principles

[12]Rule 9.8 of the High Court Rules reads:

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.

[13]   The Court is given a wide discretion under r 9.8 to allow supplementary written statements. Doogue J recently held in Body Corporate 384825 v Queenstown Lakes District Council:1

[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:

1      Body Corporate 384825 v Queenstown Lakes District Council [2021] NZHC 1207.

(a)Leave will necessarily depend on the particular facts and circumstances of the case.2

(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;

(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.3

(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.4

(h)Leave to adduce further evidence that improves a party’s position may be allowed if the trial date is a sufficient time away.5

Analysis and decision

[14]   There are many authorities which doubt whether “reply” evidence is permissible at all outside a submissions hearing based on affidavit evidence, where there is no cross-examination by default, and reply evidence is expressly provided for.6

[15]   The preferable approach here is to treat the current application as an application to adduce supplementary evidence under r 9.8. The touchstone is the “interests of justice”.7

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

3      Body Corporate 354085 v Auckland Council (No 1) [2016] NZHC 200 at [9].

4      Currie v Goodwin HC Auckland CIV-2002-404-1820, 27 August 2004.

5      Madretsma Farm Ltd v Frizzell HC Napier CP9/94, 28 March 2001 at [5].

6      SCC (NZ) Ltd v Samsung Electronic NZ Ltd [2018] NZHC 2780 at [201]–[208]; see also Body Corporate 354085 v Auckland Council, above n 3. I acknowledge a different approach and a focus on reply briefs was taken in Minister of Education v Carter Holt Harvey Ltd [2020] NZHC 1539.

7      Body Corporate 354085 v Auckland Council, above n 3, at [3]; see also Western Park Village Ltd v Baho [2013] NZHC 1909 at [12].

[16]   In considering the touchstone of the interests of justice, I note that the disputed evidence relates directly to a significant issue in the proceedings. It is not just relevant, but important. Equally, as a matter of fair trial and ensuring that the plaintiffs have a fair opportunity to establish the damages for which they contend, the evidence should be adduced. The proceedings have been under way since 2017 and the claims are large. Many of the units to which the claims relate are the homes of the plaintiffs.

[17]   I accept that the plaintiffs, when initially briefing Mr August, did not reasonably anticipate an alternative scope of remedial works as now proposed by   Mr Alexander. As a matter of fair trial, the plaintiffs should be allowed to provide their own evidential expert foundation to challenge what has obviously become a key issue.

[18]   To grant the applications is of course an indulgence. Applications of this kind are not to be encouraged, particularly those made at a late stage. As Doogue J held in Body Corporate 384825 v Queenstown Lakes District Council,8 the particular facts and circumstances of the case are all important.

[19]   I acknowledge that the applications have been brought very late in the process. That is a relevant factor. The plaintiffs have not provided a fulsome explanation for the delay, but I accept that the mediation and expert conferral processes that have taken place provide important context.

[20]   The  brief  of  Mr  August  responds  to  the  evidence  of  Mr  Alexander.   Mr Alexander is a witness of Argon. Argon does not oppose the applications. That is not decisive of the issue of prejudice but does tend to suggest that any prejudice will be minimal in nature.

[21]   The Auckland Council does not contend that there needs to be an adjournment of the hearing. I further note that there has been ongoing conferral between Mr August and Mr Alexander on a without prejudice basis, where their contrasting views have been the subject of robust discussion. I understand that Mr Alexander may wish himself to serve supplementary evidence regarding the conferrals that have taken

8      Body Corporate 384825 v Queenstown Lakes District Council, above n 1.

place.    That emphasises, of course, the materiality  of  the  matters  addressed  by Mr August.

[22]   In the case of Mr Hakin, the façade engineer, a façade engineers’ conferral took place on Thursday 4 May 2023. It made good sense, and in advance of that conferral, to allow Mr Hakin’s reply/supplementary brief to be adduced. The central premise of Mr Hakin’s evidence, namely that the ExoTec façade is not suitable, again addresses a matter of critical importance. It would be quite wrong to deny the plaintiffs the opportunity for their expert witness to provide a full explanation and reasons for his opinion on a matter central to their claim.

[23]   Mr Bigio KC, for the plaintiffs, submitted that the expert conferral process is often an organic and evolving one; the experts test each other’s theories/opinions and try to reduce disagreement. The further evidence here may assist in that process and ultimately reduce hearing time by further refining the areas of disagreement.

[24]   I do not accept Mr Price’s submission that Mr Hakin’s evidence is not relevant because there is no claim for defective cladding. The suitability of cladding relates directly to the live and important issue of the reasonable scope of repair. The plaintiffs say that the full re-clad for which Mr Hakin contends is the consequential effect of the defendants’ negligence. The plaintiffs have the burden of proving their damages and the additional evidence from Mr Hakin should be allowed.

[25]   Mr Price has helpfully colour-coded and highlighted those parts of the reply briefs that the Auckland Council challenges.9 However, I find the disputed evidence should be adduced in its entirety. The complaints about repetition (very limited) and the witnesses seeking to interpret and define the opinions of the defendants’ experts are minor and to some extent inevitable. The briefs at issue have been drafted carefully and are generally in the nature of reply briefs, responding in a relatively short fashion to crucial matters at issue.10

9      The colour-coded highlighting (yellow, orange and red) seeks to distinguish between what the Auckland Council considers the more concerning paragraphs and those which the Auckland Council is less concerned about.

10 In contrast to the reply briefs in Minister of Education v Carter Holt Harvey Ltd, above n 6, which were 744 pages long with 2,882 pages of appendices (see [119] of that case), the briefs that the plaintiffs seek to adduce in the present case are significantly shorter. While Fitzgerald J noted that the length of the briefs was not in itself determinative, the sheer extent of the reply evidence was of concern in that case.

[26]   I accordingly find that the plaintiffs should be allowed to adduce the supplementary/reply briefs of Mr August and Mr Hakin.

Result

[27]   I grant the applications by the plaintiffs to adduce supplementary briefs of evidence (called reply briefs) from Mr August and Mr Hakin.

[28]As to costs, I find there should be no order as to costs.

Andrew J

This judgment was delivered by Justice Andrew on 5 May 2023 at 3.00 pm

pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar

Date ………………………………….