Body Corporate 423090 v QBE Insurance (International) Limited

[2022] NZHC 1240

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-409-000836

[2022] NZHC 1240

BETWEEN

BODY CORPORATE 423090

Plaintiff

AND

QBE INSURANCE (INTERNATIONAL) LIMITED

First Defendant

QBE INSURANCE (AUSTRALIA) LIMITED

Second Defendant

FORTIS CONSTRUCTION NZ LIMITED

Third Defendant

STRUCTEX HARVARD LIMITED
Fourth Defendant

CALIBRE CONSULTING LIMITED

Fifth Defendant

C1 GLOUCESTER STREET LIMITED
Sixth Defendant

ERNEST FREDERICK MICHAEL DUVAL

Seventh Defendant

STUDIO2 LIMITED

Eighth Defendant

Hearing:

16 May 2022

Appearances:

I J Thain and M J Bell for Plaintiff

C R Langstone, V S Wethey and H R Birch for First and Second Defendants

Also in Attendance: Ms C Tempest (QBE Representative)

Judgment:

16 May 2022

Reasons:

30 May 2022

BODY CORPORATE 423090 v QBE INSURANCE (INTERNATIONAL) LTD [2022] NZHC 1240 [16 May

2022]

REASONS JUDGMENT OF EATON J

Application for leave to file fourth amended statement of claim

[1]    At the commencement of this trial on 16 May 2022 I granted leave to the plaintiff to file a fourth amended statement of claim. These are my reasons.

[2]    The Pacific Tower is a 22-storey building in Central Christchurch. Following the earthquake in the Canterbury Earthquake Sequence (CES) proceedings were issued against QBE as insurer of the building in 2016. Multiple other parties were joined as defendants. Cross-claims were filed.

[3]    As a consequence of mediation up to trial all issues other than those between the Body Corporate and QBE were resolved.

[4]    On 3 May 2022 the plaintiff served a fourth amended statement of claim. The primary amendments were as follows:

(a)Removing reference to all defendants other than the first and second defendants.

(b)Narrowing the alleged unrepaired damage to three elements:

(i)action links and flanges;

(ii)the brackets;

(iii)the lift shafts.

(c)Providing further particulars of the three elements of alleged damage to align with the evidence.

(d)Removing an allegation that such is the damage of the building that it cannot be repaired.

(e)Clarifying the wasted works claim by removing all quantification particulars associated with alleged wasted works.

(f)Including a claim for further works being costs incurred by the plaintiff in relation to the lift and lift shafts.

(g)Amending the prayer for relief, such that other than the claim for further works the plaintiff now seeks declarations that if the Body Corporate elects to remediate the three elements particularised, that work will be covered under the QBE policy subject to the policy limit.

[5]    Essentially, Mr Thain on behalf of the plaintiff argues that the proposed amendments are a significant refinement to the issues in dispute. He submits the invoices supporting the further works claim (with the exception of one invoice) have been discovered and are referred to in a schedule to the brief of evidence of the defence lift expert, Mr Slater. He submits that it would be not in the interests of justice for the defendant to advance a case that the lifts are now operating appropriately as a consequence of works conducted by the plaintiff and yet deny the plaintiff the opportunity of recovering the associated costs incurred.

[6]    Mr Langstone on behalf of QBE opposed the application for leave to file the fourth amended statement of claim. He submits that if leave is granted, the defendant would suffer significant prejudice. Mr Langstone traversed the relevant history behind the belated disclosure of expert briefs very shortly before the initially scheduled trial date of 9 May 2022 and the distraction from essential trial preparation by counsel and experts if required to answer in particular the further works claims. He referred to what he described as continuous amendments to the plaintiff’s claim, highlighting that since the fourth amended statement of claim was filed the plaintiff has abandoned part

of the further works claim and halved the primary aspect of that claim from about

$1 million to approximately $423,000. He described the plaintiff’s approach to its pleadings as shambolic. He submits that the late inclusion of the further works claim renders it impossible for QBE to undertake an assessment as to whether the particular invoices relate to earthquake damage or ongoing maintenance.

[7]    In the alternative, Mr Langstone submits that the further work claim is time- barred. He submits that the time began running from the date of the earthquake said to have caused the relevant damage.

[8]    In response to the time-bar argument, Mr Thain submitted that the further works claim is not new and the third amended statement of claim does allege further works have been required in relation to the lift and lift shaft as a result of ongoing issues. He submits that the proposed amended claim is really a particularisation of a claim made in the third amended statement of claim and regarding the limitation period, submits that time only runs from when QBE has refused to pay.

Legal principles

[9]    The applicable principles in considering an application to amend after the close of pleadings are well established.

[10]   Pursuant to r 7.7 of the High Court Rules, no amended pleading may be filed without the leave of a Judge after the close of pleadings date. NZ Iron Sands Holdings Ltd v Toward Industries Limited confirmed the purpose of r 7.7 as ensuring the parties can concentrate on the “demanding work” of preparing for trial which requires “clear time and attention”.1 It is the three “formidable hurdles” a party seeking to amend its pleading must surmount in order to be granted leave:2

(i)The amended pleading must be in the interests of justice;

(ii)It must not significantly prejudice other parties; and

(iii)It must not cause significant delay.

1      NZ Iron Sands Holdings Ltd v Toward Industries Ltd [2019] NZHC 2883 at [33].

2      Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA) at 385.

Analysis

[11]   I agree that generally the fourth amended statement of claim reflects the narrowing of the parties in dispute and a narrowing of the issues in dispute. In particular, the focus now is as to three elements of damage alleged and rather than quantify any repair costs, the plaintiff seeks declarations as to liability for those costs. I do not find there is any prejudice to the defendant in relation to that aspect of the proposed amendment.

[12]   The further works claim seeks reimbursement of approximately $423,000 for invoices allegedly paid by the Body Corporate in relation to repairs on the lifts and lift shafts is a new claim in the sense that the plaintiffs have not, prior to serving the fourth amended statement of claim, sought reimbursement of those costs from the defendant. Consequently, I agree there is prejudice to the defence in having to respond to this claim at such late notice.

[13]   Prejudice in this regard ought not to be considered in a vacuum. Very proximate to trial and following mediation the plaintiff has filed amended expert briefs of evidence. I accept those have been a significant distraction to the defence and I am aware that as a consequence of those briefs further physical testing has been carried out on site giving rise to reports that are currently being analysed.

[14]   I determined amendment was appropriate Three factors favour granting leave as sought.

[15]   Firstly, the issues at trial are generally narrowed in the fourth amended statement of claim. Overall, the case has been significantly simplified.

[16]   Secondly, the defence lift and lift shaft expert, Mr Slater, has considered all bar one of the invoices that make up the further works claim. Pre-trial he has reviewed each of those invoices in considering whether the works recorded relate to earthquake damage. Neither Mr Slater, nor the defence generally, know whether the invoices have been paid. I do not see that to be an issue that would cause any prejudice to the defence. Whether or not the invoices have been paid ought to be easily resolved.

[17]   Thirdly, due to scheduling, the trial will not be sitting for the week commencing 23 May 2022. That provides time to the defence to reflect on the matters raised in the amended statement of claim. The amendment will not cause significant delay.

[18]   I therefore granted leave to the plaintiff to file the fourth amended statement of claim. I did not consider it appropriate to determine the time-bar argument at this stage. Rather, the defendants are directed to file a statement of defence to the fourth amended statement of claim on or before Wednesday, 25 May 2022. It will be for the defendant to plead as an affirmative defence the time-bar argument. That can be resolved at the conclusion of the trial.

...................................................

Eaton J

Solicitors:

DLA Piper, New Zealand, Auckland - Plaintiff

Fee Langstone, Auckland – First and Second Defendants