Parihoa Farms Ltd v Rodney District Council HC Auckland CIV 2009-404-537
[2010] NZHC 630
•23 April 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-000537
BETWEEN PARIHOA FARMS LIMITED Plaintiff
ANDRODNEY DISTRICT COUNCIL Defendant
Hearing: 19 April 2010
Appearances: S J Mills QC and S McLaughlin for the Plaintiff
R M Gates and T R Fischer for the Defendant
Judgment: 23 April 2010
JUDGMENT OF DUFFY J
This judgment was delivered by Justice Duffy on 23 April 2010 at 4.30 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Counsel: S J Mills QC P O Box 4338 Shortland Street Auckland 1140, and
S McLaughlin P O Box 4338 Shortland Street Auckland 1140 for the Plaintiff
Solicitors: Simpson Grierson Private Bag 92518 Auckland 1141 for the Defendant
Copy To: Anderson Creagh Lai (S L Anderson) P O Box 106740 Auckland City
Auckland 1143
PARIHOA FARMS LTD V RODNEY DISTRICT COUNCIL HC AK CIV-2009-404-000537 23 April 2010
[1] The plaintiff makes a pre-trial application for the exclusion of all or part of the evidence of the defendant’s witness, Lloyd Alexander Barton.
[2] In this case, the plaintiff’s decision to bring this application has been vindicated by the defendant’s recognition part way through the hearing that paragraphs 9 and 30 to 54 of Mr Barton’s evidence should be excised, as well as part of paragraphs 22 and 23. This leaves the exclusion of the remaining paragraphs to be determined.
[3] The question of the admissibility of the remainder of Mr Barton’s evidence is being dealt with by considering the substance of his evidence. At present his evidence is in affidavit form, even though this is an ordinary proceeding that was commenced by way of notice of proceeding and statement of claim. The proceeding involves factually disputed issues regarding the plaintiff’s knowledge of the existence of a memorandum of encumbrance at the time when they purchased a property located at 223 Constable Road, Muriwai. At that time the memorandum of encumbrance was not registered on the property’s certificate of title. The inclusion of this type of issue in a proceeding which might otherwise have been suitably dealt with under Part 18 of the High Court Rules makes the plaintiff’s choice of process appropriate. Evidence in an ordinary proceeding is adduced by oral evidence from a witness reading his or her brief of evidence, or through the procedure provided for in r 9.14 regarding documents incorporated in a bundle of documents. Any departure from this procedure requires the parties’ agreement, or the leave of the court. Neither has occurred here. It is not for one of the parties in a proceeding to make a unilateral determination that the proceeding should be treated as something other than it is and to file evidence in a form that fits with that party’s view. Any concerns that a proceeding is in the wrong form should be raised with the party bringing the proceeding and, failing resolution at that level, the next step is to raise the concerns with the court.
[4] Since Mr Barton’s evidence is in the form of an affidavit, unless the court were to grant leave for it to be admitted in this form, the evidence is prima facie inadmissible. The defendant, who at this hearing is now represented by Mr Gapes as leading counsel, has responsibly recognised that Mr Barton’s evidence is currently in
the wrong form. Everyone is agreed that for the purpose of expediting the plaintiff’s objections to Mr Barton’s evidence, I should consider the substantive content of the narrative evidence in his affidavit and disregard the annexures. The final form of his evidence will be a written brief.
[5] One of the difficulties of making pre-trial decisions on excluding evidence is that a Judge may not be as fully informed of the relevance of the evidence, or how it is to be used as the trial Judge would be. This in the past has often been a reason for delaying such decisions until the trial. When this has occurred, courts have often commented on the undesirability of dealing with admissibility objections in advance of the trial. See CIR v BNZ Investments Ltd 19 PRNZ 553 at [9] where the Court of Appeal cited with approval an observation of the trial Judge that “... the jurisdiction to rule in advance of trial that evidence was inadmissible because it was irrelevant should be sparingly exercised and only in the very clearest of cases”.
[6] Nonetheless, in circumstances where a party’s evidence has strayed beyond the bounds of what is permissible, the opposing party should not be overly deterred from objecting to such evidence in advance of the trial. Such applications impose discipline on the parties to ensure their evidence is properly admissible. Secondly, if they are successful, they will also avoid the need for evidence in response from the opposing party. For the opposing party, caution often dictates the preparation of evidence in response. But this can lead to the issues to be determined at trial mushrooming unnecessarily through evidence that heaps irrelevance upon irrelevance. This potential outcome, if arguably inadmissible evidence is not challenged at the pre-trial stage, was recognised in Donovan v Graham (Affidavits) 4
PRNZ 311 at 313.
[7] AC Beck and others McGechan on Procedure (loose leaf ed, Brookers) at HR 9.4.04 notes that under the current regime, which results in the early exchange of witness briefs, interlocutory applications to have inadmissible evidence on important aspects of a case struck out may be justified, particularly where that evidence has a material impact on the scope of the preparation for trial of other parties.
[8] Whilst applications of this type are not to be encouraged, and whilst a Court should be slow to make pre-trial decisions which can affect the conduct of the trial, there are occasions where parties should not be being overly hesitant about making pre-trial objections to the admissibility of evidence. Ultimately, it is the individual circumstances of each case which determine if such objections are properly made. Evidence transgressions that are tolerable in one case can be unduly burdensome and, therefore, intolerable in another. The latter state of affairs is usually reached when there has been a culmination of transgressions which through sheer weight of numbers come to weigh in favour of a pre-trial disposition of such objections. When this occurrence is coupled with a failure on the part of counsel preparing the evidence to recognise it has gone beyond what is tolerable, the opposing party has no real alternative but to seek direction of the Court.
[9] In this case, the plaintiff’s application has resulted in just over half of the paragraphs of Mr Barton’s evidence being removed. This response by the defendant is by inference an acknowledgement that the plaintiff's application in part made a clear case for exclusion of Mr Barton’s evidence.
[10] But when it comes to the remaining paragraphs of Mr Barton’s affidavit, the defendant maintains its argument that this evidence is admissible. The plaintiff maintains its objections to those passages of Mr Barton’s evidence. The position each party has taken may well have been affected by the circumstances. The excision of paragraphs 9 and 30 to 54, as well as the deletion of part of paragraphs
22 and 23 of the affidavit, was done during the lunch adjournment, and the plaintiff has had no opportunity to consider the remaining evidence carefully. I have the impression that had the remaining evidence originally been the full extent of Mr Barton’s evidence, there would have been little if any basis to warrant a pre-trial application for its exclusion. However, since the matter is already before the Court, I consider it open to the plaintiff to maintain objections that in other circumstances would be more appropriately left to be made at the trial.
[11] The plaintiff’s objections fall into two main categories: irrelevance, and what I will term excess. The latter category of objection is based on the principle that no evidence should be led of facts that have been admitted already. The basis for this
principle is self-explanatory. Evidence to prove admitted facts is unnecessary and excessive. Pioneer Plastic Containers Ltd v Commissioner of Customs and Excise [1967] Ch 597 is authority for the principle that no evidence is admissible if it does no more than to prove admitted facts. Once admitted facts are no longer in issue, there is no need to prove them by evidence. The exclusion of such evidence can be explained on the ground of irrelevance in that once facts are not in issue, their proof is irrelevant as they have no probative value. Alternatively, if evidence of admitted facts is seen to have some residual probative value, its exclusion comes within s 8(1)(b) of the Evidence Act 2006. The admission of evidence to prove admitted facts is no more than a doubling up of proof, which in turn can only needlessly prolong a trial. It is hard to see how there could ever be a reason for proving something twice.
[12] The defendant argued that Pioneer Plastic Containers does not represent New Zealand law. I know of no authority that is binding on me that requires me to disregard the principle in Pioneer Plastic Containers. Furthermore, I consider the principle to be consistent with the current New Zealand approach to evidence which under s 7(2) of the Evidence Act precludes the admission of irrelevant evidence, and under s 8(1)(b) precludes the admission of relevant evidence that needlessly prolongs a proceeding. Under either head, the rules at play would operate to exclude evidence that does no more than to prove admitted facts.
[13] The plaintiff contends that paragraphs 7, 8, 10, 11, 15, 17, 18, 20, 21, 23 and
29 in the current statement of claim contain evidence of facts that have been pleaded and admitted in the current statement of defence. If that is so, these paragraphs are inadmissible and they should be removed from Mr Barton’s evidence. However, the evidence was amended over the luncheon adjournment. It has only been available since then for everyone to consider. There may be evidence in these paragraphs that goes beyond repeating the admissions in the pleadings but no one has realised this. I propose to deal with the resolution of this issue by finding in principle that evidence of facts already admitted is inadmissible. And to reserve leave to the parties to come back to Court if, in applying this finding to the paragraphs in Mr Barton’s evidence that are said to contain such evidence, the parties cannot reach agreement. The
approach I am taking is one that I signalled to the parties at the hearing, and they agree with it.
[14] I now turn to deal with the irrelevance objections. In Donovan v Graham, McGechan J refused to deal with objections on the ground of the evidence’s irrelevance. The Judge decided that objections on the ground of irrelevance should stand over, but he went on to pass comment on his concerns about the marginal relevancy of some of the evidence under scrutiny. This approach was taken in a judicial review proceeding that pre-dated the case management procedure and the current High Court Rules. The present regime which in part seeks to avoid trial by ambush, to encourage agreement on issues where possible and to ensure that the dispute before the Court is confined to no more than those issues requiring a judicial determination may favour more the clearing away of irrelevancies where that can be done.
[15] Furthermore, before the requirement for pre-trial exchange of briefs of evidence, a party objecting to the opposing party’s evidence on the ground of relevance did so at trial in circumstances where this was the first time the evidence was known to the objecting party. In such circumstances, the objecting party was not faced with hard pre-trial decisions of whether to do no more than to trust in the success of objections made at trial, or, instead, to prepare to address such evidence, by including contradictory evidence in written briefs.
[16] Under the present regime supplementary evidence cannot be led without leave of the court. Any application for leave to adduce supplementary evidence, is likely to be met with opposition from the party who has overcome the objection and now wants to press home the advantage over the other party who has not thought to include a response to the evidence in its written briefs. Whilst it might be expected that leave would be given to meet evidence that is unsuccessfully objected to, the potential for a refusal is likely to lead to counsel preparing to meet evidence that is rightly the subject of an admissibility objection. Once this has happened, by default both parties often choose to run with the evidence they have prepared. The tendency is, therefore, to prepare to meet all the evidence, including that which is
objectionable. Thus the issues in dispute expand, and the time taken in and out of court in order for a Judge to reach a decision grows expotentially.
[17] AC Beck and others McGechan on Procedure (loose leaf ed, Brookers) at HR
9.4.03 notes the important onus counsel now bear to ensure the exclusion of clearly inadmissible evidence from written briefs. Where the onus is not discharged, the opposing party suffers prejudice. Moreover, unless there is some available means to rectify those instances where counsel for one party fails to discharge this onus, it becomes easy to see that departures from the procedural and evidentiary requirements of this Court will become more frequent. The available use of pre-trial applications to determine disputes on the admissibility of evidence can avoid this outcome.
[18] Where the proceeding has not been set down, and so the pleadings are not yet closed, the exclusion of evidence may result in evidence found to be irrelevant later being made relevant by amended pleadings. In such circumstances, the time spent in having the relevancy question first determined may seem to have been wasted. But the prospect of a Court being prepared to rule on plainly irrelevant evidence can have a healthy effect on the decisions of those who seek to include such evidence in written briefs. It serves as a reminder to counsel of their responsibility to ensure written briefs comply with the requirements of the Evidence Act and the procedural rules of this Court.
[19] There is another reason in this case for acting to ensure the issues are not expanded unnecessarily. The trial is set down for four days. The plaintiff’s estimate was seven days. There are factual issues in dispute regarding whether the plaintiff purchased the property with notice of the mortgage. The legal issues are complicated, and time is likely to be taken in exchanges between the Bench and counsel. The effectiveness of and assistance to be gained from oral argument through such exchange should not be overlooked. But it can take time that the parties have not allowed for in their estimate of the hearing time required. I think that fitting this case into the four day estimate will be tight. The hearing is to take place in October of this year. The plaintiff has obtained a resource management consent which permits subdivision of the subject land. This expires in 2011. The
only present obstacle to subdivision is the mortgage that is the subject of this proceeding. The plaintiff needs an early answer to its claim. If the proceeding is not completed this year, owing to the hearing running over time, it may not be completed until next year, which runs dangerously close to the expiry of the resource management consent. For these reasons, and because exclusion on the ground of irrelevancy will not preclude later admission if as a result of amendment to the pleadings the evidence becomes relevant, I consider that this is a case where the Court should embark on considering the admissibility of evidence based on objections of irrelevance.
[20] The difficulties of dealing with evidence objections on the ground of irrelevancy in advance of the trial can to some extent be overcome by a careful consideration of the trial issues. Fortunately the issues in the present proceeding have been carefully refined by the parties in the course of their oral argument.
[21] Given the responsible concession by Mr Gapes, it may be unnecessary for me to record that evidence is not made relevant simply by pleading the facts in a statement of defence as well as having them in evidentiary form. However, given that it has taken from late 2009 until the hearing on 19 April 2010 for the defendant to realise the plaintiff’s concerns were soundly based, I propose to make some comment about the evidence vis-à-vis the statement of defence. If facts alleged in the statement of defence are not material to contradicting the plaintiff’s claim or advancing an affirmative defence, they have no place in the statement of defence. In this case, following the plaintiff’s objections to Mr Barton’s evidence being irrelevant, the defendant filed and served an amended s statement of defence on 16
April 2010. The amendment was no more than the inclusion in the new pleading of the evidence to which objection was being taken. That action in itself cannot make relevant evidence that would otherwise be irrelevant.
[22] From the plaintiff’s perspective, the proceeding is concerned with the plaintiff’s right to redeem an encumbrance registered against the title to a farm property located at 223 Constable Road, Muriwai. The parties are agreed that the encumbrance is a mortgage for the purpose of the Property Law Act 2007 and the Land Transfer Act 1952. It secures payment of a rent charge of $49.95. The
plaintiff tendered this amount to the defendant on 27 January 2009 with a request that the mortgage be discharged. The defendant returned the tendered bank cheque, and refused to discharge the mortgage. Hence, this proceeding.
[23] From the defendant’s perspective, the issues of concern extend beyond the legal character of the mortgage as a security for the rent charge, and how the mortgage might be discharged. Clause 2 of the mortgage contains a covenant; its stated purpose is to prevent any further subdivision of the property for 999 years, unless both the defendant and the Department of Conservation consent to the subdivision. The parties agree that this is a covenant in gross.
[24] The defendant wants to ensure that the covenant and, therefore, the mortgage remains on the title to the property. The defendant argues that it is not required to discharge the mortgage on the tender of the sum it secures because the purpose of the mortgage was to ensure the covenant in clause 2 would run with the land, rather than to ensure the land would provide security for the payment of the rent charge
[25] The parties have already agreed that the legal issues for determination are:
i)Whether the plaintiff is entitled to redeem the mortgaged land on payment of the amount secured by the mortgage, agreed to be $49.95;
ii)If yes, whether the covenant in clause 2 of the encumbrance continues to be binding on the plaintiff following the discharge of the encumbrance; and
iii) If yes, on what basis.
[26] Subsequent to the parties agreeing that these are the issues in the proceeding, a second amended statement of claim, dated 7 April 2010, has been filed. This has refined the relief sought and put specifically in issue whether the covenant is a clog in the equity of redemption.
[27] The dispute over the relevance of the remaining evidence of Mr Barton (that is excluding paragraphs 9, 30 to 54, part of 22 and 23, and the paragraphs in principle excluded on the ground of “excess”) is very confined. The defendant contends the remaining evidence is relevant to assist the Court in interpreting the purpose of the mortgage. This argument depends upon whether a Court can have regard to extrinsic evidence when it comes to ascertain the purpose of a registered instrument. The traditional view has been that the interpretation of a public document should be confined to a consideration of no more than the document itself: see Opua Ferries Ltd v Fullers Bay of Islands Ltd [2003] 3 NZLR 740 (CA). But there are recent cases which suggest that it is permissible to use extrinsic evidence as an aid in interpreting public documents such as registerable mortgages: see Jackson Mews Management Ltd v Menere [2009] NZCA 563, Big River Paradise Ltd v Congreve [2008] 2 NZLR 402, [2008] NZCA 78, and Thompson v Battersby HC Auckland CIV 2007-404-676, 8 June 2007. None of those cases involved covenants in gross. But they did involve registered instruments under the Land Transfer Act, and the principles which led to the result in those cases may well lead to the same result in this case. The present proceeding is going to be a test case for determining whether the purpose of a registered instrument containing a covenant in gross can be ascertained by resort to extrinsic evidence. The above cases, each in its own different way, have some of the aspects of this proceeding. The trends they reveal open the way to argue that the type of analysis approved in Boat Park Ltd v Hutchinson [1999] 2 NZLR 74 (CA) for the interpretation of contracts may now be available for interpreting registered mortgages under the Land Transfer Act. In the face of this potential approach, it would be wrong, especially at the pre-trial stage, to exclude evidence that is relevant to a Boat Park type of analysis of the subject mortgage.
[28] In circumstances where the law is in a state of development, I consider that in principle it would wrong at the pre-trial stage to determine if evidence, which one party relies on as an aid to interpret the instrument in dispute, should be excluded on the ground of its irrelevance.
[29] There are, however, passages in Mr Barton’s evidence which are only remotely connected to the factual matrix surrounding how the mortgage came to be
on the title (see for example the remaining parts of paragraph 22), and it is difficult to see how such passages could act as an aid to interpreting the mortgage.
[30] There are other issues where the plaintiff asserts that the account Mr Barton gives is plainly wrong, as well as being irrelevant; for example, the description in paragraph 10 of the property having a value under the Auckland Regional Policy Statement of “Landscape Sensitivity Value - 7”. If the plaintiff is right, as a district planner employed by the defendant, Mr Barton should ensure his facts are correct. In any event it is hard to see how the facts in paragraph 10 could be relevant to interpreting the mortgage. It either achieves the purpose of ensuring the conservation covenant in clause 2 runs with the land for 999 years, or it is vulnerable to removal through payment of the rent charge it secures. The approach the Court takes to interpreting the effectiveness of the mortgage, regarding its long term retention on the property’s title, cannot turn on the conservation value of the subject land. For this reason, I doubt that the evidence in paragraph 10 is relevant on any view of the trial issues. However, I suspect that so much has already been removed from Mr Barton’s evidence that it is not in its final form. Indeed, the defendant may decide that in view of the admissions that have been made, the case can proceed on an agreed statement of facts without the need for Mr Barton to give evidence. I propose for now, therefore, to leave to the side the balance of the paragraphs to which the plaintiff objects. Leave is reserved to the parties to return to Court for a ruling on those paragraphs if the need arises.
[31] The plaintiff has been largely successful in its application. My preliminary view is that it is entitled to costs at category 2B, as well as reasonable disbursements. Should the parties want to be heard on the question of costs, they are to file memoranda on this issue within 10 working days of the delivery of this judgment.
[32] I also record here that at the end of the hearing on 19 April 2010, I made the following timetable directions by consent regarding the disposition of the plaintiff’s application to strike out the defendant’s second amended statement of defence:
a) The defendant has 10 working days from 19 April 2010 to amend its current statement of defence;
b)The plaintiff has seven working days from receipt of any amended statement of defence to file and serve a reply; and
c) If the defendant does not amend its current statement of defence, the plaintiff’s application to strike out that document is to be brought on for hearing at the earliest opportunity.
Duffy J
8