Sleight v Beckia Holdings Limited (Previously Fr 2012 Limtied & Farrell Residential Limited)
[2020] NZHC 1120
•26 May 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000818
[2020] NZHC 1120
BETWEEN JOAN MARGARET FRASER SLEIGHT AND ALAN LEITHFIELD SLEIGHT
PlaintiffsAND
BECKIA HOLDINDGS LIMITED (PREVIOUSLY FR 2012 LIMITED & FARRELL RESIDENTIAL LIMITED)
First Defendant
ORANGE H MANAGEMENT LIMITED (FORMALLY HAWKINS MANAGEMENT
LIMITED) (In Receivership and In Liquidation)
Second Defendant
IAG NEW ZEALAND LIMITED
Third DefendantQBE INSURANCE (AUSTRALIA) LIMITED
Fourth Defendant
Hearing: 21 May 2020 Appearances:
N S Gedye QC and O V Collette Moxon for Third Defendant D H McLellan QC and S D Galloway for Fourth Defendant
Judgment:
26 May 2020
JUDGMENT OF GENDALL J
SLEIGHT v BECKIA HOLDINDGS LIMITED [2020] NZHC 1120 [26 May 2020]
This judgment was delivered by me on 26 May at 2:15 p.m. pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Introduction
[1] This proceeding involves claims arising from the Christchurch Earthquake Sequence and allegedly defective building repairs of the plaintiffs’ house. It is set down for a hearing of almost three weeks commencing on 2 June 2020 next.
[2] The present applications relate to objections to certain proposed evidence for this hearing of:
(a)Richard Neave, a witness to be called by the fourth defendant, QBE Insurance (Australia) Limited (QBE);
(b)Sean Farrell, a witness to be called by the third defendant, IAG New Zealand Limited (IAG);
(c)Kenneth McGunnigle and Julian Mace, witnesses to be called by IAG.
[3] The objections are advanced on admissibility and related grounds. So far as the evidence of Richard Neave is concerned, the objection is one brought by IAG, and, so far as the evidence of Sean Farrell, Kenneth McGunnigle and Julian Mace is concerned, the objections are brought by QBE.
[4] In each case, I have considered detailed written and oral submissions both in support of and in opposition to the admissibility objections from counsel for the respective parties. I now give my decision on each of the present applications. In doing so, I need to say at the outset that I accept the position urged on me by counsel, first, as to the importance and precedential impact of the substantive decision required
in this case (given the number of similar cases I am told are awaiting a test case decision here), and secondly, the related need to take a reasonably conservative approach here to the acceptance of the evidence that can be considered at trial, given that any admissibility orders required at the time can be made then.
[5] I now turn to consider each of the evidence admissibility objections noted above.
Evidence of Richard Neave
[6] Richard Neave is a lawyer and partner in the firm Duncan Cotterill in Christchurch. His brief of evidence is advanced here as evidence on behalf of QBE.
[7] Duncan Cotterill was engaged in 2011 and 2012 by the Hawkins Construction group of companies, part of which became the second defendant, Orange H Management Limited (in receivership and in liquidation) (called in this judgment Hawkins). Duncan Cotterill, and Mr Neave in particular, was engaged following the September 2010 Christchurch earthquakes to advise those companies in the renegotiation of certain Rebuild Solution Master Agreements with IAG.
[8] Duncan Cotterill had been engaged by Hawkins for the drafting of various implementation documentation pursuant to an original Rebuild Solution Master Agreement (the 2010 RSMA). Essentially this related to construction contracts, project management and the like for IAG relating to the repair of earthquake damaged homes and buildings owned by IAG’s policy holders. Following the February 2011 earthquake and its sequence in Christchurch, a renegotiation of the 2010 RSMA between Hawkins and IAG began as the situation had changed markedly. Mr Neave was involved on behalf of Hawkins in that renegotiation and the drafting of a new Rebuild Solution Master Agreement (the 2012 RSMA) between the parties. This work commenced in about June 2011.
[9] Considerable negotiation took place on this between the parties and between Duncan Cotterill on behalf of Hawkins and Russell McVeagh on behalf of IAG. Finally, on 13 August 2012, the last draft of the new replacement RSMA (the 2012 RSMA) was approved and signed by the parties.
[10] Hawkins has since been placed into liquidation. QBE is the insurer of Hawkins.
[11] In the present case, as I understand it, IAG has alleged a number of obligations were owed by Hawkins pursuant to the 2012 RSMA which QBE as insurer of Hawkins has denied. One of the most significant of these relates to obligations as to the quality and workmanship of building work undertaken.
[12] It is QBE’s position that this aspect of the present case is a contract interpretation one and resolution of this part of the dispute between the parties requires determination of the scope of Hawkins’ obligations under the 2012 RSMA. According to Mr McLellan, the parties interpret the terms of the 2012 RSMA differently and QBE takes the position that the “contractual matrix” facts adverted to in the brief of evidence of Mr Neave are relevant here. This is because Mr McLellan contends they suggest that IAG's current expansive view of Hawkins’ contractual obligations is inconsistent with both parties’ views at the time the 2012 RSMA was executed.
[13] At para 21.3 of IAG’s 30 July 2019 amended cross-claim against QBE here, IAG pleads that:
By Obligation C, Hawkins’ management was responsible for ensuring the work was carried out in line with the scope and to a reasonable, proper and lawful standard of workmanship (except for latent defects not reasonably discoverable by a professional project manager engaged on equivalent terms), and was not certified for payment unless it was.
[14] In response, QBE in its 28 August 2019 statement of defence to this cross- claim at para 21.3:
…denies paragraph 21.3 and says, further:
(a)between 2011 and 2012 Hawkins and IAG renegotiated the terms of the earlier RSMA governing their relationship (the 2010 RSMA).
(b)those negotiations included consideration of Hawkins’ obligations under the 2010 RSMA as to quality.
PARTICULARS
The negotiations consisted of numerous written communications, draft documents and discussions between, in particular, Hawkins,
IAG and their respective lawyers in particular in the period from around June 2011 to 12 August 2012.
(c)the final mutual intention of the parties to the negotiations was that Hawkins would not, under the renegotiated 2012 RSMA, be responsible for (among other things) the quality, workmanship or timeliness of work.
[15] In IAG’s 6 November 2019 reply to this statement of defence, it denies QBE’s positive allegations outlined above. I accept, therefore, that the negotiations, including the bilateral discussions which Mr Neave’s brief of evidence refers to, where relevant, are therefore expressly in issue in this case.
[16] The terms of the contract comprising the renegotiated 2012 RSMA and a proper interpretation of these terms objectively assessed are some of the matters in issue here. Principles applicable to contractual interpretation in this country, therefore, arise in this case and overall, as I understand it, there is no material dispute about these principles. It is accepted they differ from the current position prevailing in the United Kingdom, and the principles applying now in this country have been settled recently by our Supreme Court. Generally, contract interpretation issues are to be determined from construction of the contract in question and:1
…what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean…aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties mind.
[17] And as to this approach to be taken to contractual interpretation, the Supreme Court in Firm PI 1 v Zurich Australian Insurance Limited t/a Zurich New Zealand2 summarised the approach and, in the words of Arnold J (for the majority) said at [60]:
It is sufficient to say that the proper approach is an objective one, the aim being to ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.” This objective meaning is taken to be that which the parties intended. While there is no conceptual limit on what can be regarded as “background”, it has to be background that a reasonable person would regard as relevant. Accordingly, the context provided by the contract as a whole and any relevant background informs meaning.
1 Vector Gas Limited v Bay of Plenty Energy Limited [2010] NZSC 5 at [19] per Tipping J.
2 Firm PI 1 v Zurich Australian Insurance Limited t/a Zurich New Zealand [2014] NZSC 147.
[18] On all this, evidence of precontractual negotiations and exchanges of draft documents has been regarded as admissible to the extent that it shows objectively the meaning the parties intended their words to convey.
[19] And helpfully, Asher J in i-Health Ltd v iSoft NZ Limited,3 considered and summarised these principles as follows:
In summary:
(a)Exchanges in negotiations which construed objectively tend to establish background facts known to both parties are relevant;
(b)Exchanges between the parties in negotiations which, construed objectively, cast light on meaning are relevant;
(c)Material created by one party that relates to negotiations but is not communicated and relates to the subjective understandings and beliefs of that party is irrelevant.
[20] Mr Neave’s brief of evidence here refers to and records draft documents exchanged between the parties, correspondence and discussions between them. I am satisfied this material tends to establish relevant background facts known to both parties and which are capable of shedding objective light on the meaning of what are the disputed contract terms. In my view, it is the very evidence, like that in the Vector Gas4 case, that the Supreme Court thought was relevant to interpretation questions, and also because it was from actual parties who negotiated the contract.
[21] Although there is no dispute that evidence relating only to the subjective understanding and beliefs of a particular party is irrelevant and inadmissible, I accept here that Mr Neave’s brief is largely factual and neutral. The brief provides evidence of facts and issues that were before both parties at the time and which informed the mutual decision to frame the 2012 RSMA in the way that they did. This evidence provides context to what are undoubtedly a number of admissible variants of the 2012 RSMA and to contemporaneous documents in the common bundle relating to negotiations over that agreement before it was executed.
3 i-Health Ltd v iSoft NZ Ltd (HC) CIV-2006-404-7881, 8 September 2010 at [41].
4 Vector Gas Limited v Bay of Plenty Energy Limited, above n 1.
[22] IAG objects to certain paragraphs in Mr Neave’s brief which it is said are examples of his subjective views or intent. I disagree. In the paragraphs in question generally Mr Neave records discussions at a meeting between the parties in the context of negotiating the 2012 RSMA. At one point he does say that he explained his understanding of what Hawkins, as one party to the contract, meant or believed. But overall, as I see it, his brief largely comprises admissible precontractual background evidence relevant to the interpretation of contract terms which are in issue. As such, it assists in interpreting the objective meaning of the words settled upon by the parties in the 2012 RSMA, rather than the subjective intentions of those parties.5
[23] In my view, there is no concerted attempt by Mr Neave in his brief of evidence, either directly or indirectly, to tell the Court what he or his client Hawkins intended the words to mean or what they thought the words meant, rather than to simply outline Hawkins’ general position. Its purpose instead is to shed objective light on the meaning of provisions in the 2012 RSMA, including what he says was the mutual decision to omit all references to Hawkins having a responsibility for ensuring quality, workmanship or timeliness of the building work. It is directed to establishing the circumstances capable of demonstrating objectively what both parties intended their words to mean and, therefore, given this case involves contractual interpretation, it is helpful and admissible.
[24] Lastly, IAG endeavours to rely here on an “Entire Agreement Clause” in the 2012 RSMA. That Entire Agreement Clause states:
26.1 Entire Agreement:
Without prejudice to any rights or obligations that expressly survive termination of the original Rebuild Solution Master Agreement dated 20 October 2010 (as amended by variation dated 11 November 2010) this Agreement sets out the parties’ entire agreement on the subject matter of this Agreement.
[25] The purpose of any Entire Agreement Clause is to protect against liability for representations made before the contract in question is signed. It supplants earlier
5 On this, see Tipping J’s comments contrasting the two positions in Wholesale Distributors Ltd v Gibbons Holdings Ltd [2008] 1 NZLR 277 (SC) at [56].
agreements and precludes one party from asserting a collateral contract existed or that the other party promised them more than what is expressly written into the contract.
[26] In my view, the Entire Agreement Clause in this case does not assist the argument advanced by IAG. IAG's assertions confuse the scope of the contract concluded in the 2012 RSMA with the meaning of the words within that contract. In its pleadings, QBE does acknowledge that the Entire Agreement Clause is contained within the 2012 RSMA. It goes on to argue, however, that IAG is attempting to read obligations into the 2012 RSMA which are simply not there, are notable by their absence, and are inconsistent with the parties’ precontractual negotiations as Mr Neave’s evidence supports.
[27] I accept the Entire Agreement Clause here does not prevent the parties from relying on statements or documents “extrinsic” to the 2012 RSMA that can be used to cast light on the meaning of that contract.
[28] IAG also endeavours to rely here upon the decision in Newfoundworld Site 2 (Hotel) Ltd v Air New Zealand6 as an endorsement from the Court of Appeal of the proposition that a new or replacement contract is the only one the Court should consider in a case such as this. I disagree. The present case is a very different one from the situation which was present in the Newfoundworld case where the arguments one party endeavoured to advance were seen as entirely implausible. It was not unsurprising in that case that the Court of Appeal did not consider the negotiations were admissible to assist the resolution of the issue.
[29] In conclusion, I find here that the evidence of Mr Neave contained in his brief of evidence is admissible. It is useful and relevant in considering a proper and objective interpretation of the words the parties chose to include in their 2012 RSMA.
[30]I, therefore, dismiss this admissibility objection brought by IAG.
6 Newfoundworld Site 2 (Hotel) Ltd v Air New Zealand, [2018] NZCA 261.
Evidence of Sean Farrell
[31] Sean Farrell provides evidence put forward by IAG in a document headed “Reply Brief of Evidence” dated 27 November 2019.
[32] Mr Farrell is the managing director of Farrell Group Limited. It or one of the companies in the Farrell residential building group changed its name to Beckia Holdings Limited, the first defendant, following the sale of the group. As a builder Mr Farrell gives evidence that he had been involved in the construction industry for 25 years in various roles. At its peak following the Canterbury Earthquake Sequence, the Farrell residential group employed some 220 staff on 80 odd earthquake insurance repair jobs. One of those jobs was the repair of the plaintiffs’ house.
[33] It is interesting to note, too, that for some two or three years from about May 2009, Mr Farrell had been employed by Hawkins. This included employment as project manager in their commercial business activities at the University of Canterbury, completing repairs to University buildings that had suffered damage from the Canterbury Earthquake Sequence.
[34] I accept the contention advanced by Mr Collette-Moxon for IAG that Mr Farrell, therefore, is well-placed to give evidence from a builder’s perspective as to what Hawkins did that is relevant in this proceeding.
[35] QBE objects to the evidence of Mr Farrell in its entirety. Mr Galloway for QBE suggests that Mr Farrell is not an expert witness. He complains also that Mr Farrell could not be seen as independent here. Mr Galloway does acknowledge that Mr Farrell did not provide a brief of evidence when IAG’s evidence was originally served. And, Mr Galloway notes that, curiously, Mr Farrell’s brief of evidence at issue here is referred to as a “Reply” Brief of Evidence.
[36] On all of this, Mr Galloway complains also that Mr Farrell’s evidence is not truly reply evidence in that it is not related to matters that could not have been anticipated in IAG’s original briefs of evidence served on 11 and 12 September 2019.
[37] The decision in Houghton v Saunders7 is noted, as are the comments of Jagose J in SCC (NZ) Ltd v Samsung Electronic New Zealand Ltd8 as follows:
…If reply briefs are permissible at all (for the High Court Rules make no express provision for them) they are strictly to be in reply: responding only to relevant matters raised for the first time in the brief to which they are replying. The analogy is to be with the constraints applicable to affidavits in reply, for which the High Court Rules do make provision.
[38] A further complaint is that Mr Farrell’s brief of evidence does not properly identify those parts of QBE’s briefs that he disagrees with or which parts he may be addressing. Mr Galloway complains that Mr Farrell’s reply brief is simply an attempt by IAG to “backfill” its evidence here and QBE is prejudiced because it ought to have had all the evidence in support of IAG's cross-claim in front of it when preparing its evidence in defence of that cross-claim.
[39] Lastly, complaints are levied at what Mr Galloway suggests is opinion evidence given by Mr Farrell. Again, he says Mr Farrell is not an expert witness and, therefore, this evidence is objectionable.
[40] In response, Mr Collette-Moxon for IAG suggests that Mr Farrell’s brief was not “reply” evidence at all and it was inadvertently named as such in error. He says it was simply IAG’s primary response to QBE’s evidence here and was sequenced as such in what is a multi-defendant case. It was not a response to a response so, therefore, could not be seen as reply evidence, nor is it subject to the reply evidence rules.9
[41] The fact here that this proceeding involves cross-claims between the defendants, Mr Collette-Moxon says, has brought about a confusing situation where IAG’s second group of evidence briefs filed were incorrectly characterised as “reply” briefs. In substance, he suggests all of IAG’s evidence, including these second briefs,
7 Houghton v Saunders [2014] NZHC 423 at [3].
8 SCC (NZ) Ltd v Samsung Electronic New Zealand Ltd [2018] NZHC 2780 at [204].
9 Although r 9.76 of the High Court Rules deals solely with the form and contents of affidavits and not briefs of evidence, it does usefully by way of analogy state at r 9.76(1)(d)(ii):
“(1) An affidavit –
(d) must be confined –
(ii) if in reply, to matters strictly in reply.”
are simply central to the real controversies between IAG and QBE and their cross- claims, and as between the plaintiffs and both defendants.
[42] Further, Mr Collette-Moxon suggests there is no prejudice here on the part of QBE because it has had some months to respond to Mr Farrell’s evidence. Indeed, he notes it was even invited by IAG to do so in January of this year.
[43] On all of this, I agree with the arguments advanced by Mr Collette-Moxon for IAG. Mr Farrell’s brief of evidence has clearly been misnamed a “reply” brief. It is his first evidence provided in this matter and, broadly speaking, it is not in reply. As I see the position, it should properly be assessed as IAG’s defence and response evidence to QBE’s cross-claim evidence against it. It is, therefore, a brief of evidence in response to cross-claims issues. It is not a reply brief. And, I accept that QBE had a real opportunity to get its own evidence together in reply to that of Mr Farrell, but it chose not to.
[44] I bear in mind a guiding principle in litigation that the Court and parties are to ensure that the real controversy in a case goes to trial and is able to be fully considered. With this in mind, as I see it, IAG must get a chance to properly respond here to QBE’s briefs of evidence and that is what Mr Farrell’s brief does. I agree too that Mr Farrell, as a witness of fact, and someone closely involved in both the house construction industry generally, and indeed the earthquake repairs undertaken here, appropriately provides useful background evidence in this proceeding, evidence which can be fully tested in cross-examination. If it is shown at trial that Mr Farrell does truly lack independence here, that is a matter that can simply be taken into account in considering credibility questions.
[45] I conclude that QBE’s objection to Mr Farrell’s brief of evidence is misplaced and I reject it. Mr Farrell’s evidence is properly admissible here.
Evidence of Kenneth McGunnigle
[46] Mr McGunnigle provides two briefs of evidence here, on behalf of IAG, as an expert witness. He is a registered building surveyor and a chartered quantity surveyor and describes himself also as a “weathertightness remediation specialist”. His first
brief of evidence dated 11 September 2019 is substantial. His second brief of evidence described as a “Reply Brief of Evidence” is dated 28 November 2019. It is only paragraphs [2] – [5], [12.1], [22.1], [25.3], [29.1] and [33.1] of this reply brief to which QBE’s objections relate here.
[47] Section 25(1) of the Evidence Act 2006 addresses the question of expert opinion evidence and provides that it is admissible if the Court is likely to obtain substantial help from the opinion in understanding other evidence in the proceeding or in ascertaining any fact that is of consequence to the determination of the matter.
[48]Section 25(2) of the Evidence Act provides:
An opinion by an expert is not inadmissible simply because it is about—
(a)an ultimate issue to be determined in a proceeding; or
(b)a matter of common knowledge.
…
[49] The Privy Council recently confirmed in Pora v R10 that where expert opinion evidence touches on “ultimate issues” it must be “necessary in order that [the] evidence provides substantial help to the trier of fact”. This is because expert evidence should not usurp the Court’s role as decision-maker and fact-finder.11
[50] And, the s 25(1) “substantially helpful” criterion for the admission of expert opinion evidence has been described by the Court of Appeal in Mahomed v R12 as necessitating a:
…consideration of an amalgam of relevance, reliability, and probative value.
[51] In this case I accept that Mr McGunnigle is a qualified expert as a registered building surveyor and chartered quantity surveyor. The extent to which any expert opinion he provides substantially helps is a fact specific one. This in part depends on the nature of the expert opinion provided and the purpose for which it is deployed.
10 Pora v R [2015] UK PC 9; [2016] 1 NZLR 277 at [41].
11 Attorney-General v Problem Gambling Foundation of New Zealand [2016] NZCA 609 at [82].
12 Mahomed v R [2010] NZCA 419.
Expert evidence that is in the nature of a legal submission generally will not be seen as substantially helpful and will be struck out.13
[52] This principle is also codified in the High Court Rules at r 9.7(4)(d) which addresses requirements in relation to briefs of evidence and states:
(4) Every brief –
…
(d) must not contain any material in the nature of a submission;
…
[53] Here, QBE objected to the paragraphs I have noted above at [46] for the following reasons:
(a)Paragraphs [2] –[ 5] are not in reply.
(b) And, in particular, in paragraphs [5], [12.1], [22.1], [25.3], [29.1] and [33.1] of his brief Mr McGunnigle, it is claimed, repeatedly indulges in partial advocacy and conclusionary assertions on issues that this Court must determine, namely the interpretation of Hawkins’ role under Schedule 2 of the 2012 RSMA.
Paragraphs [2] – [5]
[54] Turning now to the first of these objections, I need to say that the objection to paragraphs [2] – [5], that they are not “in reply” is not borne out here, in my view. I reach this conclusion for similar reasons to those outlined above at paras [43] to [45] insofar as they relate to the evidence of Mr Farrell. Although, as I see it, many of the matters contained in paras [2] – [5] of Mr McGunnigle’s reply brief, to an extent, do address matters in reply, because of the nature of the cross-claims between these defendants and the way the briefs of evidence in question have been presented, there is little in the objection advanced by Mr Galloway here. I reject QBE’s objection to these paragraphs [2] – [5] of Mr McGunnigle’s reply brief.
13 By way of example see Xiao v Sun [2018] NZHC 536 at [239].
[55] In any event, and even if the arguments I have advanced at para [54] above are not accepted, these paragraphs [2] – [5] of Mr McGunnigle’s brief, as I see it are directed very much to the “real controversy” in this matter and, as such, would be admitted here as supplementary evidence. Other witnesses who are to be called by IAG, as I understand it, are generally in most cases connected with that insurance company or the insurance industry generally. Broadly speaking, they have little expertise, it seems, in building and construction matters and, in particular, providing context as to what may happen on building sites. Mr Farrell and Mr McGunnigle in particular, however, have reasonably extensive building and construction contract experience. Their evidence is important to put before the Court a picture of what happens overall on building sites. The commercial context in which the 2012 RSMA was made relates to the building and construction trades and common usage at the time, and this will assist the contractual interpretation exercise here. Thus, it might be seen in any event, that this evidence will assist what are aspects of the true controversy between the parties.
[56]I turn now to the second range of matters noted at para [46] above,
Paragraph [12.1]
[57] As I have noted above at [54], I have accepted that the context of this case involves elements of what are building trade usage and common building industry practice linked to what are the broad interpretation issues required here relating to the 2012 RSMA. In interpreting the documents between IAG and Hawkins/QBE, issues will often depend on the application of various terms used. A possible consideration of how these are used with reference to how the terms may be commonly understood in the construction industry may also be relevant. As such, industry usage of key words in the 2012 RSMA contract is potentially useful here. As I see it, this commercial context is what Mr McGunnigle covers in much of his second brief (indeed as does Mr Mace). This addresses QBE’s complaints concerning paragraph [12.1] (and also the relevant aspects of paragraph [5]) which I am satisfied have little substance.
Paragraph [22.1]
[58] I need spend little time on this objection which I find is without merit. It goes without saying that constant changes in Hawkins’ personnel is likely to lead to limited site knowledge and inevitable problems and defects. This evidence of Mr McGunnigle is relevant and substantially helpful. It is admissible.
Paragraph [25.1]
[59] Mr McGunnigle, on the material before me, appears to have considerable experience in the construction services industry. His evidence about the form of the 2012 RSMA and his identification of specific flaws in forms used regularly by Hawkins employees to record the completion of certain tasks here are matters, as I see it, within his professional competence and qualifications. They go to issues that might support IAG’s case alleging that Hawkins was cutting corners and failing to perform its obligations properly under the 2012 RSMA. The evidence in this paragraph [25.3] is relevant, helpful and admissible.
Paragraph [29.1]
[60] Again, I accept that Mr McGunnigle is properly qualified to give the opinion which he expresses in this passage. That opinion is conclusionary, but it is also substantially helpful because it informs what are alleged to be failures by Hawkins in performing its obligations. This paragraph, I find, is also relevant and helpful. It is admissible.
Paragraph [33.1]
[61] Mr Collette-Moxon suggests this is a critical passage in Mr McGunnigle’s evidence. In this paragraph, Mr McGunnigle comments on Mr Geraghty’s evidence where Mr Geraghty acknowledges he is not an expert on various aspects of the building work. Accordingly, Mr McGunnigle opines that Mr Geraghty could not certify them for payment. But he notes Mr Geraghty did make certifications for payment, which Mr McGunnigle points out should not have been done in accordance with proper practice.
[62] These are matters of professional judgment on which Mr McGunnigle, as I understand it, has considerable experience. He is providing his professional opinion that unqualified people simply should not be entrusted to certify for building contract payments and, on its face, this would seem to be unobjectionable. I am satisfied this evidence is both relevant and helpful here and is admissible.
Evidence of Julian Mace
[63] It is Mr Mace’s “Reply Brief of Evidence” dated 27 November 2019 to which QBE objects. QBE says that the entire brief is objectionable and should be struck out.
[64] Again, Mr Mace, like Mr McGunnigle, is qualified in construction industry matters having worked in that industry for over 40 years. Although his formal qualification is in quantity surveying, it seems he has worked in various aspects of the industry including estimating, cost planning, procurement methodology, business strategy and governance. He is described as a very senior member of the construction industry. On the basis of the material at present before me, I accept this is so.
[65] Questions are raised by QBE about what it says is the partiality or advocacy inherent in the evidence provided here by Mr Mace. Although at this point I do not necessarily accept that this is the case, these are matters properly for cross-examination here. And, in any event, it does appear that Mr Mace has given his evidence in his brief in a straightforward manner, noting the requirements for independence as an expert witness and, generally, the Code of Conduct for Expert Witnesses which he agrees to comply with.
[66] On all this, I find it appropriate that Mr Mace gives his view on the standards that participants in the building industry usually are required to meet, and the extent to which he considers the conduct of Hawkins and its employees here was likely to have caused or contributed to the alleged building work defects. This is of some assistance to the Court and, in any event, Mr Mace no doubt will be subject to cross- examination on these matters.
[67] Mr Mace provides evidence too as to the proper context of Hawkins’ construction services and gives some emphasis to what are the potential consequences of a failure on the part of Hawkins to perform these services in an adequate manner.
[68] Mr Galloway indicates, first, that QBE’s overall objections to Mr Mace’s reply brief are similar to those advanced in relation to Mr McGunnigle’s reply brief in the sense that the matters he raises are said not to be in reply. For similar reasons to those which I have outlined above, I reject this contention. What Hawkins may or may not have done and the personnel it used here are important issues in the cross-claims between IAG and QBE and in the claims between the plaintiffs and QBE. Mr Mace’s reply brief here is simply part of the sequencing of the evidence to be put before the Court to consider the real controversy in this case and, as I see the position, it is helpful.
[69] Secondly, Mr Galloway suggests also that Mr Mace is unqualified to give the evidence he does in his reply brief relating to the obligations of a project manager, because his qualifications and experience are in quantity surveying, and in any event, that his evidence also strays into partial advocacy.
[70] Next, Mr Galloway contends that, as with Mr McGunnigle, Mr Mace’s evidence as to how the 2012 RSMA would be understood in the building and construction industry is not substantially helpful here because Mr Galloway says this is not a standard form document in common use in the industry. Comments in this context as to common usage in the building industry therefore, according to Mr Galloway, are meaningless and unhelpful. It is the Court’s role to interpret the provisions of the 2012 RSMA, which last point is, of course, a matter which I accept.
[71] I do not, however, accept that evidence as to common usage in the building industry may not be of assistance in this case. Later, as this trial unfolds, some evidence to this end might be seen as inadmissible and, if so, rulings to this effect will follow. At this point, however, it is important, as I see it, for the Court to have before it all evidence of this kind which may later prove to be of assistance.
[72] I now turn to particular objections Mr Galloway raised to certain paragraphs in Mr Mace’s reply brief.
Paragraph [7.3]
[73] With this objection QBE appears to be asserting that Mr Mace should not be allowed to give an opinion on whether a major construction company like Hawkins should have trained its employees for entering into confined spaces (such as crawling under houses). I do not accept this assertion. It goes to issues of competence and also health and safety responsibilities and, in any event, can be a matter for cross- examination. I am satisfied this evidence may be substantially helpful in this case and is admissible.
Paragraph [9.1]
[74] The evidence in Mr Mace’s brief at paragraph [9.1] appears to be based on his experience as to the common practice of payment certification under building contracts. His opinion relates to whether Mr Geraghty’s actions were in line with common practice and whether he was properly qualified and trained to carry out this work. As I see the position, an assessment of this is logical and the Court will be required to compare the work done by Hawkins with its scope of works to justify the payments it has received. Plainly this paragraph is helpful and of assistance to the Court.
Paragraph [16.3]
[75] Any objection by QBE to this paragraph, in my view, is misplaced. The proposition Mr Mace refers to is simply that building work must comply with the building code and that building work must be undertaken to a proper standard. All that would simply seem to be uncontroversial. Mr Mace here appears to be directly addressing a passage in the evidence of Mr Wood regarding why Hawkins performed (or failed to perform) its obligations in a certain way. This is relevant and Mr Mace’s evidence in response as an expert is helpful and admissible.
Paragraphs [24.1] – [24.2]
[76] Again, Mr Mace, with his experience in the building industry, in my view, is able to give his opinion on the matters contained here. Mr Mace is entitled to express his views about Hawkins’ practices as he sees them and as further described by other
witnesses including Mr Wood and Mr Geraghty. He can, of course, be cross-examined on all of this. QBE too can explore issues on cross-examination as to Mr Mace’s impartiality or his alleged attempts to be an advocate if it so wishes. What does seem clear from his brief is that Mr Mace has a long experience relating to the consequences of faulty building work and his observations and views on this I accept are helpful. These paragraphs which describe the consequences of certifying a payment when work is not properly completed are relevant, helpful and admissible.
Paragraph [35]
[77] Mr Mace’s evidence of trade and common usage here is also relevant to the application of the 2012 RSMA with reference to the key terms in the document. This is helpful in this case and plainly any challenge to the evidence can occur by way of cross-examination of Mr Mace. Issues will arise as to whether Hawkins breached its obligations under the 2012 RSMA and these may well be underpinned by questions of construction industry usages and common practices. This is relevant and helpful evidence and is admissible.
Conclusion
[78] So far as each of the applications before me are concerned, for all the reasons I have outlined above, I conclude as follows:
(a)Richard Neave – IAG’s objection to the admission of Richard Neave’s “reply” brief of evidence is dismissed.
(b)Sean Farrell – QBE’s objection to the brief of evidence of Sean Farrell is dismissed.
(c)Kenneth McGunnigle – QBE’s objection to the admissibility of those parts of Kenneth McGunnigle’s brief of evidence outlined above is dismissed.
(d)Julian Mace – QBE’s objection to the admission of all the evidence of Julian Mace in his “reply” brief of evidence is dismissed.
[79] It follows that I decline to make any of the orders sought here for the reasons I have outlined.
[80] Costs are reserved. It may be that they can be deferred until the conclusion of the substantive hearing. If, however, costs are sought now, and counsel are unable to settle this issue between themselves, then they may file memoranda (sequentially) which are to be referred to me, and I will consider the costs question on the basis of the memoranda filed and all the other material before the Court.
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Gendall J
Solicitors:
Saunders Robinson Brown, Christchurch for Plaintiffs Clark Boyce, Christchurch for First Defendants Hazelton Law, Wellington for Second Defendant
Copies to:
Nathan Gedye QC, Barrister, Auckland for Third Defendant Oliver Collette-Moxon, Barrister, Auckland for Third Defendant Daniel McLellan QC, Barrister, Auckland for Fourth Defendant
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