Emmons Developments New Zealand Limited v Mitsu Sumitomo Insurance Co Limited
[2017] NZHC 1094
•24 May 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2016-409-000106 [2017] NZHC 1094
BETWEEN EMMONS DEVELOPMENTS NEW
ZEALAND LIMITED Plaintiff
AND
MITSUI SUMITOMO INSURANCE CO LIMITED
First Defendant
VERO INSURANCE NEW ZEALAND LIMITED
Second Defendant
Hearing: 19 May 2017 Appearances:
T Grimwood for Plaintiff/Respondent
G S A Macdonald and A Priaulx for Defendants/ApplicantsJudgment:
24 May 2017
JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] The plaintiff, Emmons Developments New Zealand Limited (Emmons), brings this proceeding against the defendants, Mitsui Sumitomo Insurance Co Limited (Mitsui) and Vero Insurance New Zealand Limited (Vero), in relation to damage to three buildings in central Christchurch caused by the Canterbury earthquake sequence. On 22 March 2017 Mitsui and Vero served on Emmons a notice to answer interrogatories. On 5 April Emmons filed and served a response. Mitsui and Vero say the response does not comply with the requirements of r 8.39 of the High Court Rules and have brought an application to the court for an order that
the interrogatories be answered.
EMMONS DEVELOPMENTS NEW ZEALAND LTD v MITSUI SUMITOMO INSURANCE CO LTD [2017] NZHC 1094 [24 May 2017]
[2] Rule 8.38 provides that a judge may, at any stage of any proceeding, order any party to file and serve a statement prepared in accordance with r 8.39 in answer to interrogatories. The interrogatories must relate to matters in question in the proceeding. The order may require the statement to be verified by affidavit. The rule provides that the judge must not make an order unless satisfied that it is necessary at the time when it is made.
[3] The interrogatories are:
5.1 Emmons’ claims expenses totalling $55,336.85 for protection costs
under automatic extension 16. In respect of those expenses:
5.1.1 Please identify the Docids of the invoices for these
expenses within Emmons’ affidavit of documents dated
15 December 2016.
5.1.2If the invoices have not been discovered please provide copies.
5.1.3If part only of the invoice(s) at 5.1.1 and/or 5.1.2 is for protection costs, identify the amount in each invoice that is for protection costs.
5.2What is the breakdown of Emmons’ claim for expenses of $76,345.78 for Rydges and $180,030.25 for Car Park in respect of Hawkins’ fees for dismantling, shoring up or propping for the period August – December 2015 including:
5.2.1 In respect of each of Rydges and Car Park:
(a) How much has Hawkins charged for propping?
(b) How much has Hawkins charged for dismantling?
(c) What parts of Rydges/Car Park have been dismantled? (d) Why was it necessary to dismantle those parts at
5.2.1(c)?
(e) How much has Hawkins charged for shoring up?
(f) What parts of Rydges/Car Park has Hawkins shored up?
(g) Why was the shoring up at 5.2.1(f) necessary?
5.3Hawkins has charged $65,044.29 and $8,542.78 for labour on Rydges and Car Park respectively. What labour are these charges for including:
5.3.1 What different labour tasks were carried out?
5.3.2What amounts have been invoiced for each different labour task?
5.3.3 Why was each labour task necessary?
5.4Hawkins has charged $539,057.90 and $60,984.50 for internal plant in relation to Rydges and the Car Park respectively. What is the makeup of these charges including:
5.4.1 What items of plant has Hawkins charged for?
5.4.2 How much has Hawkins charged for each item of plant?
5.4.3 Why was each item of plant necessary?
5.5 Hawkins has charged a total of $59,152.78 for materials costs for
Rydges, of which $30,298.99 relates to hire of a copier/scanner and
$7,583.03 comprises Thornton Tomasetti’s fees:
5.5.1What materials were provided by Hawkins in respect of the remaining $21,270.76?
5.5.2What was the amount invoiced for each different type of material?
5.5.3 Why was each different type of material necessary?
5.6In Hawkins’ invoice number S0108/3 dated 30 May 2014 (at Tab 4 of Bobby Tai’s affidavit dated 23 February 2016), it charged $45,158.20 for ‘Deconstruction of Rydges Podium’. In respect of this invoice:
5.6.1 What parts of Rydges podium were deconstructed?
5.6.2Why was it necessary to deconstruct these parts of the podium?
5.7In Hawkins’ invoice number S0108/S5 dated 24 February 2015 (Emmons’ discovery Docid HAW001.00054) it has charged
$36,000.75 for an asbestos report for Rydges tower:
5.7.1 Why was this report necessary?
5.7.2 Please advise the Docid of the report in Emmons’ affidavit
of documents dated 15 December 2015.
5.7.3If Emmons has not discovered the report, please provide a copy of it.
5.8 Hawkins has charged $15,553.03 for scaffold hire at Rydges:
5.8.1 Where was the scaffolding erected?
5.8.2 Why was the scaffolding necessary?
5.9Hawkins has charged $10,384.50 for container hire at Rydges. Why was the container/were the containers necessary?
5.10 Hawkins has charged $5,627 for temporary fencing at Rydges:
5.10.1 Where exactly was the fencing erected?
5.10.2 Why was the fencing necessary?
5.11 Hawkins has charged $10,332.98 for hire of a submersible pump:
5.11.1 What was the pump used for?
5.11.2 Why was the pump necessary?
5.12 Hawkins has charged $5,727 to purchase a sump pump:
5.12.1 What was the pump used for?
5.12.2 Why was the pump necessary?
[4] These interrogatories are directed at the claim by Emmons under clause 4 of the material damage section of the insurance policy they jointly hold over Emmons’ property. Clause 4 provides:
We will cover you for costs necessarily incurred for any of the following purposes in consequence of damage insured under this material damage section:
(a) Demolition, dismantling, shoring up or propping of the insured property;
(b) Removal of stock, plant and other contents whether damaged or undamaged;
(c) Disposal of debris (including any kind of solid, liquid or gaseous matter) from the site of the insured property damaged and the area immediately adjacent to such site ...
[5] Emmons filed an affidavit by way of response to the interrogatories of Mitsui and Vero. It was sworn by a director of Emmons. In relation to the numbered paragraphs of the notice, there were four responses.
[6] So far as paragraph 5.1 is concerned Emmons advised that the invoices had been discovered and also formed part of an expenses report which had been provided to Mitsui and Vero.
[7] Emmons objected to answering interrogatory 5.6 on the basis that it goes to evidence that will be in the brief of evidence of a witness to be called for Emmons
and the necessity of the claimed expense is a matter of expert evidence which will be used by Emmons to prove its case.
[8] So far as interrogatory 5.7 is concerned, the asbestos report was attached to the affidavit.
[9] In relation to all the remaining interrogatories, the affidavit states that costs incurred with a building company, Hawkins, have been independently identified, valued and certified by a quantity surveyor, Mr Russel, and the certification and supporting documents have already been provided to the defendants.
[10] Counsel for Emmons filed a written synopsis of submissions in which issue was taken with the interrogatories sought on a number of bases. In argument Mr Grimwood developed two points in particular. First, by reference to clause 4 of the material damage section of the policy, he noted that it is an issue for trial as to whether costs claimed by Emmons under this clause were “necessarily incurred” in terms of the clause. Therefore he says that interrogatories which ask the basis upon which reimbursement of a claimed expense is said to be necessarily incurred is an issue for trial, and thus the subject of extensive evidence, and is not properly the subject of an interrogatory.
[11] Secondly, Mr Grimwood says that in relation to all the interrogatories bar three, the information has already been provided to Mitsui and Vero.
[12] Mitsui and Vero say that although they have received some information in relation to the expenses their expert advice is that the information does not allow them to establish the charges in respect of which interrogatories have been asked.
[13] The first issue is whether the interrogatories which ask whether certain steps undertaken by Emmons, for which reimbursement is sought, were necessary are or are not acceptable. In my opinion, it is plain that they are not. Those are issues for trial. Mr Macdonald explained to me that what the interrogatories were driving at was the reason for which the claimed expenses were incurred.
[14] The reason for which an expense is incurred, and the question of whether or not it was necessarily incurred, are separate issues. As an example, one of the items for which reimbursement is sought is propping. It is a trial issue as to whether or not propping was necessarily undertaken. However, in order for Mitsui and Vero to properly prepare a defence to the case they are entitled to know the reason that the propping was undertaken and how much is claimed in respect of it. Then they can properly brief a witness to assess the reason and then advise on that reason, and if necessary give evidence on whether it was or was not necessary. I am satisfied that it is appropriate to ask an interlocutory directed at the reason for an action but not as to the necessity of that action in terms of clause 4.
[15] The second issue is whether or not Emmons has already provided information to Mitsui and Vero which answers a substantial number of the interrogatories, in which case these interrogatories would be oppressive. On the information before the Court I am satisfied that the information has not been provided in an acceptable form. I accept that Mitsui and Vero have been advised that the information needed for them to assess Emmons’ claim cannot be derived from the voluminous spreadsheets provided to them, on which Emmons relies for its position on this issue. Further, the context in which these interrogatories have been served is a claim under an insurance policy. Emmons claims reimbursement for expenses it has incurred, which it maintains were necessarily incurred, and therefore within the terms of clause 4. It is a very simple matter to inform the insurer of what those expenses are and the reason that they were incurred. I see nothing oppressive about requiring an answer to an interrogatory which provides to an insurer a clear and succinct answer on the quantum of an insured’s claim. By way of example I refer to interrogatory
5.2 This relates to dismantling, shoring up or propping work undertaken by Hawkins
in each of two buildings on Emmons’ site. The questions asked are very simple (see
5.2.1(a), (b), (c), (e) and (f)). As I indicated to Mr Grimwood, it would be easy to conclude that it is and has been, for some years, in the best interests of Emmons to clearly and simply articulate its claim in respect of these items in order to ensure that its claim can be readily assessed and responded to. As it has not chosen that course, even to the point of objecting to doing so now, I have no hesitation in ordering it to do so.
[16] However, the questions at 5.2.1 (d) and (g) are not acceptable, as posed, for the reason given above. The question at (d) is rephrased thus: “Why were the parts of Rydges/Car Park referred to in 5.2.1 (c) dismantled?” Question 5.2.1 (g) is rephrased: “Why was the shoring up at 5.2.1 (f) undertaken?”
[17] Corresponding changes must be made to questions 5.3.3, 5.4.3, 5.5.3, 5.6.2,
5.7.1, 5.8.2, 5.9, 5.10.2, 5.11.2 and 5.12.2.
[18] I refer now to the affidavit given by way of response to the notice, so far as it relates to answers to questions 5.1, 5.6 and 5.7.
(a) Interrogatory 5.1:
Question 5.1.1 has not been answered, and must be.
Question 5.1.2 relates to provision of copies of documents. If this has not been attended to, plainly it must. In the context of this application overall, the question may remain and must be answered.
(b) Interrogatory 5.6:
It is not necessarily an acceptable answer to an interrogatory to defer the provision of information until a later point in the development of a party’s case. In this case, it is expected that trial will take place in October, and exchange of evidence is to take place within a matter of weeks. On that basis it might be thought that provision of the information sought could await the service of the relevant briefs. However, given the time between now and trial it is clear that only 20 working days will be available for Mitsui and Vero to finalise and serve their briefs after they receive Emmons’ briefs. That is too short a period, and in too close proximity to trial, for Mitsui and Vero to have a proper opportunity to prepare evidence in relation to factual issues which will require investigation by their own experts and advisors, once received. The information sought should in my opinion have been provided to Mitsui and Vero long before now. It is for an insured to make its claim. If it claims reimbursement on the basis that the costs of certain actions were incurred because the actions were necessarily undertaken, it is in my opinion incumbent on an insured to say
what it did and why, so that Mitsui and Vero can form an opinion, on advice, on whether or not the costs of those actions is covered under the policy on the basis that it was necessarily incurred.
In this circumstance it is not acceptable to seek to defer answering interrogatories until relevant briefs of evidence are served.
(c) Interrogatory 5.7.2 and 5.7.3:
These interrogatories have been answered. As indicated above interrogatory 5.7.1 will stand, though rephrased.
Outcome
[19] I direct Emmons to file and serve on Mitsui and Vero a statement prepared in accordance with r 8.39 in answer to the following interrogatories, within 15 working days:
5.1 Emmons’ claims expenses totalling $55,336.85 for protection costs
under automatic extension 16. In respect of those expenses:
5.1.1 Please identify the Docids of the invoices for these
expenses within Emmons’ affidavit of documents dated
15 December 2016.
5.1.2If the invoices have not been discovered please provide copies.
5.1.3If part only of the invoice(s) at 5.1.1 and/or 5.1.2 is for protection costs, identify the amount in each invoice that is for protection costs.
5.2What is the breakdown of Emmons’ claim for expenses of $76,345.78 for Rydges and $180,030.25 for Car Park in respect of Hawkins’ fees for dismantling, shoring up or propping for the period August – December 2015 including:
5.2.1 In respect of each of Rydges and Car Park:
(a) How much has Hawkins charged for propping?
(b) How much has Hawkins charged for dismantling?
(c) What parts of Rydges/Car Park have been dismantled? (d) Why were the parts of Rydges/Car Park referred to in
5.2.1(c) dismantled?
(e) How much has Hawkins charged for shoring up?
(f) What parts of Rydges/Car Park has Hawkins shored up?
(g) Why was the shoring up at 5.2.1(f) undertaken?
5.3Hawkins has charged $65,044.29 and $8,542.78 for labour on Rydges and Car Park respectively. What labour are these charges for including:
5.3.1 What different labour tasks were carried out?
5.3.2What amounts have been invoiced for each different labour task?
5.3.3 Why was each labour task was undertaken?
5.4Hawkins has charged $539,057.90 and $60,984.50 for internal plant in relation to Rydges and the Car Park respectively. What is the makeup of these charges including:
5.4.1 What items of plant has Hawkins charged for?
5.4.2 How much has Hawkins charged for each item of plant?
5.4.3 Why was each item of plant used?
5.5 Hawkins has charged a total of $59,152.78 for materials costs for
Rydges, of which $30,298.99 relates to hire of a copier/scanner and
$7,583.03 comprises Thornton Tomasetti’s fees:
5.5.1What materials were provided by Hawkins in respect of the remaining $21,270.76?
5.5.2What was the amount invoiced for each different type of material?
5.5.3 Why was each different type of material used?
5.6In Hawkins’ invoice number S0108/3 dated 30 May 2014 (at Tab 4 of Bobby Tai’s affidavit dated 23 February 2016), it charged $45,158.20 for ‘Deconstruction of Rydges Podium’. In respect of this invoice:
5.6.1 What parts of Rydges podium were deconstructed?
5.6.2What was the reason for deconstructing these parts of the podium?
5.7 In Hawkins’ invoice number S0108/S5 dated 24 February 2015
(Emmons’ discovery Docid HAW001.00054) it has charged
$36,000.75 for an asbestos report for Rydges tower:
5.7.1 Why was this report obtained?
5.7.2 Please advise the Docid of the report in Emmons’ affidavit
of documents dated 15 December 2015.
5.8 Hawkins has charged $15,553.03 for scaffold hire at Rydges:
5.8.1 Where was the scaffolding erected?
5.8.2 What was the reason this scaffolding was used?
5.9Hawkins has charged $10,384.50 for container hire at Rydges. Why was the container/were the containers hired?
5.10 Hawkins has charged $5,627 for temporary fencing at Rydges:
5.10.1 Where exactly was the fencing erected?
5.10.2 Why was the fencing erected?
5.11 Hawkins has charged $10,332.98 for hire of a submersible pump:
5.11.1 What was the pump used for?
5.11.2 What was the reason for using this pump?
5.12 Hawkins has charged $5,727 to purchase a sump pump:
5.12.1 What was the pump used for?
5.12.2 What was the reason for using this pump?
[20] Emmons has enjoyed a measure of success, in that interrogatories asking reasons for certain actions being necessary have been disallowed, but the preponderance of success has been enjoyed by Mitsui and Vero. Emmons will pay costs to Mitsui and Vero on this application on a 2B basis plus disbursements fixed
by the Registrar.
J G Matthews
Associate Judge
Solicitors:
Anthony Harper, Christchurch.
DLA Piper, Auckland.
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