Body Corporate 422631 v Queenstown Lakes District Council

[2023] NZHC 504

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2021-425-000016

[2023] NZHC 504

BETWEEN

BODY CORPORATE 422631

First Plaintiff

AND

KAWARAU VILLAGE HOLDINGS LIMITED

Second Plaintiff

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

Defendant

AND

DE GEEST CONSTRUCTION LIMITED

First Third Party (Discontinued)

AND

DE GEEST BATHROOMS LIMITED

Second Third Party

Hearing:	14 February 2023
Appearances:	R M Saunders and G S Burcher for Defendant K R Lydiard for Plaintiffs
Judgment:	14 March 2023

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 14 February 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BODY CORPORATE 422631 v QUEENSTOWN LAKES DISTRICT COUNCIL [2023] NZHC 504

[14 March 2023]

Introduction

[1]    This case concerns a hotel development in Queenstown (the Hilton). The first plaintiff is a body corporate constituted under the Unit Titles Act 2010 in respect of the Hilton. The second plaintiff is the owner of the principal units shown on the relevant unit plan.

[2]    The plaintiffs bring an action for damages against the Queenstown Lakes District Council (QLDC) alleging QLDC was negligent in the performance of its statutory building control functions in relation to the construction of the Hilton. As a result, the plaintiffs say, the Hilton suffers from defects requiring repair. The defects relate to prefabricated bathroom pods incorporated into the construction and the absence of protection for service penetrations through fire-rated walls and floors.

[3]    QLDC seeks particular discovery under r 8.19 of the High Court Rules 2016. It is the second such application it has made. The application is opposed by the plaintiffs who say, principally, they have complied with their discovery obligations, that the discovery sought is not proportionate and that some documents sought are confidential.

Background

[4]    The Hilton was part of a land development and construction project known as the Kawarau Village Station Development. The project was led by Nigel McKenna. Peninsula Road Ltd (Peninsula) was the original owner of the land. Mr McKenna was the sole director of Peninsula, and Melview Developments Ltd (Melview) was its sole shareholder.

[5]    Melview (Kawarau Falls Station) Investments Ltd (MKFSI) and Melview (Kawarau Falls Station) Developments Ltd (MKFSD) (together the Melview Group) were incorporated to undertake stage one of the Kawarau Village Station Development. Mr McKenna is the sole director of both companies. MKFSI’s shareholder is Peninsula and MKFSD’s shareholder is Melview.

[6]    In October 2007, the land upon which the Hilton is built was transferred to MKFSI. MKFSD applied for the building consents for construction of the Hilton, engaged and managed the architects, engineers and builders and, ultimately, applied for and obtained the Code Compliance Certificate. The Hilton was constructed between March 2009 and May 2011.

[7]    On 26 May 2009, the Melview Group was put into receivership. The original receivers were Grant Graham and Brendon Gibson of KordaMentha (now Calibre Partners).

[8]    In April 2010, the second plaintiff, Kawarau Village Holdings Ltd (KVHL), was incorporated by the receivers. It is a wholly owned subsidiary of MKFSI and Messrs Graham and Gibson were its directors.

[9]    In September 2010, the partially completed Hilton was sold to KVHL. The QLDC’s position is that Mr McKenna continued to be involved in and maintained oversight over the works.

[10]   The Hilton failed inspections for Code Compliance Certificates in February and March 2010. A final Code Compliance Certificate was not issued by the QLDC until May 2011.

[11]   In March 2012, Messrs Graham and Gibson were replaced as receivers of the Melview Group by Andrew Bethell and Brian Mayo-Smith of BDO. In August 2021, Andrew McKay and Rees Logan (also of BDO) replaced Messrs Bethell and Mayo- Smith as receivers. Messrs Logan and McKay are also now the directors of KVHL.

[12]   This proceeding was commenced in 2021. The plaintiffs allege that in November 2020, Maynard Marks identified defects in the building work carried out on the Hilton, and specifically:

(a)A 50-60 mm floor level differential between the lower bathroom pod floor level and the higher living space floor level of the hotel rooms;

(b)Failure of the waterproof membrane within the bathroom pod resulting in moisture ingress into the structure of the building with resultant damage including decay to building elements;

(c)Failure to protect service penetrations through fire-rated walls and floors with a consequence of the building has never met the passive fire protection requirements of the New Zealand Building Code.

[13]   The plaintiffs plead that the cost to repair the defects and the damage is estimated to be more than $4.8m plus GST. It is asserted QLDC breached its duty of care owed to the plaintiffs when undertaking inspections pursuant to the building consent and in issuing the Code Compliance Certificate.

[14]   QLDC’s amended statement of defence denies liability to the plaintiffs. It says it does not owe a duty of care to KVHL and it was not negligent. It also advances affirmative defences that KVHL caused or contributed to its own loss by failing to undertake due diligence when acquiring the Hilton, did not mitigate its loss by failing to remediate the defects or maintain the property, and that the claim is time-barred.

The discovery order

[15]   There have been several orders made requiring the parties to give standard discovery. The discovery process was more difficult than the plaintiffs had expected and there were delays in providing discovery.

[16]   The latest discovery orders were made by Associate Judge Lester in a judgment of 23 March 2022.1 The plaintiffs were ordered to provide discovery of all documents encompassed by a standard discovery order previously made by the Court on 10 June 2021 and, in addition, all documents requested by the QLDC in a letter to the plaintiffs dated 8 September 2021 “insofar as they refer or relate to the pleaded defects”.2 The documents in the latter category were:

(a)Documents from the construction period, including:

(i)consent documents including plans, specifications, RFIs and responses;

(ii)site inspection reports and/or site meeting minutes;

(iii)project control group meeting minutes;

1      Body Corporate 422631 v Queenstown Lakes District Council [2022] NZHC 543 at [38].

2 At [17].

(iv)communications    with    contractors,    subcontractors    and consultants;

(v)head contractor and subcontractor contracts;

(vi)producer statements;

(vii)any other construction documents;

(viii)Code of Compliance documents;

(ix)construction insurance information; and

(x)photographs relating to the pleaded defects.

(b)Any expert reports;

(c)Documents relating to any post construction works including the work to the bathroom of unit 223;

(d)Maintenance documents including any and all long-term maintenance plans, reviews of those plans and any agreements with Hilton and related documents;

(e)Hotel Management’s Duty Manager reports; and

(f)Any other relevant Body Corporate documents.

[17]   The plaintiffs  provided  QLDC  with  a  draft  affidavit  of  documents  of  Mr McKay dated July 2022 which did not refer to the Associate Judge’s judgment of 23 March 2022, but which the plaintiffs considered complied with their discovery obligations. However, by the time of the hearing, the affidavit had still not been filed and Ms Lydiard confirmed it had in fact never been sworn. She advised the sworn affidavit would be filed, but this did not occur until 27 February 2023. Following the filing of that affidavit, I convened a telephone conference with counsel and was advised that the affidavit did not materially differ from the July 2022 draft.

This application

[18]   Following receipt of Mr McKay’s draft affidavit, counsel for QLDC advised the Court that there were still inadequacies in the plaintiffs’ discovery. On 20 October 2022, Associate Judge Lester directed QLDC to file and serve an application for particular discovery, which is the present application.

[19]   QLDC says the searches undertaken by the plaintiffs to identify relevant documents for discovery are unsatisfactory. It argues additional searches should be undertaken as follows:

(a)enquiry into the physical and electronic records of documents held by MKFSD, Melview and Peninsula; and

(b)enquiry of Mr McKenna to search his physical and electronic records in relation to the development.

[20]   In addition, QLDC argues the plaintiffs have documents in their possession and control that have not been discovered, and seeks particular discovery of documents under three headings as follows:

Original construction documents

(a)documents postdating the receivership of the Melville Entities;

(b)documents postdating the sale of the Hilton; and

(c)documents relating to the application for Code of Compliance Certificate;

Melville entities documents

(d)correspondence and documents relating to the sale and purchase of the Hilton, including the agreements on 21 September 2010 and 7 October 2010;

(e)the composite General Security Deed between MKFSD, Quadrant Queenstown  Ltd,  and   BOS   International   (Australia)   Ltd  dated 9 October 2007;

(f)Memorandum of Mortgage 7556266.4;

(g)documents relating to KVHL’s finance for the purchase of the Hilton and confirmation of the contract conditions;

(h)existing agreements for sale and purchase relating to one or more of the accommodation units between MKFSI as vendor and various purchasers as referred to in KVHL.06.04635;

(i)the Underwriting and Marketing Agreement between Kingston Road Limited, Austpac Investments Consultancy Limited and David Yuen;

(j)the Common Property Lease to be granted in favour of the purchase by the Body Corporate for Kingston West in respect of the common property within Lot 10 as identified on the Draft Subdivision Plan;

(k)Memorandum of Encumbrance (Precinct) for securing levels and contributions payable to the Precinct Society; and

(l)the Side Deed between Q1 Entity Limited (KVHL), Hilton International Management LLC, BOS International (Australia) Limited, and MKFSI.

General discovery issues

(m)records of 24 bathroom leaks from approximately 2018 – 2019;

(n)response from Naylor Love or results of any inspections subsequent to email KVHL.06.04685;

(o)any additional Prendos Maintenance Plan from 2014;

(p)any documents showing the maintenance or repairs undertaken at the property, including any long-term maintenance plans;

(q)Hotel Management Duty Reports;

(r)any other relevant Body Corporate documents, including additional meeting minutes; and

(s)photographs related to the pleaded defects.

The relevant discovery principles

[21]   The discovery order required the parties to give standard discovery which requires disclosure of documents that are in their control and that are:3

(a)documents on which the party relies; or

(b)documents that adversely affect that party’s own case; or

(c)documents that adversely affect another party’s case; or

(d)documents that support another party’s case.

[22]   Standard discovery only requires disclosure of documents of actual and direct relevance.4 Relevance is determined by the pleadings and, in this context, the case of the party who seeks discovery must be assumed to be true and not that of the party from whom discovery is sought.5

[23]   Under r 8.2, parties must cooperate to ensure discovery and inspection are proportionate and facilitated by agreement on practical arrangements.6 The obligation to cooperate falls on both parties.7 It is reflected in other rules and in the listing and exchange protocol.8 Counsel should assess the categories and methods for locating documents, and assess and discuss whether estimated discovery costs are proportionate to the subject matter of the proceeding.

[24]   Rule 8.14 requires that a party must make a reasonable search for documents within the scope of a discovery order. What amounts to a reasonable search will depend on the circumstances including the following factors: 9

3      High Court Rules 2016, r 8.7.

4      Pyne Gould Corporation Ltd v Bath Street Capital Ltd [2020] NZHC 1247 at [13].

5      Body Corporate 366611 v Downer New Zealand Ltd [2019] NZHC 2656 at [23].

6      High Court Rules, r 8.2.

7      Schedule 9, pt 2.

8      Schedule 9, cls 2(a) and 3(2)(ii).

9      Rule 8.14(2).

(a)the nature and complexity of the proceeding;

(b)the number of documents involved;

(c)the cost of retrieving documents;

(d)the significance of any document likely to be found; and

(e)the need for discovery to be proportionate to the subject matter of the proceeding.

[25]Rule 8.15 sets out the standard requirements for affidavits of documents.

Importantly, a party must:10

(c)give particulars of the steps taken to fulfil those obligations; and

(d)state the categories or classes of documents that have not been searched, and the reason or reasons for not searching them; and

(e)list or otherwise identify the documents required to be discovered under the order in a schedule that complies with rule 8.16 and Part 2 of Schedule 9; and

…

[26]QLDC’s application for particular discovery relies upon r 8.19 which provides:

8.19 Order for particular discovery against party after proceeding commenced

If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—

(a)to file an affidavit stating—

(i)whether the documents are or have been in the party’s control; and

(ii)if they have been but are no longer in the party’s control, the party’s best knowledge and belief as to when the documents ceased to be in the party’s control and who now has control of them; and

(b)to serve the affidavit on the other party or parties; and

(c)if the documents are in the person’s control, to make those documents available for inspection, in accordance with rule 8.27, to the other party or parties.

10     Rule 8.15(2).

[27]   In Lighter Quay Residents’ Society Incorporated v Waterfront Properties (2009) Ltd, Katz J noted that in relation to an application under r 8.19, the relevant principles are: 11

(a)Existence of the document does not have to be established on the balance of probabilities or a “more likely than not” basis. A lower threshold is required, which may vary given the relevance of the documents and issues of proportionality.12

(b)While there is a presumption that affidavits of documents filed are conclusive,13 an application under r 8.19 is a proper way to circumvent the conclusiveness rule. The party seeking further discovery has to establish the existing affidavit of documents is incomplete.14

(c)Whether a document “should have been discovered” should be determined by reference to the “adverse documents” test in r 8.7, or any stricter test imposed upon tailored discovery pursuant to r 8.8.15

[28]   The key issue in applications under r 8.19 tends to be whether there are grounds for believing a party has not discovered documents that should have been discovered. The Court generally adopts the following four-stage approach to such applications as outlined in Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd:16

(a)Are the documents sought relevant, and if so how important will they be?

(b)Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?

11 Lighter Quay Residents’ Society Incorporated & Ors v Waterfront Properties (2009) Ltd [2017] NZHC 818.

12 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd  [2015] NZHC 2760, [2018] NZAR 600 at [12] where Asher J noted “… all that is necessary is to show that there is some credible evidence which assessed objectively indicates that the documents that are sought exist”.

13     McCullagh v Robt Jones Holdings Ltd [2015] NZHC 1462, (2015) 22 PRNZ 615 at [7].

14 At [7].

15 Citing Air National Corporate Ltd v Aiveo Holdings Ltd [2012] NZHC 2258 at [16]: “It is implicit in r 8.19 … that documents will only be directed to be discovered if they can be shown to be discoverable under the general rules relating to discovery”; citing also Domenico Trustee Ltd v Tower Insurance Ltd [2014] NZHC 2657 at [67] – [68].

16 Assa Abloy New Zealand Ltd v Allegion (New Zealand) Ltd, above n 12, at [14].

(c)Is discovery proportionate, assessing proportionality in accordance with Part 1 of the Discovery Checklist in the High Court Rules?

(d)Weighing and balancing these matters, in the Court’s discretion applying r 8.19, is an order appropriate?

Have the plaintiffs undertaken a sufficient search?

[29]   The plaintiffs’ discovery obligations included making a reasonable search for documents that fall within the scope of the discovery order.17 QLDC says the plaintiffs should be required to undertake additional searches by making enquiries of what physical and electronic records  are  held  by  MKFSD,  Melview,  Peninsula  and  Mr McKenna.

[30]   The searches undertaken by the plaintiffs are set out in their affidavits of documents dated 14 March 2022 and 27 February 2023, as well as in affidavits of Joshua Hitchcock of 21 December 2022 and Andrew McKay dated 21 February 2022. Having reviewed the evidence, I agree with the plaintiffs’ submission that QLDC has not provided an evidential basis for the orders in respect to MKFSD, Melview, or Peninsula. The first affidavit of Abigail Colin filed in support of QLDC’s application simply states that she would have expected enquiries to have been made of these companies (and Mr McKenna) without explanation of what particular documents they may hold that are within the scope of the discovery order and have not been disclosed.

[31]   The position in relation to Mr McKenna is different. Mr McKenna was the driving force behind the development, and, importantly, it appears he continued to be personally involved even after the sale of the Hilton to KVHL. Mr McKenna might well have documents in his possession relating to the development and the matters in issue in this proceeding. There is nothing to suggest any enquiries have been made of him as to what documents he holds, nor any request that he produce any such documents. I consider it reasonable and proportionate that the plaintiffs make such enquiries and I will direct accordingly. Should QLDC be dissatisfied with the result of the plaintiffs’ enquiries of Mr McKenna, it will be at liberty to seek non-party discovery.

17     As noted in [24] above, r 8.14(2) sets out some of the factors which may be taken into account in assessing whether a reasonable search has been undertaken.

The particular discovery sought

[32]   I will now consider each of the categories of documents sought in the application.

Categories (a) and (b).

[33]   These can be dealt with together. QLDC argues that it needs to understand the narrative around the construction work undertaken at the Hilton and the involvement of other parties in that work. It says that because of the limited discovery by the plaintiffs, there are gaps in its understanding. The existence of further documents can be inferred, it says, from the proportions that the documents disclosed by the plaintiffs in these categories bear to the total number of documents disclosed when compared to QLDC’s disclosure. So, for example, QLDC says that of the 4,680 documents disclosed by the plaintiffs, only 229 are in category (a), whereas by comparison approximately one-quarter of QLDC’s discovered documents are in this category.

[34]   QLDC expresses concern with Mr Hitchcock’s evidence that the claim primarily relates to alleged defects in prefabricated bathroom pods and that in giving discovery, the plaintiffs endeavoured to exclude documents of no relevance to the issues in the proceeding. As an example of documents that it says have not been discovered, QLDC notes there was a delay of over a year between inspections before the issue of the final Code Compliance Certificate, but no documents explaining the reason for that delay.

[35]   For the plaintiffs, it is said they have diligently searched for documents within the scope of the discovery order, that QLDC has failed to advance any evidence (other than speculation) to suggest there are relevant documents that have not been disclosed, and that in the case of the delay in obtaining the Code Compliance Certificate, all relevant documents are in the possession of QLDC and have been discovered by it.

[36]   In respect of these categories, QLDC’s application brings to mind the comment of Fitzgerald J in Phillimore Imperial Ltd v St John’s College Trust Board that:18

18     Phillimore Imperial Ltd v St John’s College Trust Board [2018] NZHC 2145 at [51].

Construction projects typically give rise to vast amounts of documentation and information, most of which is irrelevant, or only tangentially relevant, to the matters truly in issue, even when the claim concerns construction defects.

[37]   Logically, nothing can be taken from the proportions that the documents disclosed bear to the total of all documents discovered by each party. I also do not accept that all construction documents post-dating the receiverships or the sale of the Hilton to KVHL are of actual and direct relevance to this proceeding.

[38]   It is a feature of the case that the alleged defects are narrowly defined. It would be disproportionate to require discovery of large numbers of documents that do not relate to those defects on the basis that they provide a narrative of the construction work more generally. Standard discovery does not require disclosure of documents that are no more than background.19 As an example of this, while QLDC says it seeks disclosure of documents concerning the delays in obtaining the Code Compliance Certificate, there is no assertion that the failed inspections in February and March 2010 related to the defects in issue.

[39]   I also have no concerns with Mr Hitchcock’s evidence that the plaintiffs have endeavoured to exclude documents of no relevance to any of the issues in the proceeding. That is exactly what the plaintiffs should have done.

[40]I do not order particular discovery in these categories.

Category (c)

[41]   QLDC says no documents were discovered relating to Code Compliance Certificates for the Hilton aside from documents on the Council file for BC080422 which is “the main building consent in dispute”.

[42]   For the plaintiffs, Mr Hitchcock deposes that all relevant building work was completed before the sale to KVHL. He notes that several inspections by QLDC were carried out following the sale and that records of such inspections have been disclosed

19     RHH Ltd v Anderson (No 2) [2018] NZHC 2032 at [12].

by QLDC. Those inspections do not appear to relate to the defects that are in issue in this proceeding.

[43]   It is unclear to me from what has been presented which documents in this category QLDC says it does not have but should have been disclosed or how such documents are relevant to the particular defects in issue. It appears that the disclosure sought again relates to QLDC’s desire to construct a complete narrative of the project, which I consider goes well beyond what the discovery exercise requires the plaintiffs to provide.

Categories (d) and (g)

[44]   The plaintiffs have disclosed sale and purchase agreements for the Hilton dated 21 September 2010 and 7 October 2010, but QLDC is also seeking the correspondence and documents relating to the transactions and KVHL’s financing. QLDC says that such documents are relevant to its defences of contributory negligence (founded on the allegation that KVHL failed to undertake due diligence when purchasing the Hilton), and to whether QLDC owed a duty of care to KVHL.

[45]   The plaintiffs say they have discovered all relevant documents in these categories, that QLDC does not need any further documents to advance its defences and, while recognising that it is not an issue I would decide on this application, whether QLDC owed a duty of care in the circumstances of this case has already been authoritatively determined by the Supreme Court in Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council.20

[46]   In relation to the contributory negligence defence, the plaintiffs’ counsel has filed a memorandum dated 23 February 2022 stating that it is accepted KVHL took no specific steps by way of due diligence and that this will be clarified in an amended pleading. To date that pleading has not been filed, but I am proceeding on the basis that this will be done. That addresses QLDC’s argument that discovery of documents in these categories is required for it to advance the contributory negligence defence.

20     Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 190, [2018] 1 NZLR 278.

[47]   In relation to the duty of care defence, the arguments presented by QLDC were that it did not owe KVHL a duty of care because, first, KVHL and the Melview Group are so closely interconnected that it would be unjust to regard KVHL as anything other than the developer of the Hilton and, second, that building consent authorities do not owe a duty of care to developers.

[48]   I accept QLDC’s submission that other documents and correspondence beyond the agreements for sale and purchase must exist. Relevant to this, in a letter from the plaintiffs’ counsel, Mr Rainey, to QLDC’s solicitors, Wynn Williams, of 29 June 2021, Mr Rainey wrote:

The second plaintiff will provide discovery of the purchase file relating to the acquisition of the development but this will have to take place in the context of formal discovery. There are issues of privilege which we will need to work through as part of the formal discovery process in order to discover these documents.

[49]   I consider that the documents are relevant to QLDC’s defence that it owed no duty of care to KVHL. There is no doubt that such documents must exist and in light of the issues arising, the degree of relevance of such documents, and the amount at stake in the proceeding, I consider it is proportionate to require discovery of them.

[50]I therefore intend to make orders in respect of these categories.

Categories (e), (f), (h), (i), (j), (k) and (l)

[51]   These documents are referred to in the agreements for the sale and purchase discovered by the plaintiffs dated 21 September 2010 and 7 October 2010.

[52]   The document sought in category  (e)  is  referred  to  in  the  agreement  of 21 September 2010, which is the agreement under which the Hilton was acquired by KVHL. I consider QLDC is entitled to disclosure of the document as it provides an understanding of the nature and effect of the transaction to which the agreement relates. To the extent the plaintiffs consider this document is confidential, that is not a ground for resisting discovery and the plaintiffs can propose any restrictions on inspection in the usual manner as contemplated by r 8.15(2)(f).

[53]   The document sought in category (f) is publicly available to QLDC. It would be extremely surprising if QLDC had not obtained a copy of it before now. I do not propose to make any order in respect to it.

[54]   As to the documents in categories (h), (i), (j), (k), and (l), these are referred to in the agreement of 7 October 2010 between KVHL and Entity Q Ltd (subsequently named Kawarau Village Ltd). The transaction apparently did not proceed, but the reasons for that are unknown to QLDC. Despite having disclosed the agreement the plaintiffs say the documents referred to in it are not relevant to the matters in issue and are confidential.

[55]   While it does not necessarily follow that because the agreement of 7 October 2010 was discovered by the plaintiffs any document referred to in it is relevant to the matters in issue, here it is notable that Mr Hitchcock’s evidence does not go beyond the bald assertion the documents are not relevant in circumstances where further explanation was required. I consider QLDC is entitled to disclosure of the documents as they provide an understanding of the nature and effect of the transaction and are relevant to QLDC‘s defence that it did not owe a duty of care. The disclosure of what are relatively few documents is not disproportionate, and any confidentiality concerns can be addressed in accordance with r 8.15(2)(f).

Category (m)

[56]   QLDC says there must be further documents relating to bathroom leaks identified in 2018 to 2019. The plaintiffs disclosed an email chain of October 2019 between Michael Webb-Speight, a consultant engaged by KVHL, and representatives of Naylor Love and the Hilton concerning bathroom leaks. Mr Webb-Speight recorded 24 bathroom leaks in the hotel log relating to 19 separate rooms. I was also referred to an email, discovered by the plaintiffs, from Godfreys (insurance loss adjustors) dated 3 December 2020 which concerns the  leaks and  refers  to  a  meeting with  Mr Webb-Speight and references invoices which have not been discovered.

[57]   While Mr Hitchcock says the plaintiffs have no further records of bathroom leaks and that the plaintiffs’ discovery includes the file of Mr Webb-Speight, the emails referred to suggests an ongoing investigation into the causes and remediation of the

leaks, but this is not reflected in the plaintiffs’ discovery. While the plaintiffs list documents under the heading “Michael Webb-Speight File”, it does not appear that any enquiry has been made of Mr Webb-Speight as to whether he has any further relevant documents.

[58]   I therefore accept QLDC’s position that further documents in this category may well exist that are relevant to the major defect that is in issue. I consider the most appropriate and proportionate manner to deal with this is to require the plaintiffs to make enquiries of Mr Webb-Speight as to the existence of such documents and disclose any provided. Again, should Mr Webb-Speight not provide a satisfactory response to those requests, QLDC may consider a non-party discovery application.

Category (n)

[59]   The plaintiffs say they have no record of any reply from Naylor Love to the email from Mr Webb-Speight dated 10 October 2019. I have no reason to doubt that is the case, but any reply and other documents concerning the results of inspections subsequent to that email may be held by Mr Webb-Speight. The plaintiffs are to make enquiries of Mr Webb-Speight as to the existence of such documents.

Category (o)

[60]QLDC accepts that this document has been discovered.

Category (p)

[61]   This category relates to maintenance or repairs undertaken at the Hilton. The plaintiffs say they have discovered all long-term maintenance plans as well as documents relevant to the repairs that have been carried out to the bathrooms. The plaintiffs are currently designing further remedial work and further documents will be disclosed as part of their ongoing discovery obligations.

[62]   QLDC has not satisfied me that there has been a failure to disclose relevant documents in this category and the plaintiffs acknowledge an obligation to disclose

further documents as remedial work is undertaken. I do not intend to make any order in respect of this category.

Category (q)

[63]   QLDC says that no hotel management duty reports have been provided, whereas the plaintiffs say that all reports relating to the matters in issue have been discovered. QLDC, in reply, says that hotel management reports should not be limited to those dealing with the current pleaded defects. It says how the building has been managed is directly relevant to its affirmative defence the plaintiffs failed to mitigate their loss.

[64]   In its amended statement of defence QLDC pleads the plaintiffs failed “to properly maintain the condition of the Development”. On the basis of that pleading, it can be argued the plaintiffs must disclose all management reports concerning the maintenance of the Hilton, whether they relate to the pleaded defects or not. However, I cannot see how maintenance issues that do not directly concern the causes, identification and/or remediation of the pleaded defects are likely to be relevant to the mitigation defence. It would also not be proportionate, in my view, to require the plaintiffs to make further searches to identify any and all management reports which concern maintenance issues. I do not therefore intend to make any orders in relation to this category.

Category (r)

[65]   QLDC now accepts that Body Corporate minutes from 2012 – 2020 have been discovered. It says that any further minutes from 2020 should also be disclosed. The plaintiffs say any subsequent Body Corporate minutes will be disclosed informally. On that understanding it is not necessary for me to make any order in respect of this category.

Category (s)

[66]   The plaintiffs say they have discovered all relevant photographs and anticipate further photographs being taken during remedial work to the bathrooms, and they will

discover the further photographs as part of their ongoing discovery obligations. I have no reason to consider the plaintiffs have not discovered all relevant photographs and will make no order in respect of this category.

Unless order

[67]   QLDC argues the plaintiffs have failed to comply with their discovery obligations and it is concerned that without forced compliance, there will be further non-compliance and delays. It says it is prejudiced as it cannot advance its defences until it obtains full discovery.

[68]   The making of an unless order under r 7.48 is a matter of “last resort”.21 There is no reason to consider the plaintiffs have not been making proper efforts to provide discovery in a timely manner (despite slippage in the timetable), nor do I think there is reason to believe the plaintiffs will not comply with the directions I make below. There is no basis for the making of an unless order in my view.

Result

[69]   In respect to QLDC’s application for particular discovery, I make the following orders:

(a)The plaintiffs are, within 14 days, to make enquiries of Nigel McKenna and Michael Webb-Speight to determine what hardcopy and/or electronic documents they have in their possession or control that are relevant to matters in issue in this proceeding, and to request them to advise what steps they have taken to search for such documents and produce such documents for disclosure to the QLDC (subject to any claims to privilege);

(b)Within a further seven days, the plaintiffs’ counsel shall advise counsel for QLDC what enquiries have been made and the result of them;

21     SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494.

(c)Within a further 14 days, the plaintiffs are to file and serve a supplementary list of documents stating whether the following documents are or have been in their control, their best knowledge and belief as to when any such documents ceased to be in their control, and who now has control of them:

(i)any documents relevant to the matters in issue that are provided to the plaintiffs as a result of the enquiries made in accordance with (a) and (b) above; and

(ii)documents in categories (d), (e), (f), (g), (h), (i), (j), (k) and (l) of the QLDC’s application.

(d)In some respects I have not made orders on the understanding that documents in certain categories will be supplied either informally or as part of the plaintiffs’ ongoing discovery obligation. I reserve leave to apply by memorandum should there be any issues arising from a failure to provide such documents.

(e)I dismiss the application for an unless order.

(f)I reserve costs and invite counsel to confer and reach agreement on costs. If they cannot agree, they may submit memoranda and I will deal with the matter on the papers. Memoranda should be no longer than five pages.

[70]   I understand this case has been set down for trial from 8 July 2024 to 26 July 2024 in the Christchurch High Court. In respect to the future conduct of the proceeding to trial, the following directions are made:

(a)The close of pleadings date is 30 June 2023.

(b)By 31 August 2023 the plaintiffs are to serve all briefs of evidence together with a list of all documents referred to in the briefs of evidence

for inclusion in an electronic common bundle of documents, along with a copy of each document.

(c)By 15 December 2023 the defendant is to serve all briefs of evidence together with a list of all documents referred to in the briefs of evidence for inclusion in an electronic common bundle of documents, along with a copy of each document.

(d)By 29 February 2024 the second third party is to serve all briefs of evidence together with a list of all documents referred to in the briefs of evidence for inclusion in an electronic common bundle of documents, along with a copy of each document.

(e)During March 2024 any expert witnesses to be called by the parties are to confer within their respective areas of expertise and within two weeks of such conferral are to file a joint witness statement from each conference prepared in accordance with r 9.44 and sch 4 of the High Court Rules 2016 identifying the issues that they have considered, the matters on which they agree and do not agree and the reasons for any disagreement.

(f)By 31 March 2024 the plaintiffs are to provide a draft electronic casebook (in accordance with the Senior Courts Civil Electronic Document Protocol 2019) for the other parties’ review.

(g)By 30 April 2024 the defendant and second third party are to nominate any additional documents for inclusion in the common bundle and provide an electronic copy of each document.

(h)By 17 May 2024 the plaintiffs are to file and serve the electronic casebook (which includes a hyperlink table of contents) and:

(i)the relevant pleadings;

(ii)the briefs of evidence served by the parties; and

(iii)the documents referred to in all briefs of evidence together with any additional documents nominated by the parties.

(i)By 31 May 2024 the defendant and second third party are to provide amended briefs of evidence with references to the document ID from the common bundle (the plaintiffs will hyperlink the documents).

(j)The Registrar is to set the case down for a pre-trial teleconference, preferably with the trial Judge, at least two weeks prior to trial to confirm compliance with the timetable and any special arrangements that need to be made for the trial.

(k)Counsel shall file a preferably joint memorandum for the pre-trial conference at least three working days prior to the teleconference.

(l)Leave is reserved for any party to apply to seek an amendment or variation to the timetable.

O G Paulsen Associate Judge

Solicitors:

Hornabrook Macdonald, Auckland Wynn Williams, Christchurch