Grace v Orion New Zealand Limited
[2020] NZHC 1867
•29 July 2020
IN THE HIGH COURT OF NEW ZEALAND REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000454
[2020] NZHC 1867
BETWEEN C GRACE AND OTHERS
Plaintiffs
AND
ORION NEW ZEALAND LIMITED
First Defendant
LEISURE INVESTMENTS NZ LIMITED PARTNERSHIP
Second Defendant
Hearing: 29 July 2020 Counsel:
C M Stevens and B Cuff for plaintiffs
T C Weston QC, R Scott and S Crosbie for First Defendant G N Gallaway, and W J Hamilton for Second Defendant
Judgment:
29 July 2020
ORAL JUDGMENT OF GENDALL J
As to Interlocutory Applications
[1] For some time, this proceeding has been scheduled for a nine-week trial commencing on Monday next, 3 August 2020.
[2] Around 10 July 2020, the plaintiffs filed an application for leave to amend their present Fifth Amended Statement of claim by filing a Sixth Amended Statement of claim. This application was supported by a range of affidavits.
[3] On 14 July 2020, counsel for the first defendant filed a Notice of Opposition to this application together with supporting affidavits.
GRACE v ORION NEW ZEALAND LIMITED [2020] NZHC 1867 [29 July 2020]
[4] The plaintiffs’ leave application essentially related to three matters. The first two matters concerned amendments to the quantum of the plaintiffs’ claim and the addition of a family trust as one of the plaintiffs. These amendments were in accordance with an order I had granted on 3 July 2020. They were unopposed by any of the defendants. There is no issue with granting leave to these particular amendments and I now grant leave accordingly.
[5] The third matter for amendment, however, is different. It is opposed by the first defendant. It is described in the plaintiffs’ application at paragraph 3.3 as follows:
3.3The amendment [is] to include as a simultaneous contributor to the ignition of the fire, namely that the damage to HA2/117 yellow phase Flounder conductor and to the yellow phase clamp caused molten aluminium to be expelled and ignited the vegetation at the base of AX728:
3.3.1It is necessary to ensure the just determination of the proceedings by ensuring that all real controversies go to trial and are justly determined.
3.3.2The merits of the applicant’s case (including the amendment) are strong and therefore deserving of determination by the Court, as set out in the memorandum accompanying this application.
3.3.3The reason for the delay with the application is that this issue only came to light upon receipt of the first defendant’s electrical engineering evidence on 15 May 2020. The damage was never brought to the attention of the plaintiffs’ investigators and the damaged conductor was discarded by the first defendant, despite evidence of melting and arcing and was never available for inspection.
3.3.4There is no risk of material prejudice to either of the defendants. The amendment only affects the first defendant and the first defendant has extensively dealt with the potential contributor to the ignition in its evidence and rejected it as a contributor to ignition.
3.3.5The first defendant in its defence has already pleaded that the overcurrent event that caused the expulsion drop out fuse to operate “was caused from heat, smoke and/or flames from the [Early Valley Road] fire which had already started.
3.3.6There will be no significant delay to the proceeding or trial.
[6] The opposition from the first defendant to this leave application is stated in its Notice of Opposition to apply to:
2(a)What are eight paragraphs of the draft Sixth Amended Statement of Claim;
2(b)Allegations concerning a faulty joint or clamp attached to the yellow phase on Pole AX728, Early Valley Road.
[7] And, further, in the Notice of Opposition at paragraph 3, counsel for the first defendant goes on specifically to state:
3. In the alternative, if the Court allows the application in its entirety, the first defendant seeks an adjournment of the hearing set down for 3 August 2020 until the first available date after 1 February 2021.
[8] So far as this last matter is concerned, before me counsel for the plaintiffs and counsel for the second defendant both confirmed that it is important, in their view, that the nine week trial of this rather longstanding matter which has been set down for some time to commence on 3 August 2020 does proceed on that date. If an adjournment is required, then the next available date in this Court for a trial of this length will be some considerable time away.
[9] The present leave application by the plaintiffs is made in reliance on r 7.7 of the High Court Rules.
[10] McGechan on Procedure1 at para HR7.7.01 sets out the purpose of this rule and states in part:
HR7.7.01 Leave to take steps after close of pleadings date
With limited exceptions, leave is required to take a step in a proceeding after the close of pleadings date. The close of pleadings date has a clear purpose. It is to ensure that the pleadings have been completed and all interlocutory matters have been completed, so that the parties can concentrate on preparing for the hearing: drafting evidence and delivering it, preparing chronologies, and preparing lists of documents for the common bundle. That is demanding work which requires clear time and attention. It should not be subject to disruption from interlocutory matters…
[11]McGechan on Procedure goes on at that para HR7.7.01 to state:
In order to obtain leave to take steps after the close of pleadings date it is necessary to “surmount the three formidable hurdles” of showing that doing
1 McGechan on Procedure, (Looseleaf Ed), Thomson Reuters.
so would be in the interests of justice, will not significantly prejudice other parties, or cause significant delay…The farther or closer the application for amendment is to trial, the less or more formidable those hurdles will be…
[12] McGechan on Procedure at that paragraph HR7.7.01 also sets out the principles relating to the application of r 7.7 in relation to amendment after the close of pleadings. These were summarised in Oraka Technologies Ltd v Geostel Vision Ltd as follows:2
(a)The paramount consideration is that the parties should have every opportunity to ensure that the real controversy goes to trial so as to secure the just determination of the proceeding.
(b)General regard must also be had to whether the proposed amendment will cause significant delay or prejudice another party.
(c)Even where serious prejudice and significant delay will arise, an amended pleading may nevertheless be permitted if the proposed claim has substantial merit and will not cause injustice to the defendant.
(d)The Court should consider the merit, or absence thereof, in a proposed amended pleading.
(emphasis added)
[13] It is clear also that the essential function of pleadings in our trial system has been emphasised repeatedly in a number of cases. In Brownlie v Shotover Mining Ltd3 the Court of Appeal said:
Care and accuracy in pleading is essential if justice is to be done. Pleadings are not to be treated as a mere formality…A defendant is entitled to prepare his case and conduct it on the basis that he is only required to meet the case pleaded against him…It will, of course, happen from time to time that there will be inadequacies in the original pleading and these may not emerge until trial. In such cases, the proper course is for an appropriate amendment to be sought, and it will be allowed where this can be done without injustice.
[14] In this case, I repeat, the trial which has been scheduled for some time is due to commence next Monday, 3 August 2020. This is only some three working days away. Counsel for the plaintiffs complain that the timing of this leave application has been dictated entirely by the fact that it was not until 15 May 2020, when the first defendant’s electrical engineering evidence briefs were served, that for the first time,
2 Oraka Technologies Ltd v Geostel Vision Ltd [2015] NZHC 991 at [17].
3 Brownlie v Shotover Mining Ltd (CA) (21/2/92).
it is said, this issue came to light for the plaintiffs. The plaintiffs allege the damage referred to in this evidence was “never brought to the attention of the plaintiffs’ investigators and a damaged conductor connection possibly in issue was discarded by the first defendant, despite evidence of melting and arcing, and was never available for inspection.”
[15]These contentions are strongly disputed by the first defendant.
[16] At this very late stage before the forthcoming trial, it is, however, difficult for the Court, which has yet to hear all the no doubt voluminous evidence which is to follow, to determine the merits of the plaintiffs’ claim and the first defendant’s denial here.
[17] That trial, as I note, is to commence in three working days’ time. It goes without saying that urgency in providing this decision is required. What does seem clear is that commencement of the trial is at risk if leave is granted to the plaintiffs to make what the first defendant claims is this significant change to the pleading at this eleventh hour. Significant delay, as I have noted, will arise if this long trial needs to be adjourned.
[18] Overall, here, I do not intend to traverse significant chunks of the evidence which counsel for both the plaintiffs and the first defendant advanced before me today with regard to this leave application. Suffice to say that it is my view the real controversy between the parties here, which includes issues over not only the first defendant’s power pole fuses but also adjacent clamp structures (undisclosed testing of which was undertaken for the first defendant in Sydney over at least two to four days) needs to go to trial here. I find too that, in light of its active involvement with clamp testing here for some time, the first defendant will not be significantly prejudiced by the plaintiffs being granted leave to file all its proposed Sixth Amended Statement of Claim. And, as to delay, that simply will not arise here in light of the orders I will make shortly.
[19] And, by way of an aside, I specifically note here that r 1.9 of the High Court Rules does, in any event, provide a residual discretion for the Court invariably to have
a power to amend pleadings at any stage of a proceeding in addition to the amendment power provided in r 7.7 noted above.
[20] So far as this r 1.9 is concerned, it is clear, as McGechan4 notes at HR1.9.04 that determination of the real controversy is the fundamental yardstick for any amendments that may be made subject to appropriate leave being given, no doubt also taking into account any overall prejudice to parties in the proceeding which cannot be appropriately remedied.
[21] A further matter, linked somewhat to the present leave application, has also arisen.
[22] Yesterday afternoon, 28 July 2020, counsel for the first defendant filed a Notice of Application to Vacate the hearing of this proceeding set to commence on 3 August next. That hearing, as I have said, is for nine weeks and it was set down almost one year ago in August 2019.
[23] The grounds advanced by the first defendant in support of its application to adjourn essentially are set out in part in paragraph 2 of the application as follows:
2. ….
(e)On the evening of Monday 27 July 2020 Fire and Emergency New Zealand issued a further report by Mr Alexander (a FENZ expert called by the plaintiffs to give evidence in this matter) updating his earlier conclusion in which he concluded that the cable clamp on the yellow phase on Pole AX728 was “a likely cause of the fire”. That is materially different to the earlier opinion expressed by him.
(f)Mr Alexander’s causal theory is different to that advanced by the plaintiffs as set out in the draft Sixth Amended Statement of Claim (6ASOC).
And:
(i) Mr Alexander has sought to be excluded as a witness on the grounds of ill health. If the Court accedes to his request then the parties will be unable to test Mr Alexander’s causal theory. Nevertheless, the updated report is likely to be before the Court as evidence.
4 McGechan on Procedure, above n 1. at HR1.9.04
(j) The new causal theory adopted by FENZ will require further
consideration of the cause of the fire and likely will require further evidence which will focus on the clamp and the first defendant’s use of clamps more generally.
And:
(l)
Orion would be prejudiced if required to go to trial without the opportunity of fully considering the fresh allegations (both
by the plaintiffs and FENZ) concerning the clamp and its role (if any) in the fire.
[24] That application by the first defendant to vacate the hearing is opposed by both the plaintiffs and also the second defendant. The test under r 10.2 High Court Rules for adjournment of a trial requires the Court in every case to consider the overall interests of justice.
[25]McGechan on Procedure at para HR10.2.02(1) states:5
In assessing whether the interests of justice favour postponing or adjourning the trial, the Court must consider and weigh, not only the interests of the immediate parties, but as well those of parties in cases “waiting in the queue” for a hearing and the public interest in achieving the most effective use of court resources…
[26] This proceeding and the setting down of the trial in this matter, as I have noted, had a reasonable history. The relevant fires relating to this trial occurred in February 2017. The proceeding was begun with the plaintiffs’ first Statement of Claim in 2017. As I have noted, the hearing was allocated in 2019. It is for nine weeks, a lengthy period of Court time.
[27] And, as I understand the position, essentially the first defendant’s principal defence in this matter is that its electrical equipment, including relevant fuses, plugs and poles, did not cause the fire but were themselves damaged in the fire after that fire had begun elsewhere. This obviously will have some impact upon evidence to be given before the Court.
[28] And also, so far as the interests of justice here and the need for the first defendant and no other party to be unduly prejudiced in their ability to participate in
5 McGechan on Procedure, above n 1, at HR10.2.02(1)
this trial is concerned, I am of the view this can be accommodated and achieved as the trial progresses.
[29] So far as Mr Alexander is concerned, if necessary I signal now that he is not likely to be excused as a witness. His evidence may well be given by AVL.
[30] And considering the interests of justice here and the need for neither the first defendant nor any other party to be unduly prejudiced in their ability to participate in this trial, I am of the view that this can be properly accommodated and achieved as the trial progresses. Issues too that arise during trial can be dealt with if and when they arise. So far as the first defendant’s claim that the plaintiffs will not be unduly prejudiced here if the trial is adjourned, as most have already received insurance payouts, I understand that of the 74 plaintiffs, a number (with claims totalling approximately $5 million) are uninsured and to date have lost hugely as a result of the fires. From their perspective alone, it could not be said there is only limited prejudice from an adjournment here.
[31] It is important, therefore, as I see it, for all concerned, that in the circumstances of this trial, which has been scheduled for some time that the trial does commence on 3 August 2020. If leave may be required as the trial progresses for the provision of further evidence by any party to meet matters which arise, I record now that subject to the prevailing circumstances at the time this leave is likely to be favourably considered. A direction to that effect is to follow. In addition, if it does transpire through the hearing that unavoidably the proceeding must be adjourned part-heard, then, although this is not ideal, that can be accommodated too. For all concerned, it is my view the trial can properly commence on 3 August 2020 and, given what I have noted above, in all the circumstances here, the appropriate course, at this point is to grant the plaintiffs’ application for leave to amend its pleadings so far as the third aspect is concerned and to decline the first defendant’s application to adjourn the hearing.
[32] This will obviate the need for any adjournment of this trial which, as I say, I confirm is to commence on 3 August 2020.
[33] Further orders and directions are appropriate here and I now make these as follows:
(a)Orion is forthwith to make available the yellow phase clamp to Professor Krahl of the University of Canterbury for non-destructive testing.
(b)An appropriate non-destructive examination of the clamp (estimated to take two hours) is to be carried out by Professor Krahl without delay.
(c)As to that examination, the following additional conditions are to apply:
(i)The expert metallurgists of all parties who wish to be present are to be present by AVL during the examination by Professor Krahl;
(ii)First, the eroded surfaces of the clamp are to be examined using Scanning Electron Microscopy (SEM) to confirm the occurrence of arcing between the clamp and the conductor strands; and
(iii)Energy Disbursive X-ray Spectroscopy (EDS) analysis of the eroded surface is to be undertaken to confirm the involvement of the conductor strands in the arcing process.
(iv)The report from Professor Krahl relating to this examination is to be made available to all parties, once completed, as a matter of urgency.
(d)Given that further and new evidence may be sought here (as the parties have signalled), leave is reserved for any party to approach the Court on notice if direction or leave is sought for the provision of any further, new or reply evidence from the first defendant or any other party relating to the clamp, the discovery of arcing and/or the replacement of the power pole or otherwise.
(e)Leave is reserved to any party to come back to the Court for any directions which may be sought as to subsequent destructive testing of the clamp as the first defendant suggests now may be required.
[34] Lastly, with respect to the present applications which have been before the Court, costs are reserved.
...................................................
Gendall J
Solicitors:
DLA Piper New Zealand, Auckland Kennedys, Auckland
Chapman Tripp, Christchurch
Copy to
Craig Stevens Barrister, Wellington Thomas Weston QC, Barrister, Tai Tapu
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