Remediation (NZ) Limited v Enviro (NZ) Limited
[2023] NZHC 1218
•23 May 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1140
[2023] NZHC 1218
BETWEEN REMEDIATION (NZ) LIMITED
Plaintiff
AND
ENVIRO (NZ) LIMITED
First Defendant
ENVIRO WASTE SERVICES LIMITED
Second Defendant
Hearing: 22 and 23 May 2023 Appearances:
J W Maassen and M A Black for the Plaintiff
G C Williams, T J Lindsay and MBE Morrison for the Defendants
Judgment:
23 May 2023
JUDGMENT OF GAULT J
(Application to recall witness and file supplementary brief)
This judgment was delivered by me on 23 May 2023 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr J W Maassen, Barrister, Wellington
Mr J D Cameron and Ms M A Black (plaintiff’s instructing solicitor), Willis Legal, Napier Mr G Williams, Barrister, Auckland
Mr T J Lindsay and Ms MBE Morrison (defendants’ instructing solicitor), Lindsay & Francis, Auckland
REMEDIATION (NZ) LTD v ENVIRO (NZ) LTD [2023] NZHC 1218 [23 May 2023]
[1] Yesterday, on day seven of an 11 day trial,1 I heard an application by the plaintiff (Revital) to recall a witness, Mr Buist, and file his supplementary brief to address a gap in Revital’s fact evidence underpinning its expert accounting evidence. In the alternative, Revital seeks to sever quantum to be determined subsequently (bifurcation) or an adjournment of trial.
[2] The defendants (Enviro) oppose. On Friday afternoon Enviro also filed an application for admissibility rulings and strike out. However, they did not pursue these applications yesterday on the basis that I granted leave to amend their opposition to incorporate the grounds raised in relation to admissibility. In the event, they reserved their admissibility objections for consideration if leave to file a supplementary brief is granted.
Background
[3] Revital alleges breach of contract, breach of fiduciary duty and misleading and deceptive conduct under the Fair Trading Act 1986 by Enviro in relation to the parties’ collaboration on a tender proposal to the Tauranga City Council and Western Bay of Plenty District Council (Council) for waste management services. The quantum of the breach of contract damages claim is based on expert evidence from Revital’s accounting expert, Mr Dobson.
Discovery and exchange of briefs
[1] Following the judgment of Associate Judge Taylor on 29 August 2022 determining the scope of discovery,2 on 29 November 2022 Enviro’s solicitors wrote to Revital’s solicitors stating that Revital had discovered no documents within two categories of tailored discovery relating to quantum and seeking such documents, failing which Enviro would seek an order for further and better discovery.3 Revital’s solicitors did not respond.
1 The proceeding had been allocated a three week trial commencing on 8 May 2023. However, at a pre-trial conference on 4 May 2023, I advised counsel of the Court’s timing constraints and counsel agreed that the 11 days available for trial would be sufficient.
2 Remediation (NZ) Ltd v Enviro NZ) Ltd [2022] NZHC 2155.
3 There is no suggestion these categories also required discovery by Enviro, but all parties remain subject to the residual discovery obligation in r 8.18(2).
[2] On 19 December 2022, Enviro’s solicitors wrote again to Revital’s solicitors noting that no response had been received to the earlier letter, stating that they assumed that Revital does not hold any documents relevant to its profits or quantification of its damages claim and reserving Enviro’s rights. There was no response.
[3] On 22 or 23 December 2022, Revital served its briefs of evidence, including a brief from Mr Dobson.4
[4] On 24 January 2023, Enviro’s solicitors again wrote to Revital’s solicitors repeating their discovery request dated 29 November 2022 and seeking a response by Friday, 27 January 2023. There was no response.
[5] On 13 February 2023, Enviro’s solicitors wrote to Revital’s solicitors identifying objections to parts of the proposed evidence in chief of Revital’s witnesses. Relevantly, the letter stated:
Mr Dobson’s proposed evidence in chief is inadmissible as a whole because, despite repeated requests, his report contains mere calculations without foundation (the primary evidence itself) and is unqualified expert opinion (Mr Dobson is not a waste management industry expert). As such his proposed evidence is inadmissible opinion and also lacks relevance and is inadmissible for the purposes of s7, EA. The practical effect is that his evidence as a whole is inadmissible.
[6] The same day, Revital’s solicitor gave Enviro’s solicitors a copy of the financial model relied on by Mr Dobson albeit the model provided was hard-coded (that is, without the formulae behind the figures enabled).
[7] On 8 March 2023, Enviro’s solicitors served a brief of evidence from Mr (Jay) Shaw, Enviro’s accounting expert. Mr Shaw responded to Mr Dobson’s brief. Mr Shaw’s brief is largely, but not only, a critique of Mr Dobson’s calculation. Mr Shaw has in some respects undertaken alternative calculations.
[8] On 8 May 2023, counsel for Enviro filed a memorandum in relation to admissibility of Revital’s evidence in which they referred to their admissibility objections but stated that, subject to the Court’s views, Enviro did not seek a ruling on
4 Subsequently, an amended brief of Mr Dobson was served reducing the quantum calculation.
admissibility issues prior to Revital’s witnesses giving evidence. Enviro were content for the Court to receive the evidence from Revital on a provisional basis and for admissibility objections to be addressed in closing and determined by the Court as part of its final judgment. The evidence at trial proceeded in that way.
[9] By consent, I directed that the parties’ expert evidence would be clustered after the evidence of the fact witnesses. Subject to the current application, the fact evidence is now complete, with the health and safety experts giving evidence concurrently today, and the quantum experts to follow.
Revital’s identification of the gap
[10] The parties accounting experts conferred on Monday, 15 May 2023, day four of the trial.5 That afternoon, the experts contacted counsel indicating that a significant issue had arisen, namely that Mr Dobson had identified that the assumptions on which his evidence was based were not all supported by underlying evidence. Mr Maassen, for Revital, signalled that Revital would need to make an application to file a supplementary brief from Mr Buist, one of Revital’s witnesses who had already given evidence. Mr Maassen acknowledged it was a critical issue.
[11] On Tuesday, 16 May 2023, Mr Maassen updated the Court. He indicated that he would file and serve a formal application to file a supplementary brief and recall Mr Buist by midday on Wednesday, 17 May 2023. He also indicated that if that application were not granted, Revital would consider filing an application to adjourn the trial, or alternatively, an application to sever the questions of liability and quantum. Mr Williams, for Enviro, indicated that Enviro could file and serve any notice of opposition and affidavits by 4:00 pm on Friday, 19 May 2023.
[12] Mr Buist’s proposed supplementary brief states that he was responsible for developing the financial model for the Council tender process. He produces as an appendix a snapshot extract of the key assumptions within the model and addresses factual matters relevant to the assumptions. Some factual matters are already in
5 In the absence of earlier pre-trial directions in relation to expert conferencing, on 5 May 2023 I made directions by consent that the experts confer and prepare a joint witness statement stating the matters on which they agree and disagree, including the reasons for their disagreement.
evidence, but others are only dealt with in his proposed supplementary brief and the annexed documents. Some of these raise questions about the need for further discovery.6
Applicable principles
[13]It is common ground that the applicable test is the interests of justice.
[14] In relation to recall, s 99(1) of the Evidence Act 2006 provides that in any proceeding the Judge may recall a witness who has given evidence if the Judge considers that it is in the interests of justice to do so.
[15]Rule 9.8 of the High Court Rules states:
Supplementary briefs
(1)A party wishing to offer a supplementary brief must serve it as soon as possible.
(2)The acceptance and use of the supplementary brief in court will be at the discretion of the trial Judge.
[16] Recent cases in this Court have summarised the principles guiding the exercise of this wide discretion:7
(a)Leave will necessarily depend on the particular facts and circumstances of the case.8
(b)A balancing of where the overall justice of the case lies is required, weighing the prejudice to the party that served the supplementary brief if leave is reserved against that to other parties if leave is granted;
(c)The fact that the supplementary brief improves the evidential case of the party seeking to offer it is not, without more, a basis for refusing leave;
(d)The prejudice may be especially significant where the supplementary brief is provided at a late stage in the proceeding;
(e)Granting an adjournment to allow more time to respond and/or ordering costs that reflect the extra work required in responding to the
6 Such as any earlier iteration of the financial model used for the tender process.
7 Body Corporate 406198 & HHTS Ltd v Argon Construction Ltd [2023] NZHC 1072 at [13], quoting Body Corporate 384825 v Queenstown Lakes District Council [2021] NZHC 1207 at [32].
8 Signal v Berry [2016] NZHC 1126 at [24].
supplementary evidence may minimise prejudice resulting from a grant of leave;
(f)The effect on public resources if a trial needs to be vacated due to the supplementary evidence being provided at the last minute.9
(g)To the extent that further evidence is a response to evidence adduced by the defendants, the plaintiff is entitled to provide that further evidence orally.10
(h)Leave to adduce further evidence that improves a party’s position may
be allowed if the trial date is a sufficient time away.11
[17] In relation to adjournment of trial, the Court may, before or at the trial, if it is in the interests of justice, postpone or adjourn the trial for any time, to any place, and upon any terms it thinks just.12 The interests of justice include the interests of the parties, other litigants waiting in the queue for hearing and the public interest in the efficient use of court resources.13
Discussion
[18] Mr Maassen acknowledged that there is a gap in Revital’s fact evidence underpinning its expert accounting evidence. He also acknowledged that this gap had been overlooked by Revital’s legal advisers due to confusion as to the source of the financial model referred to by their expert – Revital’s solicitor understood that Mr Dobson had created the model based on his assessment of source documents.14 Although Revital’s supplementary opening on 9 May 2023 referred to its expert relying on its witnesses, I accept the issue was not the focus of attention by Revital’s legal advisers before Mr Buist gave evidence on 10 May 2023. As Mr Maassen acknowledged, there was a failure both as to the need for the source documents to be in evidence and for the expert’s evidence to state (with sufficient particularity) the facts and assumptions on which the expert’s opinions are based.15
9 Body Corporate 354085 “Perspective Apartments” v Auckland Council (No 1) [2016] NZHC 200 at [9].
10 Currie v Goodwin HC Auckland CIV-2002-404-001820, 27 August 2004.
11 Madretsma Farm Ltd v Frizzell HC Napier CP 9/94, 28 March 2001 at [5].
12 High Court Rules 2016, r 10.2.
13 Botany Downs Secondary School v H Construction North Island Ltd [2017] NZHC 3228 at [19];
PBL Solutions Ltd v AFT Pharmaceuticals Ltd [2022] NZHC 1576 at [39].
14 This was at least in part due to a difficult handover from the plaintiff’s former counsel. The defendants’ solicitors also thought the model was Mr Dobson’s.
15 High Court Rules 2016, Schedule 4, para 3(d).
[19] Mr Maassen submitted that the model and Revital’s operation were not particularly complex, that Enviro would have some familiarity with it given the collaboration for the tender and Enviro’s own business at Hampton Downs, and that Mr Shaw would be in a position to deal with matters. However, Mr Maassen nevertheless accepted that the prejudice to Enviro would be insurmountable if the supplementary evidence were received and Enviro had to respond to it and cross-examine Mr Buist this week. Accordingly, Mr Maassen accepted that if leave is granted, an adjournment of the trial will be required.
[20] It is also common ground that, if leave is granted, an adjournment is preferable to bifurcation in which the Court would determine liability and then both parties could address quantum afresh with potentially a new methodology. An adjournment would avoid revisiting quantum evidence already given and constrain the further hearing to the issues now identified.
[21] The parties agree that the scope of the supplementary evidence is set out in paragraph 8.27 of Mr Shaw’s brief of evidence dated 8 March 2023. On that basis, Mr Maassen seeks to adduce only Mr Buist’s proposed supplementary brief subject to these qualifications:
(a)Mr Buist may need to refer to documents provided in response to the further discovery requests;
(b)Revital may address CAPEX more fully (possibly through another witness);16 and
(c)Mr Dobson’s brief requires revision to identify the factual matters relied on and any within the scope of his expertise.
[22] Thus, the issue for determination is whether Revital should be granted leave in relation to this supplementary evidence and the trial adjourned (following today’s concurrent evidence of the health and safety experts).
16 The defendants maintain a hearsay objection to some parts of Mr Buist’s proposed supplementary brief.
[23] Mr Lindsay, for Enviro, submitted that Revital should be held to its current evidence given the interests in finality for Enviro and Court resources. He submitted it is for Revital to prove its case and it has been on notice for some time as a result of the correspondence seeking discovery of documents relevant to quantum, the objection as to the admissibility of Mr Dobson’s brief and the proposed evidence in Mr Shaw’s brief.
[24] Finality in the current hearing and holding Revital to its current evidence is a consideration weighing in favour of Enviro and Court resources. However, in circumstances where the evidential gap had been overlooked by Revital’s legal advisers, I consider this factor is outweighed by the prejudice to Revital if leave were not granted. Revital is not seeking to amend its case in relation to quantum. Rather, its legal advisers have belatedly realised there is an unintended gap in the expert’s evidential foundation. They seek to underpin the existing expert evidence and model. Precluding Revital’s damages claim in its entirety as a result would be something of a windfall gain to Enviro. The prospect of discontinuance and further litigation is also undesirable. If the experts had conferred sufficiently before trial, the gap would have been identified then. The balance is particularly in favour of leave where the greater prejudice to Enviro in relation to its ability to respond to the supplementary evidence is accommodated by an adjournment,17 which Revital accepts will be a necessary consequence of leave.
[25] Mr Shaw estimates he would need one to two weeks to complete his assessment. Allowing also for proposed CAPEX evidence from Mr George, Enviro requires an adjournment of six weeks. The timing of a further hearing date remains uncertain. It may be that the roster can be adjusted to accommodate a hearing in the coming months but a hearing within this timeframe cannot be guaranteed at this stage. Mr Maassen had estimated a further three day hearing whereas Mr Lindsay estimated as many as six days may be required. In the circumstances, I consider that a week should be more than enough. Counsel have proceeded efficiently during the trial to date.
17 Rather than bifurcation with wider scope for Revital to revisit its case, as indicated.
Result
[26] I grant Revital’s application to recall Mr Buist and file his supplementary brief. However, as with Enviro’s earlier evidential objections, I will receive the evidence de bene esse.
[27] As a result of granting Revital’s application, it is necessary to adjourn the trial following the evidence of the health and safety experts.
[28] I direct the registry to allocate a further one week hearing before me on the first available date after 30 June 2023. Subject to an update in relation to another matter on Friday, counsel should now be aware the registry is looking to allocate a five day hearing commencing on 3 July 2023.
[29] The parties are to confer and file a joint memorandum by tomorrow addressing further proposed timetable directions. This timetable should include directions for any further discovery, any further supplementary briefs and for the accounting experts to continue their conferencing sooner rather than later in an effort to narrow the scope of further supplementary briefs. The experts should confer again once the supplementary briefs have been exchanged in advance of the further hearing.
[30] Even where such an application is granted, costs may be awarded in respect of extra work required to respond to the supplementary brief or caused by the adjournment. If costs cannot be agreed, I will receive memoranda (not exceeding four pages) within 20 working days and determine costs on the papers.
Gault J
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