C & S Kelly Properties Limited v Earthquake Commission

[2014] NZHC 3111

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-1273 [2014] NZHC 3111

BETWEEN

C & S KELLY PROPERTIES LIMITED

Plaintiffs

AND

THE EARTHQUAKE COMMISSION First Defendant

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Second Defendant

HearingDates:

3 December 2014

(By way of telephone conference)

Appearances:

G Shand and A Ferguson for Plaintiff
B Scott and N Bruce-Smith for First Defendant
R Johnstone and A Shaw for Second Defendant

Judgment:

5 December 2014

JUDGMENT OF MANDER J

[1]      The plaintiff, C & S Kelly Properties Limited makes application for leave to serve a reply witness statement in the name of James Michael Bundy.  It also seeks tailored discovery of documents relating to a number of witnesses to be called by the two defendants. These applications are opposed by the defendants.

[2]      This proceeding, which involves a disputed claim in respect of an earthquake damaged house owned by the plaintiff, is part heard.   The first five days of trial, commencing 29 September, were occupied with the parties’ openings, a site visit and the hearing of some of the plaintiff’s witnesses.  The trial is set to recommence on 8

December 2014  for  a  further seven  days.   The plaintiff  is  yet  to  complete the

presentation of its case.

C & S KELLY PROPERTIES LIMITED v EARTHQUAKE COMMISSION AND ANOR [2014] NZHC 3111 [5

December 2014]

[3]      The close of pleadings date of 25 July 2014 has obviously well passed, and the plaintiff requires leave to make these applications.1   In order to obtain leave it is necessary to “surmount the formidable hurdles” of showing that to do so would be in the interests of justice and will not significantly prejudice other parties or cause significant delay.2

Reply witness statement of James Bundy

[4]      Mr Bundy, a chartered surveyor, served a witness statement on behalf of the plaintiff in August 2014.  The proposed reply witness statement concerns an issue which, in the plaintiff ’s  submission, has been the subject of some focus in the hearing to date, namely whether weatherboards on the exterior of the house and aluminium windows are sloping.   The plaintiff submits that Mr Bundy’s reply evidence will challenge the correctness of the propositions that have been put to witnesses, asserting that the weatherboards are level.

[5]       The plaintiff submitted that leave should be granted because it is in the interests of justice that the Court hear Mr Bundy’s evidence and that the defendants will suffer no prejudice as a result of allowing this evidence to be admitted at this late stage.  In seeking the Court’s leave to serve the reply evidence of Mr Bundy, the plaintiff emphasised that the Court should have available to it the “best evidence” relating to this emerging issue.   It also noted that indulgences had already been extended to both the second defendant and itself to serve witness statements during the first week of the trial.

[6]      In  opposition,  the  first  defendant,  the  Earthquake  Commission  (EQC) submitted that the additional reply witness statement concerns matters which have already been dealt with by the plaintiff’s expert surveyor and there is no reason the proposed evidence could not have been provided along with the plaintiff ’s original reply evidence.  EQC sumitted the plaintiff would have been on notice regarding the issue of the levels of the weatherboards and, as is acknowledged in the proposed

reply witness statement of Mr Bundy himself, there are numerous witnesses to be

1      High Court Rules, r 7.7.

2      McGechan on Procedure (online looseleaf ed Brookers) at [HR 7.7.01], citing Elders Pastoral v Marr (1987) 2 PRNZ 383 (CA) at 385; applied in Body Corporate 172108 v Gundry [2014] NZHC 954 at [40].

called by the defendant, who in their witness statements refer to and rely upon the proposition that the weatherboards are “generally level”.  Further, the plaintiff itself has had the opportunity to file reply evidence relating to this issue and, indeed, has done so.

[7]      EQC referred to “reply evidence” already given by one of its witnesses, Mr Adrian Cowie, a surveyor, which set out the defendants’ witnesses views that the weatherboards around the house were generally level.  EQC submits that the plaintiff was well aware of the points in issue and has already addressed these matters in its reply evidence to date.

[8]      The   second   defendant,   Southern   Response   Earthquake   Services   Ltd (Southern Response), also opposes the admission of Mr Bundy’s reply statement. Southern Response’s opposition focused on the comprehensive procedural steps put in place to ensure the orderly filing of witness statements and that, notwithstanding that timetable, the plaintiff has previously been in breach of deadlines.  Extensions have been granted with the consent of the defendant.  It emphasised that the setting down date for the proceeding was some four months ago, and that the hearing has already  commenced.    Southern  Response  submitted  that  the  plaintiff  had  not provided  any  reason  to  justify  why  the  information  contained  in  Mr  Bundy’s proposed reply brief could not have been filed and served earlier in accordance with the procedural timetable.

Decision

[9]      I accept that the issues which are sought to be addressed in Mr Bundy’s proposed reply statement were, or at least ought to have been, known to the plaintiff from the evidence that had been filed by the defendants.   Mr Bundy’s proposed witness statement testifies to that being the position.   The essence of Mr Bundy’s new  evidence  relates  to  measurements  that  he  took  during  a  site  visit  on  20

November 2014, and clearly is in response to questioning by the defendants  of witnesses to date.  The continued supplementation of evidence in response to matters that has become the focus at trial cannot of itself be a proper basis upon which to grant leave.

[10]     It is apparent however that the defendants consider this aspect of the house’s condition to be of significance, and will ask the Court to place some store on this aspect.  I am therefore of the view that it would be in the interests of justice for the Court to receive further evidence on the point.   This however is subject to the defendants not being prejudiced by this additional evidence coming in, as it effectively does, during the course of trial.

[11]     Accordingly,  I grant leave for the witness statement of Mr Bundy to  be served in the absence of the identification of any specific prejudice to the defendants apart from the inconvenience of having to prepare for and meet this late evidence. The admission of the evidence is subject to the defendants being given time and having access to the site for the purpose of undertaking their own measurements and further examination of the house.   The plaintiff has indicated that access for such purposes would be facilitated.

Particular discovery

[12]     The plaintiff applies for tailored discovery of documents which it claims are relevant  to  the credibility and  impartiality of four of the defendants’ witnesses. These witnesses are as follows:  Mr Paul Thompson is an employee of EQC who has been involved in providing technical support and advice for repairs managed through the Canterbury Home Repair Programme.  He is a licensed building practitioner.  A second witness to be called on behalf of EQC is Mr Timmothy Day, a structural engineer who until May of this year was the chief engineer for Fletchers EQR and had responsibilities to oversee and coordinate the Canterbury Home Repair Programme.  Southern Response intends calling one of its employees, Mr Stephen Lamont, a senior quality audit assessor and Mr Stuart Wade, who was employed by Arrow International (New Zealand) Ltd (Arrow) to work on the Southern Response Earthquake Services Ltd project as a claim support manager and technical repair specialist.

[13]     The documents sought to be discovered in relation to these witnesses relate to the terms of the relationship between the witnesses and EQC or Fletchers EQR, or with Southern Response/AMI and Arrow.   Discovery is also sought in respect of

documents about rewards which the witnesses and/or their companies may have received from the defendants or named associated companies, and documents about training and/or the qualifications of the witnesses.

[14]     The basis upon which this discovery is sought is submitted to be that the documents are relevant to assessing the admissibility and weight of the witnesses’ evidence.  The documents relating to the training and qualification of witnesses is said to be relevant because the defendants seek to qualify the witnesses as experts.  It is submitted that ordering discovery would not be disproportionate in the circumstances, and that the documents go to the independence and impartiality of the witnesses.   The plaintiff relies  upon  a  recent  decision  of this  Court,  Domenico

Trustee Ltd v Tower Insurance Ltd.3   It is asserted that as a result of this decision the

documents now sought are discoverable.

[15]     In  opposition  to  the  application  for  tailored  discovery  of  the  identified categories of documents, the defendants submitted that there was no proper basis for the application.  EQC submitted that the tailored discovery sought is not relevant to issues in the proceeding, and that no evidential foundation has been laid for the application.  In any event, it was submitted, such application should have been made well prior to the hearing, if it was to be made at all.

[16]   EQC submits that in relation to the “training documents” sought to be discovered, the only basis upon which the application is put is that such documentation is “relevant because the defendants seek to qualify the witnesses as experts”.  EQC advises that neither Mr Day nor Mr Thompson purport to justify their expertise based on training provided by EQC personnel.  Both witnesses have listed their qualifications upon which they base their expertise in their respective briefs of evidence.    Further,  it  is  submitted that  the application  for tailored  discovery in relation to these training documents does not identify what documents are being sought.  EQC advises that it has an extensive range of training material which could potentially involve discovery of thousands of documents.  The supporting affidavit provides no explanation as to what training documents are sought.   An exhibited training presentation attached to the affidavit in support was not authored by any of

its witnesses and therefore it is unclear as to what evidential relevance it has to the application being made.

[17]     Southern Response submits that the documents detailed for discovery are not relevant to the disputed issues before the Court.  It submits that Mr Lamont does not purport to give evidence as an expert surveyor, he is a licensed building practitioner, suitably qualified and experienced to measure and give evidence about the floor levels and wall verticalities of the house.  Mr Wade is likewise a licensed building practitioner and, it is submitted, suitably qualified and experienced to observe and give evidence about the physical damage he has observed to the house.   Southern Response submit that no basis has been provided for the suggestion that either Mr Lamont or Mr Wade would benefit financially, or otherwise, from the outcome of the proceeding.  The evidence of both witnesses is submitted as being purely factual. Southern Response argue that the plaintiff is simply “fishing” for information, and that, in the absence of the plaintiff being able to identify a genuine link between the documents sought to be discovered and the issues identified for determination on the pleadings or in its opening submissions, the application is without foundation.  It is submitted that the discovery can only have the effect of deflecting the focus of the trial into irrelevant and unnecessary points of issue.

Decision

[18]     The application for tailored discovery effectively comes during the course of the hearing of this matter.  The only possible reason as to why the application is now belatedly being made prior to the recommencement of the hearing, and notwithstanding the plaintiff having been in  receipt of the defendants’ briefs of evidence for a lengthy period of time, is as a result of the plaintiff’s interpretation of

the effect of the recent decision of Domenico v Tower.4    In that case, the defendant

obtained tailored discovery orders for the disclosure of documents which were said

to go to the credibility and admissibility of one of the plaintiff’s expert witnesses.

[19]     The  situation  in  Domenico  v  Tower  was  highly  unusual  and  rare.    The

defendant’s argument was there premised on a contention that the expert witness’s

evidence could not be admitted at trial.   It was submitted that the position of the proposed expert was so lacking in independence that his opinion could not be considered as substantially helpful.5   Secondly, it was argued that the witness had a financial interest in the outcome of the case because his fee would be derived on a contingency basis, and that only in very rare circumstances would such evidence be accepted by a Court.6    Of particular note was the acknowledgment by the applicant defendant of the distinction between a challenge to admissibility and a challenge to credibility.  The defendant accepted that discovery is not generally available for the latter, and that challenges to admissibility are rare.

[20]     Importantly,  the  application  was  premised  on  the  acceptance  that  the documents sought would not be discoverable unless there was a proper ground for an inquiry by the Court on admissibility.   Associate Judge Matthews accepted those propositions as correct, but considered that the door was not closed on an application for tailored discovery of documents that may impugn the credibility of another party or witness.   Ultimately, in terms of r 8.8, the question would turn on whether the interests of justice required that an order be made.  The onus was on the applicant to satisfy the Court that this was the case and that proportionality favoured the making

of such an order.7

[21]     In  Domenico  v  Tower,  the  Court  was  satisfied  there  was  a  sufficient evidentiary foundation for an order to be made.  In particular, that the expert witness had an actual involvement in a group which had a direct financial interest in the outcome of the proceeding.8    Associate Judge Matthews was satisfied that the documents sought were critical to the issue of the expert witness’s independence, and thus relevant to the admission of his evidence and the weight that should be given to

it.

5      At [52] and [54], citing Commissioner of Inland Revenue v BNZ Investments (2009) NZCA 47, [2009] 19 PRNZ 553.

6      At [52], citing R (Factortame Ltd) v Secretary of State for Transport [2002] 4 All ER 97 (CA) at

[73]; Donovan Drainage & Earthmoving Ltd v Halls Earthworks Ltd HC Auckland CIV-2010-

404-29, 10 November 2010 at [55].

7      Domenico, above n 3, at [71]; High Court Rules, r 8.2.

8 At [73].

[22]     The plaintiff in the present case has not provided a proper foundation to support the suggestion that any of the witnesses have a financial interest in the outcome of this particular proceeding.  Each witness’ statement of evidence discloses they are either employed by one of the defendant companies, or a related company, as an employee, or have been engaged in the ordinary way for their professional services by the defendants.  As noted by EQC, the supporting affidavit filed by the plaintiff simply lists companies found on the Companies Office Register associated with two witnesses, Messrs Thompson and Day, but it does not provide any basis upon which to suggest that those companies have a financial interest in how this case is to be determined.

[23]    If the plaintiff is of the view that any of the witnesses employment or professional relationship with the defendant does reflect on their credibility, it will have the opportunity to test that in cross-examination.  Presently, so far as the EQC witnesses  are  concerned,  Messrs  Thompson  and  Day,  the  information  is  that Mr Thompson is an employee of EQC, paid by an ordinary fixed salary, and that Mr Day is engaged by EQC as a consulting engineer and paid an hourly rate in the normal way for professional services.  Neither witness’ remuneration is linked with the outcome of this case.  The position is the same in respect of Messrs Lamont and Wade.

[24]     I am not satisfied that it is in the interests of justice that the application for tailored discovery be granted.  In my view, no proper foundation has been laid for the application and it is declined.

Costs

[25]   EQC has sought costs on a 2B basis for its notice of opposition and memorandum, plus disbursements fixed by the Registrar.   Southern Response has not, at least as yet, made such application.

[26]     The question of costs is reserved.  The plaintiff is entitled to an opportunity to respond to EQC’s application as to why costs ought not follow the event in the usual way.  There ought to be an opportunity upon the resumption of the hearing to hear from counsel on this short point at a convenient time.

Solicitors:

Chapman Tripp, Christchurch Wynn Williams, Christchurch Grant Shand, Christchurch