Capital and Coast District Health Board v Beca Carter Hollings & Ferner Limited
[2020] NZHC 1083
•21 May 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2016-485-256
[2020] NZHC 1083
BETWEEN CAPITAL AND COAST DISTRICT HEALTH BOARD
Plaintiff
AND
BECA CARTER HOLLINGS & FERNER LTD
First Defendant
AND
THE FLETCHER CONSTRUCTION COMPANY LTD
Third Defendant
AND
R P BELBIN
Fifth Defendant
AND
CRANE ENFIELD METALS PTY LTD
trading as CRANE COPPER TUBE Sixth Defendant
AND
MICO NEW ZEALAND LTD
Seventeenth Defendant
Hearing: 18 May 2020 Appearances:
I Thain, E Moran and A Sweeney for Plaintiff M Ring QC and D Neutze for First Defendant
K Fulton and M N Rathod for Third, Sixth and Seventeenth Defendants
[Fourth Defendant struck out][Seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth and sixteenth defendants discontinued]
Judgment:
21 May 2020
JUDGMENT OF GRICE J
(Application for adjournment by defendants)
CAPITAL AND COAST DISTRICT HEALTH BOARD v BECA CARTER HOLLINGS & FERNER LTD [2020] NZHC 1083 [21 May 2020]
[1] The third, sixth and seventeenth defendants (the Fletcher defendants) supported by first defendant (Beca) apply for an adjournment of the 10 week trial in this matter scheduled to start on 14 September 2020.1
[2] The application for adjournment had been foreshadowed in a memorandum by the Fletcher defendants dated 17 April 2020. The suggestion of an adjournment was opposed by the plaintiff and so the matter was set down for hearing. Following that a number of other memoranda were filed by counsel including two substantial affidavits in support of the application for adjournment. The hearing of this application was held with counsel appearing remotely by VMR in accordance with directions.2 The hearing proceeded smoothly despite some initial difficulty locating all relevant memoranda and the affidavits which had been sent by email to the Court late last week.
[3] I have allowed the adjournment but only for a period of four weeks to move the trial commencement date from 14 September 2020 to 12 October 2020. This allows for the 10 weeks estimated for trial before the Christmas vacation. Any further adjournment would mean a date could not be allocated until sometime in 2022.
Issues
[4] While the defendants raised numerous points there are two main matters advanced by the defendants in support of the adjournment. These are in addition to the impact of the conditions brought about by the Covid-19 Alert conditions and in particular the present Alert Level 2 restrictions on trans-Tasman travel. The two separate issues are:
(a)The plaintiff has defaulted in meeting the timetable. In particular, the plaintiff’s briefs were due on 27 March3 but were not in fact served until 8 May 2020. Therefore, they were six weeks late.
1 The fifth defendant, Mr Belbin, the project manager has not played an active part in the proceedings. Counsel for the Fletcher defendants and Beca divided the argument between them.
2 Capital and Coast District Health Board v Beca Carter Hollings & Ferner Ltd HC Wellington CIV-2016-485-256, 20 April 2020 (Minute).
3 Capital and Coast District Health Board v Beca Carter Hollings & Ferner Ltd HC Wellington CIV-2016-485-256, 16 April 2019 (Minute) [“Minute of Grice J, 16 April 2019”] sets out the directions in terms of weeks to trial.
(b)The defendant significantly changed its theory of causation in its second amended statement of claim filed in November 2019. This change requires some of the defendants’ experts to visit or revisit the plaintiff’s hospital site in person. The experts presently resident in Australia are unable to do this at present.
[5] Further, the defendants say the plaintiff has exacerbated the situation by late discovery of documents, including a business case document which was only provided recently. The defendants say this shows the plaintiff has put forward a theory as to the cause of the leaks in the pipes (which are the focus of this case) in the second amended statement of claim (November 2019) but this theory had not been a focus until then.
[6] The Covid-19 Alert Level 4, 3 and now Alert Level 2 restrictions have affected the ability of, in particular, the defendants’ Australian experts to visit New Zealand to take samples as well as their ability to prepare for trial. New Zealand based experts under the present Alert Level 2 conditions4 are able to visit the plaintiff’s site but the Australian based experts cannot travel from Australia to personally visit the site.5
[7] Two difficulties emerge for the defendants in relation to their Australian experts:
(a)Their inability to visit the site to inspect and obtain samples of pipes and related materials which they say are necessary for them to complete their analysis and so their evidence.
(b)Doubt over whether they will be able to attend court in person in order to give their evidence in September 2020. The defendants say the provision of remote evidence by Australian experts would put them at a disadvantage.
4 Letter from The Right Honourable Dame Helen Winkelmann, Chief Justice to practitioners regarding COVID-19 – Protocol: COVID-19 Alert Level 2 (13 May 2020) [“Letter from the Rt Hon Dame Helen Winkelmann to practitioners”]. Alert Level 2 conditions came into force on 14 May 2020. Civil witness actions can be held.
5 Ministry of Health “COVID-19 – Border controls” < The restrictions have been in place since 26 March 2020.
Principles relating to adjournments
[8] The principles applying to an application for adjournment are well known. The application is dealt with under r 10.2 of the High Court Rules 2016 which provides:6
10.2 Adjournment of trial
The court may, before or at the trial, if it is in the interests of justice, postpone or adjourn the trial for any time, to any place, and upon any terms it thinks just.
[9] The interests of justice are the overriding consideration. This includes justice to both parties as well as other litigants and also involves consideration of the ability of the Court to manage and hear matters efficiently and within a reasonable time frame.7 Venning J in NZ Iron Sands noted:8
[14] As French CJ said in Aon Risk Services Australia Ltd v Australian National University:9
the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system.
[10] The impact on the Courts of the Covid-19 pandemic has led to a backlog of trials and including criminal jury trials. These may recommence in August 2020 but continuing restrictions means there is likely to be little easing of the backlog until 2021 and so will result in significant demands on court resources through 2021 and 2022.
[11] The Courts have recommenced witness actions and put in place protocols allowing in-person participation at trials. At the same time, in New Zealand as elsewhere, the Courts are able to facilitate remote participation for both witnesses and counsel.10
[12] At present it appears that New Zealand may move to Alert Level 1 within the next few weeks. The conditions which will be imposed at that level are not clear.
6 High Court Rules 2016, r 10.2.
7 Cygnet Farms Limited v ANZ Bank New Zealand Ltd [2016] NZHC 1945 at [8].
8 NZ Iron Sands Holdings Limited v Toward Industries Ltd [2019] NZHC 2516 [3 October 2019].
9 Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14 at [5].
10 Letter from the Rt Hon Dame Helen Winkelmann to practitioners, above n 4
Present restrictions may be eased but trans-Tasman travel restrictions are likely to continue to apply. Even if the trans-Tasman restrictions are lifted at some stage which has been suggested by the relevant governments, if the Covid-19 cases increase in either jurisdiction restrictions may be re-imposed. On present indications the uncertainty around particularly trans-Tasman travel is likely to extend into 2021.
[13] Other jurisdictions are also grappling with how best to ensure the Courts, which provide an essential service, continue to function and meet the public interest that cases are disposed of without undue delay.
[14] Mr Fulton, for the third, sixth and seventeenth defendants, referred to the English High Court decision of Muncipio De Mariana v BHP Group PLC.11 He noted that the case involved an adjournment of seven weeks granted in a trial scheduled to take seven days relating to the collapse of a dam in Brazil. The litigation involved numerous parties, significant damages and parties, witnesses and experts based in Brazil. The hearing in question was seeking a stay of proceedings on jurisdictional grounds. The lock down conditions in both the United Kingdom and Brazil were imposed just as the lawyers from the United Kingdom were about to travel to Brazil.
[15] The difficulties of remote participation were particularly acute in Muncipio De Mariana because of the volume of documentation, the need for interpreters to be included in the meetings conducted remotely and particular difficulties in relation to their expert witnesses in Brazil.12 These included the fact that one witness aged 76, and was unable to access his staff or library necessary for his research. He also faced difficulties operating technology without the assistance of staff which he did not have. Another expert was supporting vulnerable persons at home and did not have access to office as well as having a slow and intermittent internet connection from home in Brazil. Other witnesses were handicapped by having to work from home in Brazil without access to good internet, offices or support.
11 Muncipio De Mariana v BHP Group PLC [2020] EWHC 928 (TCC) [“Muncipio De Mariana v BHP Group”].
12 At [32].
[16] The Judge in Muncipio De Mariana accepted that the difficulties expressed by the witnesses were real and were grave but at the same time noted he proceeded on the basis that “experience is rapidly showing ways in which such problems can be addressed and their effects reduced (but not removed)”.13 He did not accept that a lengthy adjournment was necessary and allowed only sufficient time to enable the defendants further time to prepare their briefs in light of those particular grave difficulties.
[17] In addition, one of the defendants in Muncipio De Mariana was an Australian company whose lawyers were based in Australia. The Judge commented that there was a prospect that travel between Australia and the United Kingdom (for the lawyers and witnesses) might be possible in the English autumn (October/November). He put little weight on the added difficulty for the Australian lawyers that because of the time differences they would need to work through the night and into the early hours of the morning.14
[18] Of particular relevance are the Judge’s comments that the progress of the Covid-19 pandemic and the measures to address could not be predicted with any degree of certainty. He said:15
46. … Matters might have moved to such a stage that it will be possible to have a traditional in person hearing in July alternatively the position could be such that it will not be possible to have such a hearing even in the Autumn. The most that can be said is that there is some scope for believing or hoping that the prospects of having an in person hearing with travel between England and Australia being possible are greater if the hearing is in the Autumn than if it is in July. However, matters cannot be put higher than that particularly as at least some commentators suggest there are likely to be waves of infection.
[19] The Judge then went on to set out a number of principles governing the approach he took in view of the Covid-19 conditions. He started with the overriding objective that cases are to “be dealt with justly; in ways which are proportionate to the amounts involved, the importance of the case and the complexity of the issues; and expeditiously and fairly”.16 He noted that insofar as compatible with the proper
13 At [40].
14 Muncipio De Mariana v BHP Group, above n 11, at [44].
15 At [46].
16 At [16].
administration of justice the Court will take into account the impact of the Covid-19 pandemic conditions in relation to applications for extension of time for compliance with directions, adjournments and applications for relief. A similar approach has been indicated in New Zealand.17
[20]In summary the principles suggested in Municipio de Mariana were:
(a)The loss of an already fixed trial date “is no little matter to be borne in mind”.18 However, recognition must be given to the effects of the worldwide pandemic causing delay in the gathering of evidence.
(b)The Courts should continue to strive to resolve disputes, which is their purpose, even when that involves doing so by way of remote hearings.19
(c)Difficulties from the pandemic conditions resulting in the parties and their lawyers being in different locations should be addressed robustly and the parties are expected to take proactive measures to overcome such difficulties.20
(d)There is a clear and consistent message that as many hearings as possible should continue and they should “do so remotely as long as that can be done safely”.21
(e)There should be a robust exploration of the ways in which arrangements for a remote hearing could be put in place. In particular, whether a particular hearing should be adjourned if the case could not be heard face-to-face or be a remote hearing. The following points assist in that assessment:22
i)Regard must be had to the importance of the continued administration of justice. Justice delayed is justice denied even
17 Letter from the Rt Hon Dame Helen Winkelmann to practitioners, above n 4.
18 Muncipio De Mariana v BHP Group, above n 11, at [18].
19 At [20].
20 At [21] citing Re Smith Technologies (unreported 26 March 2020).
21 At [22] citing Re Blackfriars Ltd [2020] EWHC 845 (Ch) at [32].
22 At [24].
when the delay results from a response to the currently prevailing circumstances.
ii)There is to be a recognition of the extent to which disputes can in fact be resolved fairly by way of remote hearings.
iii)The courts must be prepared to hold remote hearings in circumstances where such a move would have been inconceivable only a matter of weeks ago.
iv)There is to be rigorous examination of the possibility of a remote hearing and of the ways in which such a hearing could be achieved consistent with justice before the court should accept that a just determination cannot be achieved in such a hearing.
v)Inevitably the question of whether there can be a fair resolution is possible by way of a remote hearing will be case- specific. A multiplicity of factors will come into play and the issue of whether and if so to what extent live evidence and cross-examination will be necessary is likely to be important in many cases. There will be cases where the court cannot be satisfied that a fair resolution can be achieved by way of a remote hearing.
[21] The Judge went on to say that any application for the extension of time which would necessarily lead to an adjournment of the trial should be assessed against the following principles:23
(i)The objective if it is achievable must be to be keep to existing deadlines and where that is not realistically possible to permit the minimum extension of time which is realistically practicable. The prompt administration of justice and compliance with court orders remain of great importance even in circumstances of a pandemic.
(ii)The court can expect legal professionals to make appropriate use of modern technology. Just as the courts are accepting that hearings can properly be heard remotely in circumstances where this would have been dismissed out of hand only a few weeks ago so the court can expect legal professionals to use methods of remote working and of remote contact with witnesses and others.
(iii)While recognising the real difficulties caused by the pandemic and by the restrictions imposed to meet it the court can expect legal professionals to seek to rise to that challenge. Lawyers can be expected to go further than they might otherwise be expected to go in normal circumstances and particularly is this so where there is a deadline to be met (and even more so when failing to meet the deadline will
23 Muncipio De Mariana v BHP Group, above n 11, at [32].
jeopardise a trial date). So the court can expect and require from lawyers a degree of readiness to put up with inconveniences; to use imaginative and innovative methods of working; and to acquire the new skills needed for the effective use of remote technology. As I have already noted metaphors may not be particularly helpful but the court can expect those involved to roll up their sleeves or to go the extra mile to address the problems encountered in the current circumstances. It is not enough for those involved simply to throw up their hands and to say that because there are difficulties deadlines cannot be kept.
(iv)The approach which is required of lawyers can also be expected from those expert witnesses who are themselves professionals. However, rather different considerations are likely to apply where the persons who will need to take particular measures are private individuals falling outside those categories.
(v)The court should be willing to accept evidence and other material which is rather less polished and focused than would otherwise be required if that is necessary to achieve the timely production of the material.
(vi)However, the court must also take account of the realities of the position and while requiring lawyers and other professionals to press forward care must be taken to avoid requiring compliance with deadlines which are not achievable even with proper effort.
(vii)It is in the light of that preceding factor that the court must be conscious that it is likely to take longer and require more work to achieve a particular result (such as the production of evidence) by remote working than would be possible by more traditional methods. In the context of the present case the Defendants said that meetings conducted remotely took twice as long and achieved less than those conducted face to face. The Claimants challenged the precise calculation but accepted that such meetings would be likely to take longer and that is readily understandable particularly in a case such as the present involving large quantities of documents and requiring at least to some extent the use of interpreters.
(viii)In the same way the court must have regard to the consequences of the restrictions on movement and the steps by way of working from home which have been taken to address the pandemic. In current circumstances the remote dealings are not between teams located in two or more sets of well-equipped offices with fast internet connexions and with teams of IT support staff at hand. Instead they are being conducted from a number of different locations with varying amounts of space; varying qualities of internet connexion; and with such IT support as is available being provided remotely. In addition those working from home will be working from homes where in many cases they will be caring for sick family
members or for children or in circumstances where they are providing support to vulnerable relatives at another location.
(ix)Those factors are to be considered against the general position that an extension of time which requires the loss of a trial date has much more significance and will be granted much less readily than an extension of time which does not have that effect. That remains the position in the current circumstances and before acceding to an application for an extension of time which would cause the loss of a trial date the court must be confident that there is no alternative which is compatible with dealing fairly with the case.
[22] The principles articulated in Muncipio De Mariana are applicable in New Zealand in the context of the assessment of the interests of justice required by r 10.2 of the High Court Rules 2016.
Background
[23] The plaintiff is a district health board. It owns and operates the Wellington Regional Hospital. In about December 2005 it started building a six level new main building on the hospital site in Newtown. The project was a major one worth in excess of $140 million. There was substantial contractual documentation involved.
[24] The project included the design and installation of new copper piping for hot and cold water services throughout the main building. Beca designed and reviewed the hot and cold water system, including the preparation of specifications for the material to be used in the construction of the system and its installation. The practical completion certificates were issued for the project in 2008. Beca also monitored construction.
[25] The head contract was between the plaintiff and Fletchers, the third defendant, it included provisions for the supply and installation of copper pipes for the hot and cold water system. That particular part of the contract was carried out by a sub- contractor. The pipes were manufactured by Mico, the seventeenth defendant who was joined in November 2018 following a defended application.
[26] The copper pipes for the hot and cold water system which run through the six level main hospital building developed leaks. The cause of the leaks in the pipes
remains the subject of differences between the experts. In 2018 there was remediation work relating to the plumbing and the pipes which has complicated matters.
[27] A schedule of the leaks is attached to the second amended statement of claim lists. It lists leaks found as early as February 2010. About 350 leaks have been logged. Some leaking pipes have been replaced, some patched, and others cannot be patched or replaced. The leaks have lessened since the work was done on the system.
[28] The design defects causing the leaking are described in the second amended statement of claim. In summary these are:24
(a)Type two pitting of the pipes: this is said to relate to water temperature, the level of water flow and the copper pipes not being properly flushed at the pressure testing and/or installation stage; water being left stagnant in the pipes and the design of the hot water system causing stagnation in some sections.
(b)Erosion corrosion of the pipes: this is said to be caused by among other things the initiation of corrosion through microbial or chemical activity precipitated by the failure to flush the pipes properly during pressure testing and/or installation so leaving stagnant water in the pipes.
(c)Maintainability defects: that defects in design have unnecessarily caused the cost of maintaining and repairing the hot water pipes and the hot water system.
[29]Counsel advise that the loss now claimed is in the region of $98 million.
[30] The claims against Becca are for negligence in design, in construction monitoring and in breach of an indemnity. The claims against the Fletcher defendants are in negligence and under the Consumer Guarantees Act 1993.
24 As at 14 November 2019.
[31] The claim was filed in April 2016. A summary judgment application to strike out the claim by the Fletcher defendants25 was heard in 2017.26 The claim was dismissed against the fourth defendant, Dr Smith but otherwise unsuccessful.
[32] The plaintiff made an application to join Mico as seventeenth defendant in July 2018 which was opposed. The joinder application was granted in November 2018.27
[33] There have been a number of memoranda and minutes dealing with pretrial matters. Tailored discovery was directed by Minute of 17 August 2018. The protocol for inspection of the pipes was the subject of detailed directions by agreement on 1 June 2018. The defendants’ experts inspected the site in October 2018 and July 2019. The pre-trial directions and timetable are set out in a minute dated 16 April 2019 when the trial was set. Pleadings closed in December 2019.
[34] The defendants have now also foreshadowed a further application for tailored discovery in a memorandum filed for the purposes of the application for adjournment. The plaintiff has indicated it will respond by providing documents if necessary but says the application is not necessary.
[35] Each party has pointed to the other being responsible for late discovery so creating difficulties for the others. The cause of the need for the ongoing discovery seems to be mainly due to the fact that the matters giving rise to these proceedings are now over 10 years old; some recording and logging systems employed by all the parties have been difficult if not impossible to retrieve, a problem exacerbated by the use of electronic records which are difficult to recover from obsolete systems; that documentation and other material which might have been useful in the proceedings has been lost or misplaced and many different people were involved in the construction and held relevant material. These factors have been known to the parties since early in the litigation.
25 Including the fourth defendant, Dr Smith (a construction manager for the third defendant at the relevant time) and excluding Mico which was added in 2018.
26 Capital and Coast District Health Board v Beca Carter Hollings & Ferner Limited [2018] NZHC 24.
27 Capital and Coast District Health Board v Beca Carter Hollings & Ferner Limited [2018] NZHC 2862.
[36] In support of its application the Fletcher defendants filed an affidavit with a summary of correspondence between the parties over the last few months in support of its claim that it was the plaintiff who produced material late and has been uncooperative. However, the summary, according to the plaintiff, is not comprehensive. The affidavit was only filed shortly before this hearing and with attachments is over 200 pages long. However, it is not a full record of the relevant correspondence and discussions between the parties. I do not find it of great assistance.
The issues
[37] The defendants have sought an adjournment of the trial to a date on or after 29 March 2021. One difficulty with the adjournment of a 10 week trial scheduled to commence in September 2020 is that the scheduled time cannot be filled by a long cause on this short notice. From a practical point of view the time will be lost.
[38] Counsel have also noted, and I agree, that this is not a case which can be brought on as a standby matter on short notice. It involves the coordination of a number of witnesses including experts and counsel who all have calls on their time and resources.
[39] I also note that some counsel have obligations beyond the first quarter of next year. Even more problematically the Registrar is unable to allocate a date for a civil trial of this length until 2022.
[40] However, I note that the lawyers representing all parties are led by senior and experienced counsel who have adopted a largely constructive approach in dealing with the difficulties brought on by the Covid-19 restrictions. The parties in this case are well resourced, have access to good technology, internet support and research facilities as well as work places. This is in contrast with the working conditions and resources available to counsel and parties involved in many other cases.
[41] Nevertheless, working remotely is more difficult in many respects and will likely add to the time involved for briefing witnesses despite allowing for some efficiencies and time savings in other respects including travel time. In addition
counsel and the experts have only within the last three weeks had full access to their work places. Nevertheless it appears all have been equipped to work remotely.
[42] It is with those constraints in mind that I must now consider the application for an adjournment in the specific circumstances of this case in order to assess the interests of justice.
The plaintiff’s defaults
1Plaintiff’s briefs of evidence
[43] The plaintiff’s briefs were filed some six weeks late.28 They were due on 27 March 2020, at the beginning of the Covid-19 lock down period and on 8 May 2020. The plaintiffs had earlier assured the defendants that the briefs would be filed in time.
[44] Mr Thain for the plaintiff said the delay in the provisions of briefs was regrettable but attributed part of the delay to the “drop” of a substantial quantity of documents (in excess of 3,000) by the defendants just before the briefs were due. Nevertheless, according to the defendants the receipt of those documents did not lead to many amendments in the briefs of evidence. The defendants say only one of 20 briefs was required to be amended to accommodate the additional discovery.
[45] In any event even if amendments had been required it would have been reasonable for the plaintiff to provide the draft briefs reserving its rights to amend the briefs if such amendments were required after a review of the new discovery. The plaintiff is the party who seeks to retain the trial dates.
[46] The defendants also point to the fact that Mr Jenkins (a consultant retained by the plaintiff to investigate the leaks some years ago) has now come forward with a number of samples which have only recently been discovered in a workshop. These have now been made available to the defendants’ experts.
28 Minute of Grice J, 16 April 2019, above n 3.
2Theories of the cause of the leaks
[47] The defendants say that apart from the late briefs of evidence the plaintiff has created other last minute obstacles to its experts being able to complete their briefs. In particular they say the plaintiff recently shifted its focus on the theory of the cause of the leaks in the pipes. The defendants say that water not properly flushed out of the system at the time of construction so stagnated in the pipes causing microbial activity or reactions which were a causative factor for pipe erosion corrosion leading to the leaks in the pipes.
[48] In support of the submission that the stagnation theory was a change of course by the plaintiff, Mr Williams, a senior principal and senior technical director of Beca Group Ltd, provided an affidavit. He said he had reviewed the plaintiff’s briefs of evidence. He said that in the original statement of claim the plaintiff, in general terms, alleged defects in design and construction of the hot and cold water system which created impingement attacks on the copper pipes. Mr Williams said the related particulars commentary was general without specific references. Mr Williams goes on to say that the amended statement of claim in (filed and served in draft in June 2018) attributed the cause of leaks to Type Two pitting and erosion corrosion of the pipes due to the hot water system and the temperature as well as the fact that the operating temperature of the hot water system could not be readily controlled. These were said to be Beca design failures. Mr Williams said there was a lack of particulars as to where the system temperatures and velocities were too high, what the temperatures of velocities were and the basis for lack of temperature control were not provided.
[49] Mr Williams says it was only in the second amended statement of claim filed on 14 November 2019 that the defects in design and construction of the hot water system leading to erosion corrosion included the theory that the pipes were not properly flushed during pressure testing or installation leaving the water to stagnate and so initiate corrosion.
[50] In addition counsel pointed to a business case for the Ministry of Health prepared by the plaintiff on 14 November 2019 saying that the root cause of leaks was
the stagnation of water. Mr Williams says the plaintiff’s briefs of evidence received on 8 May 2020 provided a selection of possible causes but even then he says some detail is not clear. He refers to the evidence of Mr Woolhouse, the plaintiff’s hydraulic consultant who refers to “uncontrolled and damaging water dynamics” but says it is not clear from the brief whether Mr Woolhouse asserts the temperature of the water in the hot water system was too high or too low or whether the velocity was too high or too low.
[51] The defendants say the recent change in the focus of the theory behind the leaks is largely the reason that their experts need to take further samples and visit or revisit the hospital in person to observe or select samples of the pipes in order to analyse them based on this new theory.
[52] The defendants’ experts have had the opportunity to carry out in-person site visits and did so well before the Covid-19 restrictions came into force. I understand that most, if not all, of the experts have visited the site. I put little weight on the need for an in-person site inspection in the near future in those circumstances as there are options for other ways of obtaining the necessary information which need to be properly explored.
[53] In response Mr Thain for the plaintiff says that the issue of stagnation in the pipes has been a live theory for some time. In particular he points to the fact that the theory was squarely raised by the plaintiff’s expert in relation to erosion corrosion in copper pipes.29 Dr O’Halloran in his affidavit dated 10 February 2017 (in opposition to the strike-out application) set out the theory squarely. He pointed to the fact that the plaintiff had been unable to locate documents to show the water was flushed from the hot water plumbing system in the hospital after the testing and raised the question of stagnation of water in the pipes. He then went on to outline the potential harmful effects caused by stagnant water and failure to thoroughly flush new pipe work. In an affidavit at the same time of Mr Angus the plaintiff’s project engineer, made particular reference to searches he had undertaken looking for documents which would show
29 Dr O’Halloran is a research chemist with qualifications and experience in analytical electro chemistry relating to water as well as analytical chemistry of waters and corrosion of copper tubing.
whether or not there had been water left in the pipes following flushing which might have caused stagnation. He was unable to find a number of documents he was looking for which might have assisted, however he did find some checklists which led him to the conclusion there may well have been water left in the pipes following flushing which might have led to the relevant pipe damage.
[54] Mr Thain also notes that the original statement of claim was wide enough to include the stagnant water theory but acknowledges it did not specifically refer to it. However, he says the first amended statement of claim referred to the issue of stagnant water. He said this was filed and circulated to the parties about 15 June 2018 well before inspection occurred by the defendants’ experts on 2 October 2018.30 The plaintiff said the erosion corrosion theory based on stagnation was a live theory from early 2017 and specifically included in the pleadings in 2018 before the defendants’ expert visits. The defendants say while the theory was mentioned in the pleadings and it might have been referred to in the evidence it was not the focus of the case and that it was only clearly stated in the second amended statement of claim filed in November 2019.
[55] In my view the theory based on stagnation was squarely in focus at least from 2017 onwards. Since then the defendants’ experts have carried out inspections. They were alive to the theory based on stagnant water. Dr Smith the Fletcher expert was familiar with the theory. He filed two affidavits at the time of the application to strike out and specifically refers to reviewing Dr O’Halloran’s and Mr Angus’ affidavits. He refers to the stagnant water theory. Mr Williams also filed an affidavit at the time for Beca as did Mr Rowlands. I do not consider the fact that the second amended statement of claim honed the theory detracts from the fact that all the experts would have been aware of it and would have needed to undertake their investigations taking it into account.
30 It was originally filed as a draft because it made the claim against Mico and the joinder was opposed and so the final version was not filed until 12 November 2018. When it was filed it retained the stagnant water allegation.
[56] The strength of the plaintiff’s evidence on the theories of causation are criticised by the defendants’ experts. However, those are matters for further discussions between the experts and for trial.
3The effects of the Covid-19 Alert Level restrictions
[57] In the present Alert Level 2 Alert conditions no travel is permitted between New Zealand and Australia. The government has indicated that there are discussions in train between Australia and New Zealand which may lead to a relaxation of the trans-Tasman travel prohibitions. There is no clear indication of when such restrictions might be lifted. In any event it is likely the conditions may change if there was any increase in the Covid-19 case numbers in either country in the future. Attempting to predict the likely circumstances which will prevail in September is impossible.
The experts
[58] Counsel for Beca says that three of its primary experts are based in Australia. Two of those, Mr Rowlands (metallurgist) and Mr Alexander (hydraulic system expert), seek to inspect the hospital in person. Mr Rowlands has already inspected the site.
[59] The Fletcher defendants’ experts who face particular difficulties are Mr Roberts, a quantity surveyor based in Australia and Dr Smith who is a metallurgist based in Auckland.
[60] Mr Roberts, in a letter provided to the Court, says that the relevant plaintiff’s expert briefs are deficient but if they had been supplied six weeks earlier he may have been able to make progress. He also says he is impeded by the inability to make a personal site inspection. Mr Roberts merely says that a virtual site inspection is less than optimal. That may be the case however in the circumstances that is available to him. In addition, with the assistance of virtual technology he is able to discuss matters with the other experts and in particular the plaintiff’s experts. While there are added difficulties there is no reason why Mr Roberts cannot prepare his brief of evidence particularly as he has the benefit of a further four weeks preparation time.
[61] Dr Smith of Optimech International Ltd in Auckland expresses concerns about his ability to get the samples in his possession tested at the University of Auckland laboratory. He says that he has had the samples for some weeks and has started testing them at the laboratory. However, that the move to Alert Level 3 conditions has resulted or may result in delays at the laboratory. Dr Smith has the samples and has sorted them. There is nothing to suggest that other laboratories are not available or that his testing cannot be prioritised particularly if given extra time to prepare his evidence. He is also awaiting samples to be sent from those found in the Jenkins workshop.31
[62] Mr Gartner, an Australian based expert who has been retained to peer review Dr Rowland’s metallurgy expert report, is over 70 years of age and he does not wish to travel to New Zealand even if travel were possible. There appears no reason why he cannot undertake the peer review remotely.
[63] Mr Alexander, a hydraulics engineer based in Australia, has provided a letter setting out the difficulties he faces. He says he was retained by Beca and met with them last year in Australia and had planned to undertake an intensive investigation of the issues related to the hospital in March this year. He expresses a number of concerns related to the quality of the plaintiff’s evidence and in his view the defendants’ experts have omitted investigation which he considers is appropriate, relating to components of the hot water network. He lists the components which include hot water tanks and other items in the system. Mr Alexander makes the point that it is always good to have “ample time for investigation and testing so nothing gets overlooked”, that he is an expert whose schedule is booked up for at least six to 12 months ahead and he is facing a serious bottleneck of cases due to the delays caused by the Covid-19 travel restrictions. Mr Alexander points to the dilemma for both the Court and the parties when he says:
Simply extending the timetable for a set period of time will not in itself fix the problem, because it is not known if or when Australian citizens will be permitted to enter New Zealand.
31 Mr Jenkins was an expert in, among other things, forensic investigations into copper pipe systems engaged by the plaintiff in late 2015 to look at the pipe failures. He took a number of pipe samples held by him at his workshop. These have been recently located by the plaintiff and made available to the defendants.
[64] Mr Alexander makes no suggestion for alternatives options to obtain information he needs and insists it requires a personal visit by him. He does not even consider the use of local experts or the provision of other material. There are other alternatives which he may say are not optimal but he has not even considered. Whether that involves other local experts or assistance of those who have already visited the site or other options, they need consideration.
[65] Mr Woolhouse, the plaintiff’s hydraulics consultant, appears to be based in Australia and it may even be possible for the hydraulics experts to collaborate in person in Australia subject to applicable interstate restrictions.
[66] The defendants expressed concern that the conditions will affect the ability of the experts to meet, discuss and provide joint reports. They say that without the time that had been built in for their experts, the trial might last longer than the present estimate as the experts may have to give their evidence in the traditional manner rather than a more collaborative approach.
[67] Given the demand on the Court to deal with the back log of jury trials, and the uncertainty surrounding the conditions which might exist five months from now, when the trial is scheduled to commence, I consider it is in the interests of justice to grant a short adjournment and start the trial on 12 October 2020.
Analysis
[68] I am of the view that all parties have contributed to the ongoing discovery difficulties largely through no fault of their own but due to the lapse of time since the events giving rise to the proceedings.
[69] I place little weight on the defendants’ argument that there has been the sudden introduction of a new theory of the case of the leaks which has made it necessary for the experts to personally visit the premises. It was apparent in 2017 that water stagnation was one of the theories of the cause of the leaks. The defendants’ experts or most of them have visited the site, taken samples and undertaken observations. In any event alternative means are available to obtain further samples and inspect the
systems including using New Zealand experts direct site examinations and the taking of samples and video viewing.
[70] The lateness of the provision of the plaintiff’s briefs of evidence has added to the delays. As I noted while there may have been ongoing discovery of large amounts of documents by the defendant, the plaintiff was aware that the trial dates would be under pressure. It could have provided the briefs in draft subject to the caveat that they might require amending.
[71] I accept that the six weeks delay included Easter but that does not excuse the plaintiff’s delay. Nor does the suggestion put forward by the plaintiff that the fact that the Alert Level 4 conditions were in place most of that time so the defendants could not do any work on the briefs excuse the plaintiff’s dilatoriness. The defendants indicated they could have used that time in preparing replies.
[72] The plaintiff has suggested the trial might take six to eight weeks rather than the 10 weeks. The defendants counter and say the trial might be lengthened due to the inability of the experts to collaborate. However, all parties agreed on the 10 week estimate at the time the matter was set down for trial which was well over 12 months ago. At that stage the parties would have had a good idea of what was involved. I do not consider it is appropriate to attempt to change that 10 week estimate now.
[73] There is no suggestion here that either counsel or the witnesses, including the experts, face obstacles in accessing good internet connections, technical support and assistance nor are they restricted from movement to laboratories and other workplaces in their own jurisdictions. Virtual meeting rooms and Zoom conferences provide the facilities needed to share documents, even large size plans for the purposes of expert discussions. It is expected that that is how the preparation of evidence and collaboration between experts will be undertaken in the foreseeable future while person-to-person meetings are not feasible.
[74] The defendants’ experts’ concerns can be dealt with or at least considered. It appears many of their concerns are about the lack of clarity as to what caused the leaks.
There are a number of theories and the experts have had at least three years to consider them.
[75] The same applies to giving evidence remotely if that is what the experts are required to do. Mr Ring QC, for Beca, indicated there might be credibility issues which require examination in person. He also pointed to the fact that the plaintiff’s experts would likely be giving evidence in person and so therefore would have the upper hand. However, the relevant evidence is by professional experts. They are experienced and responsible and bound by obligations to the Court. There is no reason why their evidence cannot be given remotely as effectively as would be the case if they gave the evidence in person.
[76] It is not clear what conditions will prevail in October in New Zealand and Australia and futile to make guesses at this stage. The parties have options available to deal with the inability for their experts to travel to New Zealand. It is open to the parties to agree on joint reports and collaborate on the presentation of evidence. The parties will have time to consider their approach on that.
[77] I do not overlook the fact that the experts will also be under pressure to prepare their evidence as well as attend to other cases. However, that is more likely to be exacerbated if this matter is adjourned beyond the end of this year. That seems to be the situation acknowledged by Mr Alexander. There will be a number of parties in long cause trials seeking adjournments, which will lead to problems in 2021 with expert and counsel availability. In my view it is better to retain the present dates or thereabouts and work toward them while the experts are focussed rather than allow the dates to slip into some distant time in the future.
[78]In summary:
(a)There is an existing trial date which has been in place for some time. A trial estimate of 10 weeks will be difficult if not impossible to accommodate until 2022. That is not prompt administration of justice. It is also unlikely the Court can use the 10 weeks that will be vacated by moving this trial and so resources will be wasted.
(b)Access to technology and to work resources present no problems in this case. All parties are well resourced, with senior counsel acting for them and experienced experts have been retained. In addition, not only can they take advantage of remote meetings to collaborate using technology available to them but they are locally able to meet face-to-face if necessary.
(c)The experts based in Australia have access to good IT, reliable internet connections, work spaces including laboratories and have no restrictions on moving internally in Australia. They are professionals and should be able to adapt to working under the present conditions.
(d)Recognition needs to be given to the fact that counsel and experts have been hampered in preparation and that is likely is to cause delays. Nevertheless, as I have indicated, good communications, are now available and with the proposed adjournment there is over five months to an October trial start.
(e)An adjournment of any more than the month allowed in this case will result in substantial delay in bringing the matter to trial.
[79] As I have noted the trial start can be moved out to 12 October 2020 for the 10 week trial. This allows a further month to accommodate the defendants’ preparation. I am aware this may create difficulties for Beca’s counsel who have another long cause trial occurring in the Wellington High Court. To that end their involvement will need to be accommodated but should not prevent the defendant parties having the benefit of the extra month in the circumstances.
[80] Mr Fulton noted that he had taken steps to ensure that he had sufficient resources available. He has involved another barrister, however he also made the point there comes a time where the addition of resources of people becomes counter- productive. There are two senior counsel acting for Beca. The addition of resources is an option for them to consider.
[81] The defendants say the plaintiff suffered no prejudice by delays because it has the remediation works scheduled over six years and has obtained funding from the Crown to undertake the remediation. The defendants say this case is just about money and it is not a situation where the plaintiffs are prevented from remediation. That may be the case but there is significant public interest in having this matter dealt with as closely as possible to the scheduled dates. The court system is under particular pressure exacerbated by lost hearing time caused by the Covid-19 Alert Level restrictions. It is in the interests not only the plaintiff but also the defendants to ensure matters such as this do proceed as closely as possible to schedule when alternative trial dates which can be allocated are 18 months to two years away. The proceedings are now four years old, the events giving rise to them are 10 years old and the parties have been focussing on a start date in September 2020 for over a year.
[82] The claim is large which I take into account but further delays will increase costs to the disadvantage of all parties. The public interest in bringing this matter to trial as well as fairness to the plaintiff is in having it resolved. The issues raised by the defendants’ experts can be accommodated with cooperation between counsel and the parties. Of course circumstances may change closer to trial however at present I am of the view that an adjournment of four weeks to 12 October 2020 meets the interests of justice.
[83] While the difficulties caused by the present Alert Level 3 and 4 as well as the restrictions on travel at the present Alert Level 2 will create some obstacles, there are options for getting around them which are available.
[84] The plaintiff has suggested an alternative timetable in its memorandum, starting with the plaintiff’s briefs of evidence which were provided on 8 May 2020. The defendants will now have the benefit of an extra month which will allow more time for the conferring of the experts than would be the case with the present start date. The full timetable needs to be revised but with the following indications of a timetable that would work toward a trial date commencing 12 October 2020 as follows:
(a)the first, third and seventeenth defendants’ briefs of evidence to be provided by 20 July 2020;
(b)the sixth defendants’ briefs of evidence to be provided by 18 August 2020;
(c)the plaintiff’s reply briefs of evidence (if any) to be provided by 18 (?) August 2020;
(d)counsel for the plaintiff and defendants to confer regarding the conferencing of expert witnesses within 14 working days of service of the plaintiff’s reply briefs of evidence;
(e)a pre-trial conference to be held in mid-August 2020; and
(f)the common bundle to be filed on 31 August 2020.
[85] Counsel will need to confer further on the timetable as it relates to the steps set out in the Minute of 16 April.32 If this is able to be agreed a joint memorandum is to be filed within seven days of the date of this judgment otherwise counsel should file memoranda before a teleconference to be set by the Registrar to review the position in the week of 8 June 2020 or shortly thereafter.
[86] A further pre-trial conference to review the timetable should also be set in mid- August 2020.
[87] Therefore, the application is successful insofar as a month adjournment of the trial start date is allowed. It will now start on 12 October 2020. If counsel are unable to agree on costs in relation to this application for adjournment, memoranda should be filed in the usual manner with the plaintiff’s memorandum to be filed on or before 10 days of the date of this judgment, the defendants’ responses to be filed on or before a further 10 days and any reply on or before a further three days.
Grice J
Solicitors:
DLA Piper, Wellington
Brookfields Lawyers, Auckland
32 Minute of Grice J, 16 April 2019, above n 3.
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