Jarden v Earthquake Commission
[2015] NZHC 204
•18 February 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-1332 [2015] NZHC 204
BETWEEN D J AND J JARDEN
Plaintiffs
AND
THE EARTHQUAKE COMMISSION First Defendant
LUMLEY GENERAL INSURANCE (NZ) LIMITED
Second Defendant
Hearing: 18 February 2015 Counsel:
G D R Shand with A J D Ferguson for Plaintiffs
J Knight with N Bruce-Smith for First Defendant
A C Challis with K Rowe for Second DefendantJudgment:
18 February 2015
JUDGMENT OF THE HON JUSTICE KÓS (Pre-trial applications)
[1] This judgment deals with three pre-trial issues. The case is rostered for trial before me starting next Monday, 22 February 2015. The three pre-trial issues concern the admissibility of evidence of two plaintiffs’ witnesses, an application that I recuse myself and an application by the defendants for further particular discovery.
[2] This morning a memorandum was filed indicating that the plaintiffs and EQC
have now settled. Leave to discontinue has been sought. I will deal with that in due course after hearing from counsel for Lumley.
JARDEN v THE EARTHQUAKE COMMISSION & ANOR [2015] NZHC 204 [18 February 2015]
Admissibility issues
[3] On 20 January 2015 the defendants gave notice under r 9.11(2) that there was an admissibility issue concerning two witness statements exchanged by the plaintiffs. Those are the statements of John Johnstone and Adrian Cowie.
John Johnstone
[4] Three objections are taken to Mr Johnstone’s evidence.
(a) First, that he is not an “expert” for the purposes of ss 4, 23 and 25 of
the Evidence Act 2006.
(b)That if Mr Johnstone is an expert, the Court is unlikely to obtain “substantial help” from his opinions in ascertaining facts of consequence to the determination of the proceeding. That is an objection based on s 25(1) of the Evidence Act 2006.
(c) That Mr Johnstone’s witness statement does not comply with the Code of Conduct set out sch 4 of the High Court Rules: fails to state his qualifications or experience, that the issues he is addressing are within his area of expertise, the facts and assumptions his opinions are based on, and details regarding material relied on to inform his opinion. The statement was thereby non-compliant with r 9.43, and by reason of that provision and s 26 of the Evidence Act 2006 cannot be led.
[5] I will deal at once with the third objection. Mr Johnstone has prepared a supplementary witness statement. In it he sets out his qualifications and experience, states that the issues addressed in his statement are within his areas of expertise and sets out a series of factual observations on which his opinions are based. It does not, however, meet cl 3(f) of the Code which requires the witness to “specify any literature or other material used or relied on in support of the opinions expressed”. Mr Johnstone merely says at [2] of his statement that he has “read documents about
the house”. That is not compliant. However, if that omission is corrected, the third objection will not stand.
[6] I turn now to the first objection. That is, that Mr Johnstone is not an expert for the purposes of ss 4, 23 and 25 of the Act. As the definition of “expert” in s 4 makes clear, the relevant specialised knowledge or skill may be based on experience rather than formal training or study.1 In this case Mr Johnstone deposes to no formal qualifications of relevance.2 Instead, he refers to his experience as an insurance broker between 1987 and 2009, and as a contract loss adjuster from 2010 to 2012.
He now describes himself as a “claims investigator”. In his evidence he refers to “my general knowledge of construction, mining and engineering”. However, while general knowledge may form part of the corpus of knowledge of an expert, it cannot make a person holding that general knowledge an expert in those areas. I accept however that Mr Johnstone has expertise in loss adjustment and claims investigation. Those are overlapping vocations. To that extent, Mr Johnstone qualifies as an “expert” under the Act. I do not accept that Mr Johnstone has demonstrated expertise beyond those disciplines, for instance in construction and remediation of damaged buildings.
[7] I turn now to the second objection. To ascertain how Mr Johnstone’s evidence might assist, if at all, the issues for trial are important. In Wylie J’s minute of 24 July 2014 the Judge recorded the agreed issues for trial:
Fact:
(a) What is the nature and extent of the damage to the plaintiffs’ residential building that is the direct result of the earthquakes in September 2010 and February 2011? In particular:
(i) whether the physical damage to the residential building that is the direct result of the earthquakes is able to be repaired or whether the building was rendered uneconomic to repair so that it was necessary
to rebuild (that is, a total loss); and
1 Shepherd v R [2011] NZCA 666, [2012] 2 NZLR 609 at [26].
2 He has qualifications as a psychiatric nurse.
(ii) if the residential building is a total loss, which earthquake event caused the residential building to be a total loss.
(b) What reinstatement work is required to restore the residential building to the standard required by the EQC Act and/or the written policy of insurance by which the second defendant insured the plaintiffs’ building?
(c) Subject to any right(s) the defendant(s) may have to carry out reinstatement work rather than make payment, what is the cost of repairing the natural disaster damage, or alternatively, rebuilding the property if repair is not economic?
Legal:
The following issues of law relate solely to EQC:
(d) Is EQC in breach of any of its insurance settlement obligations under the
EQC Act in the respects pleaded?
(e) What relief (if any) are the plaintiffs entitled to from EQC? The following issues of law relate solely to Lumley:
(f) Is Lumley in breach of any of its insurance settlement obligations under the policy of insurance?
(g) What relief (if any) are the plaintiffs entitled to from Lumley?
[8] Mr Johnstone’s evidence, as I read it, is calculated to respond to Issues (a)(i) and (a)(ii). This morning Mr Ferguson confirmed that those are the issues Mr Johnstone’s evidence addresses. In essence his core conclusions are, based on his observations:
(a) The frame of the house has suffered “frame racking” and “lost significant bracing”.
(b)The brick veneer cladding of the house has dislodged (and must be removed and reinstated – including to enable the house framing to be checked for alignment).
(c) Gib linings have detached.
(d) The roofing has dislocated and flexed.
(e) The floor slab has been compromised, so that professional engineering input is required.
[9] The plaintiffs are perfectly entitled to call Mr Johnstone to describe apparent physical defects in the house. I accept that is within his available expertise as a loss adjuster and claims investigator. Mr Johnstone’s evidence, as described, does not provide me with substantial help as to whether the damage identified is the direct result of the September 2010 and February 2011 earthquakes. It does not help me identify what must be done to repair or rebuild the house to the standard required by the EQC Act and policy of insurance. It does not help me identify which earthquake event caused the house to be a total loss (if indeed it is a total loss). In fairness to Mr Johnstone, however, his evidence is not intended to assist me in these respects.
[10] In these circumstances I accept that Mr Johnstone may give evidence. But he may not give the following evidence:
(a) The conclusion offered at [8] that the factual observations made mean the house has suffered frame racking and lost significant bracing.
(b)The conclusion at [16] that the house frame has flexed and lost bracing.
(c) The conclusion at [16](2) that the cladding must be removed and reinstated.
Adrian Cowie
[11] Mr Cowie is a registered professional surveyor and licensed cadastral surveyor. The defendants in their notice accept that he is qualified to give expert surveying evidence. But they say his brief provides comments and conclusions that exceed his study, training and experience as a surveyor. A table is attached to the defendants’ memorandum setting out the particular observations that they object to. A subsequent memorandum retracted one of the objections made.
[12] The plaintiffs have provided a response on a paragraph-by-paragraph basis. They have also provided a copy of Mr Cowie’s curriculum vitae. Amongst other things it indicates he is a member of the New Zealand Society of Earthquake Engineering. It is apparent from Mr Cowie’s CV that his expertise and experience goes beyond simply measurement and spatial science. He has experience as a design consultant. He has designed pavements, roading, sewerage and storm water laterals, and building floor levels and slabs. I accept that in his 28 years as a survey practitioner, Mr Cowie would have developed a degree of expertise (through experience) of damage, causation and remediation. This has been significantly enhanced in the work he has done since September 2011 undertaking significant assignments in relation to survey assessment of damaged buildings in Christchurch. It is apparent from his CV that he has undertaken much work of this kind in conjunction with structural engineers. While it is not immediately apparent that that knowledge would be of the same order as that of a structural engineer he will have knowledge based on experience, going beyond his formal training and qualifications, entitling him to give expert evidence on earthquake damage evaluation. The exact extent of his expertise and its relevance in the present case is a matter requiring careful evaluation at trial. That limits the extent to which this Court should pre- emptively exclude his evidence on such matters.
[13] I bear in mind that the jurisdiction to rule evidence inadmissible in advance
of trial is to be exercised sparingly, and only where a witness’s evidence has strayed
beyond the bounds of what is permissible.3 The issue here is whether there are any
3 Parihoa Farms Ltd v Rodney District Council (2010) 20 PRNZ 8 (HC); MacDonald v Tower
Insurance Ltd [2014] NZHC 2876 at [20].
sections of Mr Cowie’s evidence which patently exceed his available expertise to
such an extent that pre-emptive exclusion may now be directed.
[14] In reviewing the passages to which objection is taken, I note that many of them are based on Mr Cowie’s collaborative experience as a surveyor involved in earthquake damage investigation alongside structural engineers. He is in most respects appropriately careful in expressing his own opinion. It is often expressed tentatively, noting the possibility of damage, and indicating the need for further analysis.
[15] Proceeding on this basis, there are only very limited respects in which I am prepared pre-emptively to exclude the evidence of Mr Cowie. They are as follows:
(a) Cook Costello repair methodology recommendations, paragraph 4: I accept the objection made by the defendants that this paragraph concerns the interpretation of the insurance policy, and is not an appropriate matter for Mr Cowie to express a view on.
(b) Cook Costello repair methodology recommendations, paragraph
8d(a): Again I accept this paragraph deals with policy wording interpretation and is inappropriate in the evidence of an expert surveyor.
(c) Opus report, paragraph 7.11: By consent this paragraph may be
deleted from Mr Cowie’s evidence.
(d)Conclusion/recommendations for further investigation, paragraph 2-5: The opening sentence of this paragraph purports to assess what is required in terms of the insurance policy and EQC Act. Again, this is not an appropriate matter for Mr Cowie to give evidence on.
[16] With those exceptions the balance of Mr Cowie’s evidence may be tendered
in evidence at trial. As I have already said, what weight is placed on the passages
objected to in light of such evidence as the defendants may call (and cross- examination of Mr Cowie) remains to be seen at trial.
Recusal
[17] On 22 January 2015 the plaintiffs filed a memorandum which stated at [8]:
The plaintiffs this week became aware that Justice Kos is the trial Judge. The plaintiffs intend to address the court on this issue shortly.
[18] At a telephone conference on 10 February 2015 that rather delphic indication was enlarged upon. Mr Ferguson foreshadowed an application that I recuse myself as trial Judge. Given the imminence of trial, I gave directions for the filing of a formal application, a right of response and an opportunity for parties to be heard. The application was filed on 13 February 2015 and written submissions in support were filed by the plaintiffs on 17 February 2015. The defendants neither oppose nor consent to the application, and abide the Court’s decision.
[19] The essential ground given in the written submissions for recusal is:
That a fair minded lay observer might reasonably apprehend that Kós J might not bring an impartial mind to the resolution of the question he is being asked to decide by reason of his previous negative oral comments in Court conferences and in Court minutes about John Johnstone, Brian Staples and documents produced by them and/or by Earthquake Services and Staples-Can.
Two affidavits have been filed by Messrs Morris and Child, solicitors in the firm acting for the plaintiffs who regularly appear in the Earthquake List.
[20] To a very substantial degree, those affidavits are verbatim repetitions of affidavits sworn by Messrs Morris and Child in a similar application made in November 2014 that Wylie J recuse himself from hearing a significant interlocutory application in a case called Pearce v Tower Insurance.4
[21] After hearing counsel this morning, I dismissed the application for recusal. It is not appropriate that I give other than brief reasons for my doing so:
4 Pearce v Tower Insurance [2014] NZHC 2849.
(a) My reasons for dismissing the application are in all respects identical to those given by Wylie J in [29] to [57] of his decision.5
(b)Although the affidavit evidence refers to critical observations regarding material sourced by Mr Staples and others associated with him, made in the course of case management in the Canterbury Earthquake List, no evidence is being given by Mr Staples or employees of Mr Staples in this case.
(c) Mr Childs’ affidavit refers to the absence of any recollection by him of criticism of the “independence, impartiality or admissibility” of reports prepared by EQC, insurers, their employees and agents. However, with the exception I think of Mr Betts, and for the reasons given in the judgment of Matthews AJ in Deminico Trustee Ltd v Tower Insurance Ltd,6 neither Wylie J nor I have tended to question any report (whether for plaintiff or defendant) for want of independence of the author. In the case of Mr Betts, the question in
Deminico concerned disclosure of his interests. Mr Betts is not giving evidence in this case. It is a reality of the Canterbury Earthquake List that fully independent experts are difficult to obtain. So long as witnesses conform to the Code of Conduct for Expert Witnesses set out in sch 4 of the High Court Rules, their independence is a matter going to weight rather than admissibility.
(d)Reports by Mr Johnstone (and, indeed, by other experts) have been the subject of comment by Canterbury Earthquake List Judges. The context is important, however. All three Judges (that is, Miller, Wylie and Kós JJ) have consistently required, as a condition of the fast-track process in the List, that there is early exchange of expert reports, followed by conferral. A template for conferral has been developed and is widely used in the List. As soon as the conferral of experts has
occurred, there is a second conference at which cases are set down for
5 Pearce v Tower Insurance [2014] NZHC 2849. Although Wylie J did there recuse himself, the reasons given (at [59] to [63] of the judgment do not apply here.
6 Deminico Trustee Ltd v Tower Insurance Ltd [2014] NZHC 2657.
trial. The plaintiffs are then required to exchange their evidence within six weeks of the second conference. For that reason, and for that reason alone, the List Judges have been emphasised to parties the importance of “putting their best foot forward” in the exchange of reports, and in the conferral process. There simply will not be time, in almost all cases, to change horses (experts) after the conferral process. This is of particularly acute importance to plaintiffs, because in almost all instances, and on almost all issues, they bear the onus of proof. As a result, List Judges have made it their business to review the reports that are provided to the Court in accordance with the pre-Issues Conference disclosure requirement. And then to comment upon their adequacy for the purposes of determining directions for further reporting, and the timing of conferral, in anticipation of setting-down. If the exhortation to provide further or better reports has been uncomfortable for some plaintiffs (or perhaps their counsel), one might perhaps have thought the only real cause for complaint would be from defendants facing better quality reports for the plaintiffs.
(e) Finally, I need to deal with one point made by Mr Shand in his submissions suggesting that I may have “personally chose to hear the application (sic)”. Presumably he means the trial. A similar suggestion was made in Pearce.7 The short point, however, is that both Brown J and I have been allocated a number of Christchurch trials this year in order to assist with the hearing work flow faced in the Christchurch High Court. Which trials we sit on is determined by the Roster Manager. Not by the Judges.
[22] There being no sufficient grounds for recusal, and nothing to justify departure from the earlier analysis of this Court in Pearce, the application must be dismissed.
7 See at [57] of the judgment.
Discovery
[23] On 16 February 2015 the defendants filed an interlocutory application for further and better discovery by the plaintiffs. The application incorporates a challenge to a claim to litigation privilege made by Mr Jarden in his affidavit of documents. Three categories of documents are involved.
[24] First, there are the litigation privilege claims. At the moment the documents are simply described as emails between certain persons. A claim to “litigation privilege” simpliciter is made. Section 56(2) of the Evidence Act 2006 provides for four different bases for litigation privilege, and in some instances (but not others) it is not clear here which applies. In addition some of the documents in respect of which privilege is claimed were written in 2012, whereas the present proceedings were brought only in July 2013. As the commentary to McGechan on Procedure, paragraph 8.16.05 makes clear, the basis for claim of privilege in relation to documents listed in the second schedule must be sufficiently described. Mr Ferguson is to review the bases for privilege claimed, and the description of documents, and provide more detail in a memorandum, provision for which I make in timetable directions to follow.
[25] Secondly, there are some recordings of conversations between Mr Jarden and EQC representatives. Mr Jarden says in his affidavit of documents that these have been deleted. However, in an email dated 30 July 2012 he advised EQC that “Mr Brian Staples of EQE now has a copy of this file including the recording”. Mr Ferguson is to ascertain whether copies of recordings (or transcripts thereof) are held by Mr Staples. He has acted previously as agent for Mr Jarden in these proceedings.
[26] Thirdly, there are documents said by the plaintiffs to be missing from Part 1 of the affidavit of documents. These are detailed in paragraphs 10 to 12 of an affidavit sworn by Mr Holt, dated 16 February 2015. It is accepted that exchanges between the Jardens and Mr Staples (and closely associated entities) that relate to the state of the Jardens’ house, or what is required to repair it, are relevant, and must be discovered. Mr Ferguson is to address this also in his memorandum.
Directions
[27] The following directions were made at the hearing on 18 February 2015:
(a) Mr Ferguson is to file his memorandum addressing the three areas of documentary controversy just discussed, by 5.00 pm, Wednesday
18 February 2015.
(b)Ms Challis, if she wishes to challenge Mr Ferguson’s response, is to file a memorandum by 11.00 am, Thursday 19 February 2015.
(c) There will be a further telephone conference at 4.00 pm, Thursday
19 February 2015.
[28] In the event that the challenge to privilege is maintained, and to the extent that I am satisfied that a sufficient case has been made for review, Associate Judge Osborne will review the documents on Friday morning. I do not consider it appropriate that the trial Judge do that exercise.
[29] The telephone conference on 19 February 2015 will also deal with any remaining pre-trial arrangements.
Stephen Kós J
Solicitors:
Grant Shand, Christchurch for Plaintiffs
Chapman Tripp, Wellington for First Defendant
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