Metlifecare Retirement Villages Limited v James Hardie New Zealand Limited
[2023] NZHC 333
•28 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2015-404-003080
[2023] NZHC 333
UNDER the Consumer Guarantees Act 1993 AND
the Fair Trading Act 1986
BETWEEN
METLIFECARE RETIREMENT VILLAGES LIMITED
Plaintiff
AND
JAMES HARDIE NEW ZEALAND LIMITED
First Defendant
defendants continued overleaf
Hearing: 8 February 2023
Further submissions received 13, 15 and 16 February 2023
Appearances:
J S Cooper KC, J K Stewart, J K Wilson and R G Muston for Plaintiffs
J E Hodder KC, E S Scorgie, L L Fraser and W M Cheyne for Defendants
Judgment:
28 February 2023
JUDGMENT OF EDWARDS J
[Plaintiff’s application re evidence to be presented by topic]
This judgment was delivered by me on 28 February 2023 at 3.30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
METLIFECARE RETIREMENT VILLAGES LTD v JAMES HARDIE NEW ZEALAND LTD [2023] NZHC 333
[28 February 2023]
STUDORP LIMITED
Second Defendant
JAMES HARDIE NZ HOLDINGS LIMITED
Third Defendant
RCI HOLDINGS PTY LIMITED
Fourth Defendant
JAMES HARDIE AUSTRALIA PTY LIMITED
Fifth Defendant
JAMES HARDIE RESEARCH PTY LIMITED
Sixth Defendant
JAMES HARDIE INDUSTRIES PLC
Seventh Defendant
[1] The plaintiff seeks orders relating to the presentation of expert evidence at trial. The proposal is to group the expert evidence according to issue or area of expertise, with the evidence then presented sequentially (plaintiff first, then defendant) within that group. The application relates to both the groupings and order in which the groups will be called.
[2] The defendants oppose the application. They say the proposal is contrary to experience, settled practice and principle; will cause substantial and irremediable prejudice to the defendants; and will not provide any advantages in hearing the evidence. They propose two alternatives to the orders sought by the plaintiff to meet some of the plaintiff’s concerns.
[3] In addition, following the hearing, and in response to my minute, the defendants made a further proposal which involves grouping some of the expert evidence, with directions as to the sequence in which that evidence is presented.
The proceeding
[4] The plaintiff is the owner of five retirement villages located throughout New Zealand. It claims damages (currently quantified at around $90.7 million plus interest) against the defendants in relation to the defendants’ cladding systems (Harditek and Monotek) used on the buildings within those villages.
[5] The plaintiff claims those cladding systems are inherently flawed and do not adequately protect the buildings from water. The focus of the plaintiff’s evidence concerns three alleged defects (h-mould, head flashing on windows, and base to cladding detail); reliance on sealant; and egress deficiencies.
[6] The defendants deny all claims. They say the cladding systems are effective in managing moisture content in low-rise timber-framed buildings provided the buildings are properly designed and constructed. The defendants say they are not responsible for the design and construction of the buildings.
[7] A common list of issues has not yet been prepared. However, the defendants say the claim will require determination of the following:
27.1whether the Harditex and Monotek products and cladding systems are
in fact defective (“do they work?”);
27.2whether the steps taken by James Hardie in the development of the product and systems (including testing) were reasonable or otherwise, assessed in light of industry practice and scientific understanding of the day;
27.3whether the alleged defects in the product and/or systems were or should have been apparent (“known”) to James Hardie for various reasons and at various points over the decades-long period at issue; and
27.4whether the alleged defects in the products and systems pleaded are in fact the cause of damage to the subject buildings.
[8] The trial is due to commence on 8 May 2023. It is set down for 29 weeks. There are approximately 100 witnesses to be called by both parties. The majority are experts. Briefs of evidence exchanged to date total more than 17,000 pages, with reply briefs still to come.
[9] Caucusing between experts, with the assistance of independent facilitators, is currently taking place. The purpose of these caucuses is for the experts to prepare a joint statement identifying those areas they agree and those they do not. The parties agreed on the caucusing groups based on the predominant expertise of each witness.
Proposal and counterproposal for the presentation of evidence
Plaintiff ’s proposal
[10] The plaintiff’s application seeks orders that the evidence at trial be presented on an issue/area of expertise basis “where possible”.
[11] Each of the plaintiff’s witnesses on a particular topic or area of expertise would present their evidence and be cross-examined first, followed by each of the defendants’ witnesses on that topic or with expertise in that area.
[12] The parties would be free to determine the running order of their witnesses within the group, provided they give reasonable advance notice to the other party to facilitate preparation for cross-examination.
[13] The proposed groupings and the sequence in which the groups would be called were set out in a schedule annexed to the application (and updated at the hearing) as follows: building surveyors; buildability; building science; testing; WUFI;1 material science; industry experts (plaintiff); factual (plaintiff); factual (defendants); industry experts (defendants); corporate governance; marketing; and scope of repair/quantum. Those groups broadly follow the caucusing groups agreed between the parties.
[14] In its memorandum of counsel dated 15 February 2023 filed after the hearing, the plaintiff sought orders in relation to the first six of the groups outlined at [13]. I have therefore treated the application as being limited to those six groups.
[15] Finally, orders are sought that each witness is to give evidence and be cross- examined only once to the extent practicable (and subject to the usual rules relating to the recalling of witnesses).
Defendants’ counterproposal
[16] The defendants oppose the plaintiff’s proposal. In their notice of opposition, they propose two alternatives designed to answer some of the concerns driving the plaintiff’s application.
[17] In the first alternative, the evidence is to be presented in the orthodox way unless the parties agree to the contrary. Other directions are suggested (such as abridging the requirement to put the case in cross-examination and agreeing on a trial timetable) to achieve an efficient presentation of the evidence.
[18] The second alternative arises if the Court is minded to direct evidence be presented by groups. Under this alternative, the parties would be directed to
1 “Wärme Und Feuchte Instationär”.
collaborate in developing a timetable to accommodate the presentation of evidence by issue, with counsel left to discuss the details of that arrangement.
[19] During the hearing, I asked Mr Hodder KC whether there were any categories of expert evidence (such as the building surveying evidence) which the defendants agreed should be grouped. Mr Hodder indicated that the building surveying evidence was such a category. However, he sought further time to confer and confirm instructions on that point. At the conclusion of the hearing, I directed the defendants to file a memorandum addressing whether the building surveyor evidence could be heard as a group, and whether any other categories of evidence could also be grouped.2
[20] In a memorandum dated 13 February 2023, the defendants maintained their position that it was wrong to impose constraints on a party’s presentation of its case. Nevertheless, a counterproposal was put forward in relation to the building surveyor, building science, and scope of repair/quantum evidence. The key components of the counterproposal are as follows:
(a)An expert presentation/tutorial on Building surveying by the primary witness for each party in this area.
This would include an explanation of the fundamental and agreed upon matters, with an outline summary of matters which were not agreed. The Court would have an opportunity (and would be encouraged) to ask questions.
(b)An expert presentation/tutorial on Building science by the primary witness for each party in this area. The presentation would be on the same basis as above.
(c)Buildability witnesses will then give evidence. The plaintiff’s experts first, followed by the defendants’ experts.
2 Metlifecare Retirement Villages Ltd v James Hardie New Zealand Ltd HC Auckland CIV-2015- 404-003080 [9 February 2023] (Minute (No 10) of Edwards J).
(d)Building survey evidence will follow and be presented on a “village by village” basis. The plaintiff’s evidence on one village first, followed by the defendants’ expert evidence on that village.
(e)Primary building survey witnesses for both parties would then provide their overview evidence on all villages the subject of the claim.
(f)Witnesses may be called more than once.
(g)Scope of repair/Quantum evidence would also be called at the same time and be addressed on a standalone basis.
(h)The trial would otherwise proceed in the orthodox sequence.
[21] The defendants have also indicated a willingness to agree that certain evidence be given concurrently (that is by way of panel3). However, the parties agree that it is premature to make such an order at this stage when caucusing has not yet been completed and reply briefs have not been served.
Legal framework
Presentation of evidence at trial
[22] The High Court Rules 2016 include several rules relevant to the presentation of evidence at trial.
[23] Rule 10.10(1) to (3) sets out the orthodox order for trial. That is, the plaintiff’s case followed by the case of the defendant. However, r 10.10 is expressly subject to “any directions given under rr 7.2 or 7.8 as the case requires”.4
3 Colloquially referred to as a “hot tub”.
4 High Court Rules 2016, r 10.10(5)(a).
[24] Rule 7.2 deals with case management conferences and provides that a Judge may give directions to secure the “just, speedy and inexpensive” determination of the proceeding, including directing how the hearing or trial is to be conducted.5 Rule 7.8(3) refers to pre-trial conferences and contains a rule to similar effect.
[25] The “just, speedy and inexpensive” determination of a proceeding is the overriding objective under the High Court Rules.6
[26] Rule 7.43A allows for directions to be made as to the conduct of proceedings. Under r 7.43A(1)(d) a Judge may direct how the hearing is to be conducted.
Expert evidence
[27] An expert witness has an overriding duty to assist the Court impartially on relevant matters within their area of expertise. An expert witness is not an advocate for the party who engages the witness.7
[28] Rule 9.46 relates specifically to the presentation of expert evidence at a hearing. That rule provides:
9.46 Evidence of expert witnesses at trial
The court may, at the hearing, direct that the evidence of expert witnesses is given after all or certain factual evidence is given or in a sequence the court thinks best suited to the circumstances of the proceeding.
[29] Section 84 of the Evidence Act 2006 sets out the usual order for a witness to give evidence (evidence in chief, cross-examination, and re-examination). That section is subject to an order by the Judge to the contrary. As noted in the commentary to that provision, this includes directions for expert witnesses of the same discipline to give evidence concurrently or by panel.8
5 High Court Rules 2016, r 7.2(3).
6 Rule 1.2.
7 Schedule 4 Code of Conduct for Expert Witnesses, cll 1, 2.
8 Mathew Downs (ed) Cross on Evidence (online ed, LexisNexis) at [EVA 84.5].
A departure from orthodoxy causing prejudice to the defendants?
[30] The defendants raise three grounds of opposition to the plaintiff’s proposal. The first concerns the novelty of the proposal, and the third concerns prejudice to the defendants. There is significant overlap in the arguments advanced under both grounds and so they are addressed together.
[31] Regarding the novelty of the plaintiff’s proposal, Mr Hodder submits that it is a “radical departure from the long settled and acquired conduct of major civil trials” set out in r 10.10(1) to (3). He says that this approach is informed by the onus of proof, and it incorporates the important right and responsibility of counsel for a party to choose what witnesses to call and in what order. This, he submits, is illustrative of the paramountcy of the just resolution of proceedings in accordance with the principles of natural justice enshrined in s 27(1) of the New Zealand Bill of Rights Act 1990.
[32] The lack of precedent for the departure from the orthodox trial order is, in Mr Hodder’s submission, telling. Moreover, he submits that the plaintiff’s proposal will cause “substantial and irremediable” prejudice to the defendants’ rights in a complex contested trial.
[33] There is no dispute that the plaintiff’s proposal represents a departure from the orthodox order in which evidence is presented in a civil trial. Nor is there any dispute that there is no precedent for the orders sought. But I do not consider the plaintiff’s proposal infringes upon natural justice rights, nor cause irremediable prejudice, for the reasons set out below.
[34] First, as a survey of the rules set out at [22]–[29] reveals, departure from the ordinary sequence of witnesses at trial is specifically contemplated. Indeed, departure from the presumptive order is commonplace for expert evidence and is expressly provided for in r 9.46. That suggests that departure from the ordinary sequence is neither radical nor unprincipled. Nor does it subvert the onus of proof, which remains
on the plaintiff throughout.9 Whether such departure should be ordered will depend on the circumstances of each case, and where the interests of justice lie.
[35] Second, the ability of a party to unfurl the evidence in a way which best advances their case is not unfettered. Case management represents a general constraint on a party’s ability to conduct a proceeding and trial entirely as a party would wish. The purpose for doing so is to ensure litigation is managed in a just, speedy and inexpensive way. This is not only in the interests of the parties to a proceeding, but also ensures the best use of Court resources, and so serves the wider public interest.
[36] Third, and relatedly, the plaintiff’s proposal concerns expert evidence. Experts are a separate category of witness. They are impartial witnesses engaged to assist the Court. Their briefs of evidence have been exchanged prior to trial, and, in this case, the experts have caucused with a view to resolving, or at least narrowing, the issues in dispute. This is not a case of the defendants waiting to hear what the plaintiff says in evidence before calling their own evidence in response. There is no impingement of the defendants’ right to be informed of the case before them or the right of natural justice in that respect.
[37] Fourth, the plaintiff’s proposal allows each party to decide the order in which their witnesses within a group are called. That aspect of the proposal preserves elements of the orthodox approach and affords counsel for each party a measure of control over the way their case is presented. In comparison, the defendants’ counterproposal places greater restraints on the party’s freedom to call evidence in their preferred order, and in that respect, is a more extensive departure from the orthodox approach.
[38] Similarly, hearing expert evidence by panel represents a greater departure from the orthodox approach than what is proposed by the plaintiff. Yet hearing evidence that way is now commonplace. Seen in that context, the plaintiff’s proposal is not as radical as the defendants suggest.
9 In Harbour Inn Seafoods Ltd v Switzerland General Insurance Co Ltd (1990) 3 PRNZ 653 at 654, Fisher J held that the discretion to depart from the presumptive order for the presentation of cases suggested that the matter did not turn solely on the incident of the onus of proof. Rather, the real question was which order served the ends of justice.
[39] Fifth, and flowing on from the prior points, the observations in ASICC v Rich, relied on by the defendants, are distinguishable.10 The issue in that case was not presentation of expert evidence, but proposals for abbreviating final hearing time. At stake was the ability of the party to adduce all the evidence it wished to adduce. There is no such constraint in the plaintiff’s proposal with the only issue in this application being the sequence in which that evidence is presented. Rule 9.46 expressly allows a Judge to make directions about the circumstances in which expert evidence is presented. This is not a case of a Judge standing in the way or unnecessarily interfering in the conduct of the trial.
[40] Sixth, the lack of precedent is unsurprising. This is a very large and complex case. The allocated trial time is significantly longer than either Cridge v Studorp Ltd11 or White v James Hardie New Zealand Ltd.12 Although there will be significant overlap in the issues to be determined, the cases are not the same. What worked for one party in one proceeding will not necessarily work in this case.
[41] The fact that evidence was presented in an orthodox manner in those trials does not mean there are not better ways to present similar evidence in this case. In fact, the Judge in White indicated a clear preference for evidence to be given on an issue/topic basis in the case management of this proceeding.13 The defendants’ counterproposal is also put forward (at least in part) as a result of counsel’s experience of comparable trials in which it appeared that the building survey evidence presented the most difficulties for the Court to assimilate.
[42] In sum, I do not consider the plaintiff’s proposal to be a radical departure from the orthodox approach. Nor will it cause substantial and irremediable prejudice to the defendants. Whether expert evidence should be presented in a different way will depend on the circumstances and nature of the case, and not on precedent.
10 Australian Securities and Investments Commission v Rich (2009) 75 ASCR 1.
11 Cridge v Studorp Ltd [2021] NZHC 2077.
12 White v James Hardie New Zealand CIV-2015-404-2981. The case resolved prior to the defendants calling any evidence.
13 Metlifecare Retirement Villages Ltd v James Hardie New Zealand Ltd HC Auckland CIV-2015- 404-003080 [9 February 2023] (Minute (No 68) of Whata J dated 2 August 2021 at [7]).
Will grouping the evidence assist the Court?
[43] Grouping the evidence will mean that expert evidence on a particular issue will be heard around the same time. Ms Cooper KC, for the plaintiff, submits that this will assist the Court to quickly understand the nub of the dispute between the experts and why that evidence is relevant to the case.
[44] The defendants dispute that grouping will achieve the intended benefits. This forms the second ground of opposition to the plaintiff’s application. Several arguments were advanced in support of this ground, each of which are addressed below.
Interrelated nature of the evidence
[45] First, the defendants say that the proposed groups and witness allocations are unrelated to the pleaded issues to be determined, and do not map neatly on the issues to be determined by the Court.
[46] Moreover, they say the interrelated nature of the evidence makes it impossible to silo the evidence into discrete topics or areas. Additionally, many witnesses give evidence that cross the boundaries of multiple topics and areas.
[47] In assessing this, and the other grounds of opposition, I am acutely aware that I do not yet have a full grasp of the issues in dispute, nor the detailed nature of the expert evidence to be called. I am heavily reliant on the parties’ identification of those issues and the characterisation of the evidence. That said, I do not consider the nature of the evidence makes the plaintiff’s proposal unworkable. Nor does it erode the intended benefits, as I explain further below.
[48] It is apparent that adjudication of the plaintiff’s claims will depend heavily on the expert evidence called at trial. The answers to the issues framed by the defendant (set out at [7]) will be informed by the expert evidence. For example, the building surveying, buildability, building science, and testing evidence is likely to be relevant to whether the defendants’ cladding systems are defective. Understanding that evidence is critical to the just disposition of the case.
[49] Furthermore, while the interrelated nature of the evidence makes grouping more difficult, it is apparent that it is nevertheless possible. The plaintiff’s proposed groupings are broadly based on the caucusing groups which the parties agreed on according to the predominant expertise of each witness.
[50] Mr Hodder says that these groups were not intended to be used for trial purposes, and not all experts in each area were included in the relevant caucusing groups. That may be so, but the caucusing groups suggest that it is possible to organise witnesses (even if imperfectly) into broad groups. Indeed, the defendants’ counterproposal is premised on that principle, at least insofar as the building surveying, buildability and scope of repair/quantum evidence is concerned. The fact that concurrent evidence is also anticipated for other evidence suggests that grouping is practically achievable.
[51] I am also confident that a solution may be found for those witnesses who give evidence on more than one issue or area of expertise. It may be that some of that evidence is heard out of sequence. That would be no worse than the orthodox approach which could see evidence being heard on the same topic several months later and after evidence on various other topics had been heard in the meantime. Alternatively, it may mean that some witnesses are recalled. Counsel should be able to reach agreement on an approach which keeps re-calls to an absolute minimum, but which allows for that possibility in some cases.
Relative proximity
[52] The defendants also say that grouping the evidence will not achieve “relative proximity” and so it does not offer sufficient advantage to the Court to warrant departing from the orthodox approach.
[53] It is true that the plaintiff’s proposal does not offer the same proximity as, for example, hearing the expert evidence concurrently. Nevertheless, it is still advantageous compared to presenting evidence in the ordinary way. Grouping the evidence according to fields of expertise means the trial is focused only on that evidence for a concentrated period. Familiarity with the concepts discussed by the expert is gained over time, and the ear adjusts to the technical terms used. That aids
in understanding where the contest between experts lies, and the issues which must be resolved to determine the case.
[54] In contrast, the orthodox approach means expert evidence on the same topic could be led several months apart, with evidence on other topics heard in the meantime. The Judge would only catch a glimpse of what might be in issue, and what might be addressed by the experts who are called later at trial. Lines of cross- examination are likely to be more difficult to follow, and the benefits arising out of the joint statements produced after caucusing may be diminished.
[55] To that extent, I consider the grouping approach has distinct advantages over the orthodox approach, even if the evidence is not presented concurrently.
Coherence
[56] The defendants say that the plaintiff’s proposal will result in a loss of coherence in the way each case is presented, and lead to a fragmented narrative.
[57] On the materials currently before the Court, I am not satisfied that this is a significant risk. The subject of the application is expert, not factual, evidence. To the extent that witnesses give mixed fact and expert evidence, the embedded narrative may still be unfurled in the order which the party calling that witness within the group considers appropriate. Furthermore, to the extent that the factual evidence informs the expert opinion given by a witness, grouping will assist in understanding the assumptions that underpin the expert conclusions.
Trial timetable and other measures
[58] The defendants submit that the plaintiff’s proposal introduces a lack of certainty in terms of trial timetable, and risks extending the time for trial. Other measures (such as a “chess clock” where each party is allocated set times for the questioning of witnesses) are proposed as a better way of ensuring the trial remains on track.
[59] I am not persuaded that the plaintiff’s proposal will create uncertainty in the trial timetable, nor extend the time required for trial. To the contrary, making orders now as to how the evidence is to be presented will facilitate planning around a trial timetable, and clustering has the potential to save valuable trial time.
[60] The measures suggested by the defendants are helpful and are likely to be agreed. But these measures will not assist the Court to understand the expert evidence. They are not a substitute for what is proposed by the plaintiff but are tools that may be employed in addition.
Which evidence should be grouped?
[61] The common assumption underpinning both proposal and counterproposal is that there are advantages to at least some evidence being grouped. The question is which evidence is to be grouped, and how the groups should be determined.
[62] The two alternatives presented in the defendants’ notice of opposition are both premised on counsel continuing to confer on suggested groupings to a lesser or greater extent. While some measure of agreement may (and in fact has) been reached between counsel, I am satisfied that orders should be made now. Doing so will provide a foundation from which a trial timetable may be developed. This provides certainty for the parties, witnesses, and counsel, and allows the Court to plan.
[63] As to which evidence should be grouped, I consider the advantages go beyond those groups identified by the defendants in the counterproposal. They extend to the building science, testing, WUFI and material science evidence also. Whether the remaining expert evidence should also be grouped is a matter best left to the parties at this stage.
[64] Determining which witnesses fall within each group is also a matter best left to the parties. The predominant expertise of the expert, and the caucusing groups agreed, provide good yardsticks by which to agree allocation.
What order should the groups be called?
[65] A key difference between the proposal and counterproposal is the sequence in which the grouped evidence is to be called.
[66] The defendants’ counterproposal includes the building surveyor evidence being given on a village-by-village basis, with the overview evidence given at the end. The difficulty with this proposal is that it constrains the plaintiff’s ability to present the building surveyor evidence in the order it sees fit. For this reason, I prefer the plaintiff’s proposal which allows each party control over the order in which their respective building surveying witnesses are called.
[67] More generally, however, I consider the sequence in which the groups are called (including whether buildability witnesses should be called before or after the building surveying evidence) is best left to counsel to determine.
[68] In making that determination, counsel should ensure that any factual evidence which informs an expert opinion is given before the relevant expert evidence. Similarly, the groups should be sequenced in a way which maintains coherence in the evidence wherever possible and minimises the need to recall witnesses. A pragmatic approach is required – perfection must not be allowed to be the enemy of the good.
Conclusion
[69] Given the size and complexity of the trial, I consider grouping the expert evidence as proposed by the plaintiff is consistent with the just, speedy and inexpensive determination of the proceeding. Presentation of the evidence in this way serves the interests of justice. However, the sequence in which the groups will be called is best left to the parties to agree, with leave to return to Court if required.
Result
[70]I make the following orders:
(a)Expert evidence shall be presented in accordance with orders (b) to (f) below if that evidence falls within the following groups: building
surveying; buildability; building science; testing; WUFI; material science; and scope of repair/quantum.
The remaining evidence shall be presented in accordance with r 10.10(1) to 10.10(3) of the High Court Rules 2016 unless the parties agree otherwise.
(b)The parties shall confer on which witnesses fall within each group. Inclusion within a group shall be determined by reference to the predominant issue covered in the expert’s brief of evidence and/or their principal field of expertise, and participation in the caucusing groups.
(c)Within a group, the plaintiff’s witnesses shall be called and cross- examined first, followed by the defendants’ witnesses.
(d)Each party shall determine the running order of their witnesses within the group provided they give reasonable advance notice to the other party to facilitate preparation for cross-examination.
(e)The parties shall confer on the order in which each group of witnesses, and the other witnesses, shall give their evidence at trial bearing in mind the guidance set out in [68] above.
(f)Leave is reserved to the parties to vary the groups or order of witnesses by agreement and notice to the Court, or, in the absence of agreement, by application to the Court.
[71]The plaintiff’s application is granted to the extent set out in the orders above.
[72] The plaintiff is the overall successor in relation to the application and is entitled to an award of costs. Counsel shall confer with a view to reaching agreement on quantum. I urge the parties to take a reasonable and proportionate approach to issues of costs.
[73] If quantum cannot be agreed, then a memorandum in support of costs shall be filed and served 15 working days after delivery of this judgment. A memorandum in response shall be filed and served 10 working days thereafter. Memoranda shall be no longer than five pages in length.
Edwards J
Counsel/Solicitors:
J S Cooper KC, AucklandMinter Ellison Rudd Watts, Auckland J E Hodder KC, Auckland
Chapman Tripp, Auckland
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