Lyttelton Port Co Ltd v Aon New Zealand
[2019] NZHC 726
•5 April 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2015-409-000428
[2019] NZHC 726
BETWEEN LYTTELTON PORT COMPANY LIMITED
Plaintiff
AND
AON NEW ZEALAND
Defendant
AND
OPUS INTERNATIONAL CONSULTANTS LIMITED
First Third Party
AND
COLLIERS INTERNATIONAL VALUATION (CHCH) LIMITED
Second Third Party
Hearing: 3 April 2019 via telephone hearing Appearances:
Z G Kennedy and J M Embling for the Defendant
M E Parker, E L Keeble and A J Gaborieau for the First Third Party
Judgment:
5 April 2019
Reissued:
9 April 2019
JUDGMENT OF NATION J
[1] On 28 March 2018, Aon was granted leave to issue a third party notice against Opus. The close of pleadings date between Aon and Opus was 17 August 2018. A 12 week trial is scheduled to begin on 20 May 2019. On 14 February 2019, Aon filed an application for leave to amend its claim. If granted, that amendment would expose Opus to potential liability as a joint tortfeasor for approximately an additional $29 million over the $6 million to which it is currently exposed. Aon’s application for leave is strongly opposed by Opus.
LYTTELTON PORT CO LTD v AON NEW ZEALAND [2019] NZHC 726 [5 April 2019]
Background
[2] The plaintiff (LPC), through the Canterbury earthquakes, suffered major damage to its property and business associated with the Lyttelton Port. Through mediation, it entered into a settlement agreement with Vero in December 2013.
[3] On 29 June 2015, LPC issued proceedings against its broker Aon. LPC alleges Aon failed to exercise reasonable skill and care in particularised ways. When it began proceedings, it alleged this had resulted in losses of approximately $185 million.
[4] In his judgment of 28 March 2018, Associate Judge Matthews granted leave to Aon to issue a third party notice against Opus and also the second third party (Colliers).1 Both companies had been involved in providing advice to Aon when Aon was arranging insurance for LPC. Leave was required because of the time that had elapsed since the date for filing of Aon’s defence.2
[5]As the Associate Judge recorded in his judgment:
[6] In relation to Opus, Aon says that LPC engaged Opus to undertake insurance valuations of a group of assets including, amongst others, LPC’s harbour structures, a term that includes the asset known as number 1 Breastwork. Aon says that Opus prepared a spreadsheet setting out LPC’s harbour structures which identified number 1 Breastwork as an asset which Opus was required to value. Opus then provided LPC and Aon with a spreadsheet containing its insurance valuations for LPC’s harbour structures, but there was no reinstatement cost estimate for number 1 Breastwork and the entry “0” was recorded in the column headed “Insurance Replace Cost 2010”. In a subsequent updated version of this spreadsheet there was still no reinstatement cost estimate for number 1 Breastwork, and the same entry in the Insurance Replace Cost 2010 column.
[7] Aon says that Opus owed LPC duties in contract and in tort to exercise reasonable care and skill in carrying out its instructions to undertake a valuation of number 1 Breastwork and to include a valuation for that asset in the spreadsheet to be provided to LPC and its insurers. It says, as it does with Colliers, that Opus is liable as a concurrent joint tortfeaser with Aon if Aon is found liable to LPC.
[8] Aon says that it used the valuations provided by Colliers and Opus in arranging material damage cover for assets. Consequently cover was not taken out in respect of the assets in the two classes described. When the earthquakes struck LPC was uninsured in respect of these assets.
1 Lyttelton Port Company Ltd v Aon New Zealand [2018] NZHC 568.
2 High Court Rules 2016, r 4.4(2).
[6] LPC had pleaded against Aon that its uninsured earthquake damage and loss included the estimated reinstatement costs of restoring earthquake damage to the No. 1 Breastwork in the sum of approximately $6 million.
[7] Aon filed its first statement of claim against the third parties on 27 April 2018 and a first amended statement of claim against Opus on 22 June 2018. Opus filed an amended statement of defence to that amended statement of claim on 3 July 2018. The pleadings all related to Aon’s potential liability in respect of LPC’s claim over the No. 1 Breastwork as one of LPC’s structures requiring valuation.
[8] In a minute of 19 June 2018, I made timetabling directions, largely as suggested and agreed to by counsel for all parties. LPC had to serve its briefs of evidence by 16 July 2018. The close of pleadings date as between Aon, Opus and Colliers was 17 August 2018. Aon was to serve its briefs of evidence by 17 September 2018. The proceedings were to go to trial, scheduled for 12 weeks beginning 20 May 2019.
[9] There was serious slippage with the service of briefs of evidence on the part of Aon. LPC raised concerns as to this. As a result, I convened a telephone conference. In a minute of 19 November 2018, I referred to the difficulties Aon had faced in completing briefs, particularly from experts. I then amended the timetabling directions. Aon had to serve all its briefs of evidence by 30 November 2018. I directed there was to be a further pre-trial conference before me on 14 March 2019.
[10] Aon’s application for leave to file the amended statement of claim was made on the grounds:
(a) it was in the interests of justice for all Aon’s third party claims to be heard concurrently at trial and there would be no real prejudice to Opus because the trial was not to start until 20 May 2019;
(b) there would be time for Opus to prepare and serve any additional amendment with reasonable changes to the timetable for Opus’ briefs of evidence for that purpose;
(c) further evidence from Opus might not be necessary because Opus’ principal witness, Gary Chalmers, had dealt with relevant issues in a detailed brief of evidence already provided for LPC; and
(d) Aon’s delay in amending the claim was reasonable and explicable because the proposed new cause of action against Opus arose out of documents which had only been disclosed by LPC on 16 July 2018. Aon had been heavily committed to the preparation of detailed evidence in response to the 17 briefs of evidence from LPC in the weeks following 16 July 2018.
[11] The hearing date on the leave application was the date for the already scheduled pre-trial conference of 14 March 2019.
[12]Opus filed a notice of opposition to Aon’s application on 12 March 2019.
[13]In the notice, Opus said it opposed the application on the grounds:
(a) Aon had notice of LPC’s claim against it as to reclaimed land in LPC’s original statement of claim and the new cause of action should have been included in the original statement of claim dated 27 April 2018;
(b) there was no valid reason for the delay;
(c) any delay in Aon receiving documents from other parties was not Opus’ concern nor an excuse; and
(d) Opus would suffer prejudice given the impending trial and the need for Opus to prepare further evidence and engage experts.
[14] After the conference with counsel of 14 March 2019, I directed there would be a telephone hearing of the application. That hearing took place on 3 April 2019.
[15] Submissions for Aon were filed on 28 March 2019. In those submissions, counsel, Mr Kennedy, explained the delay by submitting that the basis of Aon’s proposed new cause of action arose out of a report prepared by Mr Chalmers of Opus for LPC in February 2015 but not provided by LPC to Aon until 18 July 2018 (the land
report).3 He also referred to the demands that Aon had faced in having to deal with 57 other newly discovered documents provided on 18 July 2018 and the demands of responding to LPC’s 18 briefs of evidence totalling 526 pages, excluding schedules.
[16] Submissions were filed by Opus on 1 April 2019. In those submissions, counsel was highly critical of the delay that had occurred. In submissions, counsel advised that Opus wished to obtain expert evidence and, as a precaution, had been trying to do so since the application was first filed but had found it difficult. With submissions, Opus filed an affidavit from a valuer employed by Opus, John Vessey. In his affidavit, Mr Vessey spoke of the small number of valuers available in New Zealand able to value port assets. He said it would be very difficult for Opus to obtain expert evidence in relation to the issue of reclaimed land between now and the commencement of the trial on 20 May 2019.
[17] In his oral submissions, Mr Kennedy referred to the way Mr Chalmers, in evidence for LPC, had described reclaimed land in a way that could include certain seawalls. He also submitted that it was only when Aon saw the land report that they saw Opus had taken an inconsistent approach providing reinstatement cost valuations as to some of LPC’s reclaimed land but not other parts.
[18] Mr Parker, for Opus, was highly critical of Aon not providing to the Court Mr Chalmers’ briefs of evidence which Mr Kennedy had referred to. Mr Parker intended to provide with his submissions Mr Chalmers’ 72 page brief of which he said only two pages related to reclaimed land. That full brief was filed on 3 April 2019.
[19] In response to that material, on the eve of the hearing, Aon filed with the Court the land report which Mr Kennedy had said was crucial in their identifying grounds for the proposed new cause of action against Opus and also a brief affidavit from Peter Wrona. He had previously provided a brief of evidence. In his evidence, he said the valuations provided by Opus for the purpose of arranging insurance were not “valuations” as such on which valuation advice would be given. They were “instead componentised replacement costs estimates” and that evidence as to what those should
3 The report had been withheld by LPC as a privileged document, having been obtained for the purpose of the proceedings.
be in a replacement or reinstatement cost estimate were structural, civil and geotechnical engineering issues, not valuation ones.
Legal principles
[20] Rule 7.7(1) High Court Rules 2016 provides that an amended pleading may not be filed after the close of pleadings date without leave of the Court.
[21] In Elders Pastoral Ltd v Marr, Cooke P for the Court of Appeal described the grant of an amendment to the plaintiffs at a very late stage as a “notable indulgence to them”.4 In that instance, the amendment had been allowed after 57 days of evidence and after more than a week of final submissions. The Court of Appeal nevertheless upheld the trial Judge’s allowance of the amendment. The Court of Appeal said that, in relation to what counsel had described as belated applications for amendments, it was difficult to envisage a case in which the relevant considerations could not be comprehended in the “three formidable hurdles of showing that the amendment is in the interests of justice and will not significantly prejudice defendants or cause significant delay”.5
[22] I accept that the farther or closer the application for amendment is to trial, the less or more formidable those hurdles will be.
[23] Cull J recently and helpfully summarised principles applying to amendment of pleadings with reference to authorities in Monster Energy Company v Ox Group Global Pty Ltd.6 She identified the relevant considerations as follows:7
(a) the merits of the proposed amended pleading;
(b) whether irreparable damage would be suffered by the applicant;
(c) the timing of the application and magnitude of, and reasons for, delay;
(d) the risk of significant prejudice to other parties;
(e) the effect on public resources reflected in the impact on case management and the timetable to trial;
4 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA) at 384.
5 At 385.
6 Monster Energy Company v Ox Group Global Pty Ltd [2016] NZHC 2124.
7 At [28].
(f) the importance of the principle 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;8 and
(g) the overarching requirement is to exercise the discretion in the interests of justice.9
[24] In his submissions for Opus, Mr Parker referred to the way the High Court had emphasised the importance of the close of pleadings date and the importance of operating within the constraints of that close of pleadings date so that parties could concentrate on the demanding work involved in intensive preparation for trial.10 He also referred to the way the High Court had outlined the principles that would be relevant as including the expectation created by r 7.7 that parties would proceed to a hearing based upon pleadings as they stand “after the close of pleadings date”.11
[25] Counsel for Opus also emphasised the importance of there being a satisfactory explanation and an evidential basis for seeking the amendment. He referred to the judgment of the High Court of Australia in Aon Risk Services Australia Ltd v Australia National University where the Court had said:12
… So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU’s statement of claim should not have been allowed.
[26] That statement was made by the High Court in explaining why it held a trial Judge to have been in error in allowing an adjournment and ultimately the vacating of a four week trial after three days of hearing.
[27] The comments were made in the context of proceedings which French CJ described as follows in his judgment:
4. Save for the dissenting judgment of Lander J in the Court of Appeal, the history of these proceedings reveals an unduly permissive approach at both trial and appellate level to an application which was made late in the day, was
8 Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd [1989] 3 NZLR 304 (CA) at 309; Clode v Sullivan [2016] NZHC 529 at [16].
9 Chilcott v Goss [1995] 1 NZLR 263 (CA); Clode v Sullivan, above n 8, at [16].
10 RHH Ltd v Anderson [2018] NZHC 2045 at [9].
11 EBR Holdings Ltd (in liq) v Van Duyn [2016] NZHC 1169 at [59].
12 Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27, (2009) 239 CLR 175 at 5.
inadequately explained, necessitated the vacation or adjournment of the dates set down for trial, and raised new claims not previously agitated apparently because of a deliberate tactical decision not to do so. In such circumstances, the party making the application bears a heavy burden to show why, under a proper reading of the applicable Rules of Court, leave should be granted.
[28] In Elders Pastoral, Cooke P referred to statements made by the House of Lords in Ketteman v Hansel Properties Ltd13 as to the need for efficiency in litigation, similar to those that were made by the High Court in Aon Risk Services Australia Ltd v Australia National University. Cooke P said that, provided an application for amendment could overcome what they said would be the three formidable hurdles for a belated amendment, very little weight should be given to the need for denunciation in deciding whether the amendment should be allowed.
[29] Consistent with that, one of the principles which it was submitted for Opus should be taken into account, through counsel’s reference to the judgment in EBR Holdings Ltd (in liq) v Van Duyn, was:
The discretion to permit a late amendment to a pleading in r 7.7(1) in the exercise of which access to justice will be regarded as the primary justice, taking into account the need to obviate significant prejudice to other parties rather than taking a disciplinary approach in respect of belated amendments.
The merits of the proposed new claim
[30] These were not addressed in detail either in any memorandum supporting the application or in the written submissions I received. The basis of the additional claim Aon wishes to make was however set out in detail in the proposed amended statement of claim.
[31] In oral submissions, Mr Kennedy for Aon took me carefully through the documents which he said had caused Aon to consider it would have a claim to contribution or indemnity from Opus with regard to any liability to LPC for uninsured harbour work that could come within LPC’s claim in respect of uninsured reclaimed land.
13 Ketteman v Hansel Properties Ltd (1987) AC 189.
[32] Mr Parker, for Opus, did not respond in any real substance as to the potential merits of this additional claim but submitted it would be quite unfair for the Court to proceed on the basis there was merit in the additional claim when neither Opus nor the Court had been adequately informed as to how the claim would have merit when the application for amendment was made.
[33] The application for amendment was accompanied by the proposed amended statement of claim with particulars as to the new claim. Opus then had sufficient information to argue that there was no merit in the new claim if they had wished to oppose the application for amendment on that basis.
[34] With Aon’s first amended statement of claim, Opus faced a claim that it had been required to provide valuations for key assets including walls and seawalls. Opus faced a claim that in May 2010 LPC had instructed valuers, including Opus, to undertake insurance valuations of LPC’s key assets. It was claimed that Opus failed to provide LPC or Aon with an appropriate valuation for No. 1 Breastwork. Opus was on notice that LPC was claiming against Aon that Aon had failed to obtain insurance cover on a reinstatement basis in respect of No. 1 Breastwork or to give it appropriate advice as to the potential need for such cover and information relating to that. Aon had also advised Opus that LPC’s claim in respect of the No. 1 Breastwork was for some $6 million with regard to breach of duties Aon had to LPC. Opus faced a claim by Aon that, if Aon was liable to LPC, Opus would also be liable to LPC in negligence. Aon thus claimed against Opus contribution under s 17 Law Reform Act 1936 as to any liability that Aon might have to LPC with regard to the No. 1 Breastwork.
[35] Opus has not attempted to strike out Aon’s claim against it in respect of the No. 1 Breastwork on the basis that Aon’s claim in this respect could have no merit.
[36] Although Aon has described its proposed claim against Opus as a new cause of action, it is more in the nature of an additional claim relying on the same cause of action, a potential liability as a joint tortfeaser or by way of contribution under s 17 Law Reform Act. On that basis, the additional claim could have as much merit as the claim that had been previously made as to the No. 1 Breastwork.
[37] In its second amended statement of claim of 8 May 2018, LPC also alleged Aon initially failed to claim from Opus estimated reinstatement costs for what was described as reclaimed land. LPC claimed it should have been given appropriate information and advice over the “fill, back fill or similar improvement the sole purpose for which was to form, extend or join a wharf to the effective shoreline”, from there described in the statement of claim as “reclaimed land”. LPC alleged Aon wrongly advised LPC these improvements were uninsurable. LPC claimed that when claims were made on their insurance policy, the reclaimed land was not insured because land was generally excluded under one term of the relevant policy. The reclaimed land had not been declared as part of the total insurance value. LPC claimed it could and would have been insured under the policy if LPC had been properly advised.
[38] LPC alleged Aon had failed to give appropriate advice as to whether it could insure reclaimed land, failed to obtain the required valuations for its reclaimed land and failed to ensure the reclaimed land was insurable. LPC claimed that, as a result of these failures, LPC had suffered loss to the extent of the estimated cost of reinstating LPC’s reclaimed land, approximately $29 million.
[39] In submissions, Mr Kennedy claimed that Aon had not understood the particular basis as to this aspect of LPC’s claim. I was told by counsel that, on 20 June 2018, by notice served on LPC, they sought particulars.
[40] In its application for leave, Aon said it received the primary document underpinning the proposed new claim on 16 July 2018. In submissions, Mr Kennedy explained the relevant document was the land report prepared by Opus. The report was prepared for LPC on the instructions of its then solicitors. One of the tasks required of Opus was to value reclaimed land as at 30 June 2010 in a way that was consistent with the full valuation of port assets undertaken by Opus (and other consultants) at that time.
[41] Mr Kennedy said they received these particulars through receiving a brief of evidence from Mr Chalmers of Opus for LPC and Opus’ land report on 16 July 2018. In that brief of evidence, Mr Chalmers said that in early July 2014 Opus was asked by
LPC’s then solicitors to advise, from an engineering perspective, what might be termed as reclaimed land for the purpose of LPC’s insurance policy.
[42] In his brief of evidence, Mr Chalmers says that on 19 May 2010 he told Mr Cooper of LPC that Opus would value certain harbour assets, including seawalls, that he identified as standalone “breakwater seawalls” and valued them separately. He also says LPC and Aon left it to him to identify LPC’s “key structures” and that he did this by highlighting the main revenue generating harbour structures and seawalls on the Opus spreadsheet.
[43] Later in his brief, he referred to “the land report” dated 20 February 2015. In a summary of that report, Opus identified three seawall sections which could have been insured as part of the retained value in 2010 but which were not. Opus estimated that the valuation or costs of reinstatement for those seawalls in 2010 for insurance purposes would have been $92.5 million. Opus’ estimate as to the costs of reinstating this land to its pre-earthquake condition using information known as at December 2013 in respect of three seawalls was some $25 million.
[44] Mr Kennedy explained that, as a result of analysing the information in this report, it seemed to Aon there may have been an inconsistency in the way Opus had treated seawalls, and thus reclaimed land, as being insurable.
[45] I cannot say, given the context in which I have had to consider the issue, the extent to which there is merit in Aon’s position over this. It may turn out that there is an explanation for the way certain seawalls were dealt with by Opus as against others. What I can say is that, through reference to the relevant documents, in conjunction with reference to Mr Chalmers’ brief and on the basis of information provided in July 2018, it has been explained why it was Aon believes it may be entitled to a contribution or indemnity from Opus with regard to reclaimed land, and LPC’s claim as to that of approximately $29 million. On the pleadings as they stand and with the evidence from Mr Chalmers as to the role assumed by Opus in advising LPC as to these matters in 2010, it may be that Aon’s claim against Opus could succeed if Aon is held liable to LPC on this aspect of LPC’s claim.
[46] I would not deny leave on the basis the amendment sought is as to a claim that would appear to have little merit.
The timing of the application and reasons for delay
[47] The close of pleadings date was 17 August 2018. Leave to file an amended statement of claim against Opus is required because there was no amendment to Aon’s amended statement of claim against Opus before 17 August 2018. There was then a further delay until 14 February 2019 before the application was filed.
[48] For Aon, Mr Kennedy explained the delay by reason of the pressure that Aon, its expert witnesses and advisers were under in responding to the further documents provided by way of discovery from LPC in July 2018, and the detailed evidence in the 18 briefs of evidence, totalling 526 pages excluding schedules, served on Aon between 16 and 31 July 2018.
[49] For Opus, Mr Parker says this should properly have been the subject of an affidavit filed in support of Aon’s application.
[50] An affidavit and/or memorandum from counsel in advance of the hearing of the application would have been of assistance to the Court in explaining why there was a delay. It is however understandable why such an affidavit was not filed. The priority for all parties over the months since July 2018 must have been in preparing briefs of evidence, compiling an index of documents for trial bundles and all the other intensive preparation that is required for trial.
[51] Despite the slippage and delays that have occurred, the impression I have from dealing with counsel in various case management conferences is that all counsel have endeavoured to progress these proceedings conscientiously and to the best of their ability. There is certainly nothing to suggest that the parties or their counsel have taken a cavalier approach to their responsibilities in the way that must have been a feature of the Australian proceedings in Aon Risk Services Australia Ltd v Australia National University.
[52] In a memorandum of 19 April 2018, Aon joined with LPC in agreeing to timetabling directions aimed at ensuring these proceedings could be allocated a 12 week trial as soon as convenient after 1 April 2019. Both parties made that commitment although it was only on 28 March 2018 Aon was granted leave to join Opus and Colliers as third parties. In my minute of 26 April 2018, I referred to the Court’s proposal to set the proceedings down for a 12 week trial beginning on 6 May 2019. In my minute of 26 April 2018, I also recorded that LPC and Aon had agreed to attend mediation after the exchange of evidence in late November or early December 2018.
[53] By the next telephone conference on 18 June 2018, the trial was set down for 12 weeks to begin on 20 May 2019. Since then, all parties have been endeavouring to ensure they would be ready to proceed at that time. Consistent with that approach, they are also now committed to the mediation to begin on 9 April 2019.
[54] LPC was concerned at slippage with Aon’s service of briefs in November 2018 and of potential problems that could cause other parties in being ready for trial. In memoranda from both LPC and Aon over this, counsel referred to the difficulties they faced in having to brief expert witnesses who were outside the two organisations, experts who had other professional commitments and who themselves were under pressure. LPC referred to the difficulties they would face with the Christmas break.
[55] The claim which Aon wishes to add to its existing claim against Opus relates to only one part of LPC’s claim against Aon for $185 million. Even with the brief exposure I have had to the evidential issues that relate to the current application, it is clear that the factual issues between the parties are complex and extensive, consistent with the need for a 12 week trial.
[56] Against that background, I find there is a reasonable explanation for Aon’s delay in filing the application for leave to amend its pleading. I do not consider Aon’s failure to file, either by way of affidavit or memorandum, an explanation for the delay should be fatal to its application. The documents, including a brief of evidence on which it relies in explaining why it needs to amend its claim, are documents which all parties have had access to. All parties and their counsel have been aware through the
various conferences and the service of briefs of evidence as to what all the other parties have been doing in progressing the proceedings. Consistent with the appropriately constructive approach counsel have taken as to the conduct of these proceedings, Mr Parker for Opus acknowledged the pressure that Aon and their advisers would have been under in preparing their evidence and the other preparation required for trial.
Prejudice/delay
[57]Potentially, this could have been the matter of greatest concern.
[58] Significantly, it was not suggested for Opus that allowing the amended pleading would necessitate a delay in the trial.
[59] I note also that all parties, including Opus, are committed to participating in the mediation which is to begin on 9 April 2019. For that, all parties are to be commended. Opus has remained committed to that, knowing since 14 February 2019 that potentially the claim against them by Aon could increase from $6 million to some
$35 million.
[60] Aon does not suggest that, if it is granted leave, it will need to serve a further brief of evidence to support the further claim against Opus, except possibly in reply.
[61] Potentially, Opus may wish to brief further experts or other witnesses. There is time for it to do so if required, albeit such witnesses will be under some pressure. It is also not clear to me that they will need to do so.
[62] A valuer employed by Opus, Mr Vessey, has already provided a brief of evidence on valuation issues related to LPC’s claim. That brief has been provided by Mr Vessey as a witness for LPC. I have not seen his brief but, if evidence from a valuer was needed in relation to LPC’s reclaimed land claim, then I would assume he has provided valuation evidence as to that aspect of LPC’s claim. If no such valuation evidence has been provided to support that aspect of LPC’s claim, it is difficult to see why Opus would need to now brief another valuer to deal with a reclaimed land claim against Opus.
[63] If there is an issue between Aon and LPC over the quantum of LPC’s claim as to reclaimed land, it is reasonable to assume that Aon would have already served briefs from the appropriate experts supporting whatever position it has adopted over quantum. In terms of disputing the quantum of LPC’s claim in relation to the reclaimed land, Aon and Opus would have a similar interest.
[64] LPC’s claim in respect of reclaimed land is based around what it says would have been the reinstatement costs for earthquake damage to that aspect of LPC’s harbour structures when insurance was being arranged, and what the actual reinstatement costs would have been in December 2013 when LPC settled its claims with Vero as the insurer. It appears to me, from Mr Chalmers’ evidence and the land report, that evidence as to this would be provided not by a valuer but by an appropriate engineer, as Mr Wrona suggested in his affidavit.
[65] An engineer who is to give this evidence for LPC is Mr Chalmers, a principal of Opus based in the Christchurch office. He peer reviewed and approved for release the land report referred to earlier which Aon says has been important in its seeking to amend its claim against Opus. Mr Chalmers is already a witness. In his brief of evidence, Mr Chalmers gives evidence as to the estimated loss in respect of the No. 1 Breastwork, partly through reference to the land report. Through preparation of that report, he must be already fully briefed as to the basis on which Opus was instructed to provide cost estimates for various harbour structures in 2010 and the reasons why they provided estimates for some but not others. If Opus required him to provide evidence to deal with any potential liability that Opus might have as a result of an amendment to the claim, it is reasonable to consider that he would be able to do so before the trial. However, it may well be that no further evidence from him would be required.
[66] On Aon’s claim against Opus as currently pleaded, Opus has been facing a claim for approximately $6 million. There was no dispute that it has elected not to serve any witness briefs to protect its position. It would seem that, despite its potential liability to Aon over the No. 1 Breastwork, Opus has been content for both Mr Chalmers and Mr Vessey to continue as witnesses for LPC in relation to all aspects of LPC’s claim on which they are able to give evidence.
[67] Mr Chalmers provided a brief of evidence in reply dated 21 February 2019. In that he continues to provide evidence as to estimated repair costs for the No. 1 Breastwork. He deals also with evidence for LPC in relation to reclaimed land. That suggests strongly to me that Opus would not now want to obtain evidence from another engineer as to what the appropriate reinstatement cost should be for reclaimed land relevant to the additional claim Aon wishes to make against Opus.
[68] I am further fortified in this view by the submission Mr Parker made during the recent hearing. I asked what he wanted to say about the potential need for parties to be involved in the costs and risks of further separate proceedings if Aon was held liable to LPC on LPC’s claim in respect of reclaimed land. Mr Parker submitted this would not necessarily be the consequence of not allowing Aon to amend its claim. He suggested, without an amendment to Aon’s claim, all issues that would have to be addressed in any further proceedings would be canvassed fully in the trial scheduled for 20 May 2019. That submission suggests strongly to me that Opus considers that all evidence relevant to a potential claim between Aon and Opus will be before the Court in the trial scheduled to begin on 20 May 2019, despite the relatively short period between now and the trial commencement date.
[69] There will be some prejudice to Opus in having to respond to an amended claim. It will be exposed to a significantly greater liability, an increase from around
$6 million to some $35 million on the amended claim. There will be additional legal costs incurred in responding to it. There may be a need for it to provide further evidence. It will have to address issues during the trial in ways that would not be necessary if leave is denied. The prejudice it faces in this regard will not however be of such significance as to be a ground in itself to deny leave.
The interests of justice
[70] In essence, I see this as a case where all the evidence relevant to a claim between Aon and Opus over the reclaimed land is likely to be before the Court on the case as already pleaded in the trial scheduled to begin on 20 May 2019. On the basis of that evidence, it appears Aon may be entitled to a contribution from Opus for up to
a further $29 million on the claim which LPC has made against Aon for approximately
$185 million.
[71] If Aon is not able to pursue such a claim against Opus in the current proceedings, it might well have to pursue such a claim in separate proceedings. If that were necessary, both Aon and Opus would face the very significant costs in relitigating matters that are already before the Court. There would be the same need to brief, at significant expense, many of the expert witnesses who are to give evidence at trial, and all the delays associated with that. There would be the risk of differing results in two separate proceedings, an outcome that would bring the course of justice into disrepute. It would also involve a significant use of Court resources to the detriment of other potential litigants who are seeking access to the Court to resolve their disputes. The objective of the High Court Rules is to secure the “just, speedy, and inexpensive determination of any proceeding”.14 These current proceedings are of a nature that could never be inexpensive but to deny Aon’s application so as to risk the need for the parties to be involved in further hugely expensive litigation would be the antithesis of what the High Court Rules strive to achieve.
[72] It is in the interests of justice that all potential issues as between Aon and Opus can be determined through the trial which all parties are committed to and which is to begin on 20 May 2019.
[73] I am satisfied that it is in the interests of justice for leave to be granted to Aon to file its second amended statement of claim against Opus in accordance with the draft amended statement of claim attached to its application for leave. Leave is granted accordingly.
Costs
[74] Aon has had to seek an indulgence from the Court in seeking leave to amend its pleadings at such a late stage. Given the way in which the application was presented and the lack of supporting information explaining the delay, it was reasonable for Opus
14 High Court Rules 2016, r 1.2.
to oppose the application and for Aon to have to justify its application in the way that occurred through the hearing that took place.
[75] In the circumstances, although Aon succeeded with its application, it is appropriate that Aon pay costs to Opus in respect of this application. Opus are entitled to costs on a 3B basis. Although three counsel were present for Opus for the hearing, I certify for one second counsel.
Solicitors:
Chapman Tripp, Christchurch MinterEllisonRuddWatts, Auckland Parker Cowan Lawyers, Queenstown Wynn Williams, Christchurch.
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