Prendevile v Earthquake Commission
[2016] NZHC 3207
•16 December 2016
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2016-409-000424
[2016] NZHC 3207
BETWEEN SHIRLEY PRENDEVILLE
Plaintiff
AND
EARTHQUAKE COMMISSION
First Defendant (Discontinued)
AND
TOWER INSURANCE LTD
Second Defendant
Appearances: A J D Ferguson for Plaintiff (with Z Rakovic in attendance) S McMullan for Second Defendant Judgment:
16 December 2016
(Determined on the papers)
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
[1] The Court has convened two in-person conferences this week to deal urgently with matters arising from certain actions taken by the plaintiff’s expert on structural engineering issues (Z Rakovic).
[2] As Mr Rakovic’s conduct has caused grave concern to the Court, I record the background in some detail before setting out the degree of resolution which has occurred.
Background
[3] The plaintiff commenced her claim against two defendants in relation to earthquake damage in July 2014. The claim against EQC has been discontinued. I will refer to Tower Insurance Ltd as “the defendant”.
PRENDEVILLE v EARTHQUAKE COMMISSION [2016] NZHC 3207 [16 December 2016]
[4] By Minute dated 14 August 2014, the Court made standard directions as to the provision of the plaintiff’s expert engineer’s report (by 26 September 2014) and the defendant’s own expert engineers’ reports (by 21 November 2014). The Court made its usual, specific directions as to what the experts were to do in the event of any disagreement, namely to meet on site and to thereafter report on areas of agreement and disagreement.
[5] The plaintiff obtained a report from a structural engineer, Pavol Csiba, on 7 October 2014.
[6] The defendants jointly filed a report from their structural engineer on 18 December 2014. They then additionally filed a geotechnical engineering report on 10 March 2015. The defendants’ reports were respectively by Martin Webb and Chris Armstrong.
[7] From mid-2015, the plaintiff looked to replace Mr Csiba with another engineer, a process which eventually took though to late-2016.
[8] By November 2016, the plaintiff had elected to discontinue against EQC. By that time Tower had had enough of the plaintiff’s delay and sought unless orders. On 25 November 2016, Gendall J decided “by a fine margin” to refuse unless orders but did make orders requiring the completion of the plaintiff’s evidence, in the form of briefs, before Christmas. At a conference convened on 14 December 2016, Mr Ferguson confirmed that the plaintiff’s briefs will be fully filed by the timetable dates. (He has today sought an extension to 22 December 2016, which I have granted by consent).
Mr Rakovic’s intervention
[9]In the meantime, Mr Rakovic has burst onto the scene.
[10] I do not know on what date he was instructed. It appears to have been late- November/early December 2016.
[11] On 6 December 2016, Mr Rakovic wrote a two-page letter to the plaintiff, Mrs Prendeville. He recorded that she had engaged his company to carry out a review and comment on Mr Webb’s 18 December 2014 report. His letter contained the assertion that he had demonstrated that Mr Webb had not achieved the basic competency standards. He stated that “the report (including its findings and recommendations) is returned to Mr Webb for re-work”.
[12] On 8 December 2016, Mr Rakovic wrote to Mrs Prendeville a materially identical letter in relation to Mr Armstrong’s geotechnical report dated 10 March 2015.
[13] Having written those two “reports” to Mrs Prendeville, Mr Rakovic then emailed the reports to Mr Webb and to Mr Armstrong respectively stating:
I attach my review of your report for the above property demonstrating that it has been produced in an incompetent manner. I am therefore concerned about your professional conduct, which could potentially cost the property owners (sic) hundreds of thousands of dollars. This is significant.
I therefore request that you withdraw your report by CoB Friday 9 December 2016 [or in the case of Mr Armstrong CoB, 13 December 2016].
I would be more than happy to assist you with bringing your report to the minimum competency standards prescribed by IPENZ.
[14] On the day after Mr Rakovic so wrote to Mr Webb, Mr Rakovic sent a complaint as to Mr Webb’s report to IPENZ.
[15] In the meantime, the defendant’s solicitor (Mr Harris) had brought to the attention of Mrs Prendeville’s solicitor (Mr Ferguson) the emails sent by Mr Rakovic to the defendant’s engineers. Mr Harris had asked that Mr Rakovic’s threats be withdrawn. They were not.
[16] Furthermore, shortly after Mr Rakovic sent his 8 December 2016 email to Mr Armstrong, Mr Rakovic sent a complaint to the Law Society in relation to Mr Harris’s correspondence with Mr Ferguson.
[17] Mr Harris by memorandum dated 9 December 2016 appropriately brought these matters to the attention of the Court. I convened for 14 December 2016 a telephone conference of the parties, their solicitors and of Mr Rakovic and Mr Webb.
Conference on 14 December 2016 and subsequent events
[18] At the conference on 14 December 2016, I made clear the Court’s displeasure at the events as summarised above. I summarised the nature of the Court’s concerns. I emphasised that the Court recognises the right of individuals to make complaints to relevant professional bodies. I pointed out, on the other hand, the need of the Court to take into account the existence and potential time of the investigation of professional complaints in relation to their potential impact on the progress of the proceeding, particularly where the Court had earlier made directions governing the expert reporting and conferral process. I observed that the Court must also ensure that an individual’s rights to make professional complaints were not being deliberately utilised to affect the proper progress of a party’s case in this Court.
[19] I adjourned the conference to an in-person conference at 9.30 am today. The defendant needed to be able to review the position reached in relation to the continued involvement of its solicitors and engineers.
[20] In my Minute that day I concluded that there remained issues concerning Mr Rakovic’s conduct which had not been explained to my satisfaction. I therefore required Mr Rakovic to appear today. I noted his entitlement to have a solicitor or barrister appear with him.
[21] On 14 December 2016, Mr Rakovic personally filed a memorandum. It is attached as Schedule A to this judgment. In it he noted that he would forthwith be withdrawing his complaints (which I took to be his complaints to IPENZ and to the New Zealand Law Society respectively against Mr Webb and Mr Harris). He has confirmed this morning that he has withdrawn the complaints.
The Court’s concerns as to Mr Rakovic’s conduct
The role of the expert
[22] The Court’s first concern in relation to Mr Rakovic’s conduct concerning this proceeding was that it appeared that he had at best misunderstood or, at worst, deliberately disregarded the duties of an expert assisting the Court.
[23] As an expert who has regularly appeared in other litigation, Mr Rakovic would have been expected to fully understand the obligations identified in the Code of conduct for expert witnesses.1 The two most fundamental duties are involved in the duty to the Court spelt out as follows:
(a)An expert witness has an overriding duty to assist the Court impartially on relevant matters within the expert’s area of expertise;
(b)An expert witness is not an advocate for the party who engages the witness.
[24]Also important in the present context is the duty to confer:
6 An expert witness must comply with any direction of the court to –
(a)confer with another expert witness:
(b)try to reach agreement with the other expert witness on other matters within the field of expertise of the expert witnesses:
(c)prepare and sign a joint witness statement stating the matters on which the expert witnesses agree and the matters on which they do not agree, including the reasons for their disagreement.
Status of defendant’s reports
[25] The defendant’s reports (Mr Webb’s and Mr Armstrong’s) have been held on the Court file since December 2014 and March 2015 respectively. They were filed pursuant to Court orders.
[26] Until Mr Rakovic’s various December 2016 communications, the reports had not been the subject of any challenge.
[27] If there were to be a challenge to the reports which affected whether they should remain on the Court file, such challenge had to come from the plaintiff’s solicitor. That is a role of the solicitor and advocate.
1 Schedule 4, High Court Rules.
[28] It involves a fundamental breach of the expert’s role to become involved in a demand that a report filed pursuant to a Court order be withdrawn.
[29] It is of concern that Mr Rakovic, when offered the opportunity over the last 48 hours to review his conduct, focused his memorandum solely upon the lodging (and subsequent withdrawal) of his professional complaints and did not refer at all to other, unacceptable aspects of his conduct.
Obligations in relation to process
[30] The procedure directed at the commencement of this proceeding followed the Court’s usual expectation that experts would file their reports and confer pursuant to the Protocols for expert conferral under the High Court Earthquake List, before jointly reporting to the Court in the approved form.
[31] It was not for one expert unilaterally to decide not to confer with another expert as to the content of his or her report. The process of conferral and of subsequent joint reporting (identifying areas of agreement and disagreement and the reasons therefor) is designed to identify the strengths or weaknesses of each expert’s report and conclusions. It is not for one expert to write off the report of the other at the outset as “incompetent” and to refuse to confer in relation to it.
[32] The approach adopted by Mr Rakovic was misconceived and appeared arrogant. It was alarming that a professional who has appeared as an expert in this Court previously might have considered it appropriate to take such a step on any occasion, let alone in relation to two separate experts in this proceeding.
[33] The extent of Mr Rakovic’s error is worse still in that Mr Harris has upon my direction produced three other instances (involving other litigation) in which Mr Rakovic by letters dated 5 December 2016, 8 December 2016 and 13 December 2016 embarked upon identical competency attacks against fellow-engineers. I have today asked Mr Rakovic whether, apart from this case, he has filed professional complaints against other professionals. He informed me that he had filed “about a dozen” such complaints over the two week period in early-December.
Concern over the client’s litigation
[34] In his emails to both Mr Webb and Mr Armstrong, and in his identically worded emails to the three other engineers whose emails I have, Mr Rakovic expressed the “concern” that those engineers’ “incompetent reports” “could potentially cost the property owners hundreds of thousands of dollars”. It is difficult to understand how Mr Rakovic, retained to provide his expert opinion on matters relating to his expertise in structural engineering, considered it appropriate to comment on the likely level of financial recovery by the plaintiff. The Court would have expected him to realise that the responsibility for looking after the client’s interest in such regards lay with counsel/advocate and not with an engineer retained to give expert evidence. Mr Rakovic clearly in that regard departed from his role as expert.
Area of expertise
[35] Mr Rakovic describes himself as “Principal Structural-Engineering”. He confirmed today that that is his area of expertise.
[36] He nevertheless purported to provide a critique of the work of (not only Mr Webb, but) Mr Armstrong. Mr Armstrong is a Senior Geotechnical engineer and provided a report entitled “Geotechnical Investigation Report for the Prendeville residence …”. It was not for Mr Rakovic on the expertise he has professed to have to provide a report on geotechnical engineering matters let alone to purport to critique the report of a geotechnical engineer. He has explained today that he intended to critique only “the structural engineering aspects” of Mr Armstrong’s report. If so, his own document fell short of making such intention clear.
Overall approach
[37] Mr Rakovic appears through his memorandum of yesterday to now understand that the overall approach he adopted was inappropriate. He said for instance that:
“I can understand that the way I have written could be taken as other than appropriate communications between Court experts.”
[38] The difficulty with Mr Rakovic’s statement that such was not his intention (apologising “for any adverse inference that may have been drawn from this”) is that the legitimate concerns which arise in relation to his conduct are focused not so much upon the fact that he made a complaints to IPENZ or the New Zealand Law Society but the way in which he set out to use his right to complain to advance matters which were not for an expert to involve himself in.
Mr Rakovic’s statements today
[39] As directed, Mr Rakovic appeared at today’s conference. He elected not to have a solicitor attend with him.
[40] He informed me that he has now taken legal advice from a named practitioner. He was given advice particularly in relation to the handling of the professional complaints.
[41] He informed me that he recognises that he needs in the future to first take such legal advice if matters threaten to take him away from the straight reporting and conferral practice of this Court.
[42] He expressed his apologies to the Court and to all parties for what he recognised were failings in the approach he had taken. In the course of the conference, I had taken him through the various concerns which I have identified earlier in this judgment and I understood Mr Rakovic to accept each of those concerns.
[43] Following Mr Rakovic’s apology, I explained to him that the consequential, important concern for the Court, arising from his conduct, was that the conduct demonstrated a departure from the requirements of objectivity which is involved in the duty which every expert owes to the Court. As Mr Rakovic is one of the plaintiff’s witnesses who is about to provide a complete brief of evidence I emphasised to him that it is essential that in completing his report he now reverts fully to the duty of objectivity, (and non-advocacy) which his role entails.
[44] It will be for the defendant and its solicitors to determine in due course whether they wish to take any objection to Mr Rakovic’s further involvement in this proceeding
having regard to the incidents of this month. There is an interest for both parties in not having this litigation further held up but counsel for the defendant is entitled to have the opportunity to consider the question of Mr Rakovic’s independence in the light of the evidence he will now serve.
Consequence
[45] Mr Rakovic’s conduct in his “reports” and his correspondence has caused wasted costs in this litigation. His conduct threatened to create a situation in which the defendant was reasonably entitled to a stay of the proceeding while the complaints made by Mr Rakovic in relation to long-filed reports were worked through. By Mr Rakovic’s late withdrawal of those complaints, the plaintiff’s claim can now proceed, without stay, towards resolution.
[46] In the meantime, defendant has been put to wasted costs in the form of Mr Harris’s two memoranda and of the two conferences which the Court has necessarily convened.
Costs submissions
[47]Against this background I heard from counsel and from Mr Rakovic as to costs.
[48] I first indicated that the order I was likely to make would involve an order that the costs and disbursements associated with Mr Harris’s two memoranda and two conferences be fixed and paid to the defendant in any event. I indicated that (leaving aside which particular individual should bear the costs) this appeared to be a case in which a number of the limbs of r 14.6(4) (allowing the award of indemnity costs) might be considered to have been satisfied.
[49] In the event, Mr McMullan, appearing for the defendant, indicated that the defendant would not seek indemnity costs. Mr McMullan submitted that the circumstances appropriately should attract an award of increased costs. Such an approach, which in the circumstances might be considered modest, is clearly justified under r 14.6(3)(b) in that the costs have been caused through the departure of the
plaintiff’s expert from the proper process of expert reporting and conferral. Only now is the proceeding back on the rails.
[50] Mr Rakovic stated that he did not want any awards of costs and disbursements to be made against the plaintiff. He said that he accepted full responsibility for his actions and that they were not (apart from the original instruction for a report) instigated by the plaintiff.
[51] Mr Rakovic asked, given that he would be paying the costs and disbursements, that the Court extend some leniency by not awarding increased costs. He emphasised that he was genuinely sorry and that the events had come about by a “slip of judgement” on his part.
Discussion as to amount of costs and disbursements
[52] It would be wrong and unjust in the circumstances of this case that the defendant have to carry any significant sum on account of the costs and disbursements incurred in relation to these recent events. Given Mr McMullan’s concession (in not pursuing indemnity costs) the most appropriate award of costs and disbursements will be an award on a 2B2 basis with an uplift of 50 per cent. I also certify for Mr McMullan’s travelling costs.
Who is to pay the costs and disbursements?
[53] Given Mr Rakovic’s clear acceptance of responsibility, it would be inappropriate to make the award of costs against the plaintiff.
[54] The award justly should be against Mr Rakovic personally. I have explained to Mr Rakovic that for an enforceable order to be made, it is appropriate that he be joined as a party for the limited purpose of an award of costs and disbursements. In this regard, I adopt the approach taken by Peter Smith J in Phillips v Symes (No 2),3 both as to jurisdiction and procedure.
2 High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).
3 Phillips v Symes (No 2) [2005] 1 WLR 2043.
[55]Mr Rakovic indicated he accepted this approach.
Orders
[56]I order:
(a)Zoran Rakovic (Mr Rakovic) is joined to this proceeding as a third defendant for the limited purpose of the making of costs and disbursements orders referred to in this judgment;
(b)Mr Rakovic is to pay to the second defendant (Tower) the costs of two memoranda and two conferences which I fix at $5,352.00 together with Tower’s reasonable disbursements in that regard (with a certificate for the reasonable travelling costs of one solicitor).
Associate Judge Osborne
SCHEDULE 1
I am also familiar with and respect the Code of Conduct of Experts set out in the High Court Rules. Nothing in the letter I wrote to Mr Webb was intended to depart from those very important obligations. I have handled 100's of these cases, and I have never taken such a step before. However, in this case I believed that the position taken by Mr Webb was so far removed from engineering good practice that it raised professional issues. I did not reach this conclusion arbitrarily, vindictively or lightly. I did so based on serious consideration and in view of my professional obligations.
0. In the same way as a lawyer may raise issues about a colleague with the Law Society, I believed that as set out above, I should raise these issues with Mr Webb before making a formal complaint to IPENZ.
9. I can unreservedly assure the Court that there was never any intention by myself to try to obtain advantage for the party instructing me, to depart from my duties as an expert to the Court.
10. Having re-read the letter to Martin Webb in light of the comments by Associate Judge Osborne, I can understand that the way I have written could be taken as otI1er than appropriate communications between Court experts. I again assure The Court that this was not my i0tention, and apologise for any adverse inference that may have been drawn from this.
11. I again assure the Court that I have always and do continue to respect and observe the obligations of expert witnesses. But I accept that my letter to Mr Webb could be construed as otherwise and for that I apologise.
12. I will forthwith withdraw my complainIs against Mr Webb and Mr Harris.
Zoran Rakovic
SCHEDULE 2
Item 11 Memorandum 0.4 Item 13 Appearance at conference 0.3 Item 11 Memorandum 0.4 Item 14 Appearance at issues conference 0.5 Subtotal
1.6
Plus 50% uplift
0.8
TOTAL 2.4 At $2,230
$5,352.00
0
0
0