Mikitasov v Lindsday DC Whangarei CIV-2010-027-99 [2010] NZDC 2100 (15 December 2010)

[1] This hearing in the Whangarei District Court, civil jurisdiction, has related to an amended application for interlocutory orders filed by Mr Mark on behalf of the first defendant in what may loosely be described as a building dispute. All three parts of the amended application are opposed by Mr Browne, on behalf of the plaintiff, who is the owner of the property in question, a substantial dwelling in Paihia.

[2] Apparently the building suffered “leaky home” defects which required certain work done on it. The first defendant, who has brought this application for three orders, was engaged as a builder to do that work and the owner of the property, the plaintiff, was dissatisfied with the work done. He withheld payment of part of the

first defendant’s account and has brought a claim for damages based largely on an estimate of the cost of remedial work provided by a Mr Aldrich.

[3] The three applications are, first of all, for an extension of time under r 1.18 of the new District Court rules, secondly, for particular discovery of a certain class of documents, and thirdly, for an order for inspection of the property including access to it for an intended expert witness for the first defendant. I will deal with matters in that order.

[4] The need for an extension of time arises because at the time of preparing a counterclaim for the amount owing under the original contract for services, counsel for the first defendant omitted to have the notice of counterclaim filed in the District Court. This was apparently a straight oversight. The application is brought under r 1.18:

1.18.1 The court may, in its discretion, extend or shorten the time allowed by these rules, or fixed by any order, for doing any act or taking any proceeding or any step in a proceeding, on such terms (if any) as the court thinks fit in the interests of justice.

1.18.2 The court may order an extension of time although the application for the extension is not made until after the expiration of the time allowed or fixed.

1.18.3 The court or a Registrar may order an extension of time on application made by written notice instead of by interlocutory application, if the parties consent.

[5] For reasons that I will canvass later, there is no argument advanced by Mr Browne about the ability of the first defendant to make this application at this stage and, in my view, it should be granted. Mr Mark puts forward three short points in support of the application, all of which, in my view, are relevant and lead to the result.

[6] First of all, the need for the order has been explained in terms of counsel’s oversight and that is not disputed. Secondly, no prejudice has been suffered by the

plaintiff because he was served with a notice of counterclaim and, indeed, has responded to such notice. Thirdly, on a pragmatic basis, a failure to grant an extension of time at this stage would leave the first defendant with the option of having to bring a separate proceeding for the amount owing to him. This would be counterproductive in terms of the costs involved and the convenience of all concerned. I agree with that and refer now to r 1.3:

1.3.1 The objective of these rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.

1.3.2 The objective of these rules includes, so far as is practicable,— (a) ensuring that all parties are treated equally; and

(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases.

[7] The third point advanced by Mr Mark fits squarely within the objective of the rules which is to secure the just, speedy and inexpensive determination of any proceeding, and where related proceedings can be dealt with by way of claim and counterclaim in the one proceeding, that is clearly less expensive and more speedy for all concerned.

[8] The grounds for opposing the matter were very slight, in my view, and do not overcome the need for that order to be made. However, because the defendant is seeking an indulgence, to use the old-fashioned term, it is appropriate that the

plaintiff’s costs of appearing and opposing the application be met by the party seeking the indulgence.

[9] The remaining two applications can be described briefly before dealing with the arguments about them. The question of access to the property arises because the plaintiff has possession of the property and has declined written requests to provide access to representatives of the first defendant who would, of course, be one or more persons able to advise in an expert way on work done. I am told that the essential issue to be determined by inspection is more likely to be whether the work that has been done by the plaintiff is truly remedial. While that is likely to be the main issue, the general scope of the inquiry, however, is to whether any remedial work was necessary and, if so, what a proper cost for that work would be.

[10] In terms of discovery, the application as amended seeks an order as follows:

Discovery by sworn affidavit of documents listing all plans, invoices, receipts, reports, photos and other documents relating to the work undertaken by the applicants [meaning, I think, the first defendant who is the only applicant] and further in relation to any subsequent building or remedial work carried out by the plaintiff on the property at 28 Binnie Street, Paihia.

[11] In oral argument Mr Mark explained that the claim, as presently advanced, is based on the estimate of the cost of remedial work provided by Mr Aldrich who is a person whose name was suggested to the plaintiff by the first defendant as being someone who could advise on whether the job had been done properly. However, the plaintiff has subsequently had remedial work done, according to his affidavit, and Mr Browne advises that his client intends to amend his claim as soon as all accounts are to hand. The work has apparently been completed but the bills are still “coming in”. The scope of discovery is general, insofar as the first part of the wording I have just referred to relates, but is specific in relation to the second part - that is, the remedial work.

[12] The principal ground upon which these two applications are opposed is that they are premature, and indeed Mr Browne would go further and say that the Court has no jurisdiction to grant them. I will canvass the argument in a little more detail in a moment, but in short, what is stated on behalf of the plaintiff is that the new type of proceeding governed by the 2009 Rules has a very strong emphasis upon the parties being taken quickly to either a short trial (for a matter that can be tried in about the same time as a judicial settlement conference could be held) or preferably to a judicial settlement conference, and that discovery and inspection are orders of the type that can only be made if the matter does not settle at a judicial settlement conference and, therefore, proceeds to a judicial directions conference.

2.49.2 An intending plaintiff may apply for discovery of particular documents under rule 3.61.2 by making an interlocutory application before starting a proceeding.

2.49.3 A party may apply for any of the following in a proceeding by making an interlocutory application after the proceeding starts:

	Home \| Databases \| WorldLII \| Search \| Feedback District Court of New Zealand

1	Mediation or alternative dispute resolution	1.7
2	Objection to jurisdiction	2.12.6 and 3.38.1
3	Application for summary judgment to enforce an agreed settlement	2.43
4	Leave extending time under rule 2.49.5 for making interlocutory application	2.49
5	Striking out pleading, staying or dismissing proceeding, or applying for indemnity costs	2.50
6	Directions as to service	3.34.12 and 3.44

7	Leave to serve document out of New Zealand	3.44.22
8	Injunction or interlocutory injunction	3.52.1 and 3.53.1
9	Any other interlocutory order, or relief, not covered by rule 2.49.4	2.49

2.49.4 A party may apply for any of the following in a proceeding by making an interlocutory application at or after the start of the judicial directions conference for that proceeding:

2.49.5 If a judicial directions conference is convened for a proceeding, interlocutory applications in the proceeding must be made within 30 working days beginning on the day after the conference starts or within any further time that the Judge may allow by leave.

2.49.6 A Judge may, for good reason consistent with the objective of these rules, grant leave allowing an extension of the 30-day period in rule

2.49.7 An interlocutory application for summary judgment must be dealt with in open court.

2.49.8 An interlocutory application other than an application for summary judgment must be dealt with in open court unless—

(a) it is not in the public interest that the matter be dealt with in open court; or

(b) a Judge considers there are other reasons why the matter should not be dealt with in open court.

[14] On the face of it, Mr Browne’s submission is appropriate given that r 2.49.4 makes provision for both discovery and inspection orders to be made “at or after the start of the judicial directions conference for that proceeding.” No such conference has yet been held.

[15] Mr Mark argues that r 2.49 does not prohibit interlocutory applications of this type being made prior to a judicial settlement conference or judicial directions conference. He describes the rule as being “permissive”, in that it provides that an intending plaintiff “may apply for discovery” of particular documents before starting the proceeding (2.49.2); a party “may apply” for any of the following in a proceeding by making an interlocutory application after the proceeding starts (2.49.3); and a party “may apply” for any of the following “at or after the start of a judicial directions conference” (2.49.4). Therefore, Mr Mark argues that a party may do that and by implication may not apply at that time - that is, there is a discretion given to the party.

[16] Further, it is said to be important in this case that any discretion be exercised in favour of the first defendant because both the discovery of these documents and the inspection of the property are required in order to fully inform the first defendant

[17] Further, it is argued that r 1.18, already set out above, applies so that the Court has a discretion at any time to extend or abridge the time for making of various applications, including interlocutory applications under r 2.49. Mr Mark submits that the new rules must be read in the light of the type of dispute involved and, in the case of a building dispute, it is, in his submission, common for both sides to have expert reports early in the piece so as to be well informed. This is particularly important where the parties are going into either a hearing or a judicial settlement conference.

[18] It was also submitted that there would be no logical reason why the Court should say that one cannot apply for an order for access at an early stage; and further,

if there is a proper application before the Court such as the one just granted for an extension of time, then from a pragmatic point of view it is sensible that other outstanding matters be able to be dealt with in an interlocutory way at the same time.

[19] Finally, it was submitted that the purpose of the rules was to make settlement conferences an effective process and, if there is to be a meaningful conference, there needs to be information available appropriate to the particular case. In the case of a building dispute that means information about the costs of repairs, the extent of repairs that maybe necessary, and the views of relevant experts formed not just by way of peer review of other reports but by way of inspection of the property in question.

[20] The question of disclosure was argued more briefly. It was submitted that the documents are relevant and normally it could be done between counsel. This has not been able to be achieved so far between counsel, although they have good relationships between them, and an order is needed to overcome this. It was pointed out that the remedial work actually undertaken is not part of the information capsule provided with the documents intended to be relied on by the plaintiff. It turns out that this is because some of the documents are still not to hand. As with the question of access for experts, this is said to be relevant and necessary for properly informing the party and its experts prior to a judicial settlement conference or, for that matter, a short trial, I imagine.

[21] Mr Browne’s argument is based on the general scheme of the new rules and the philosophy that underpins it. It is his submission that the rules have brought about a “sea change” in civil procedure in District Court claims, and that the sort of interlocutory warfare that used to be fought at different stages of proceedings under the old rules is now strictly governed by r 2.49. He argues that what is proposed here is contrary to the dramatic change brought about by the new rules which require a “different mindset”. Mr Browne submits that r 2.49 is one of those rules very carefully drafted and put together which is crucial to the operation in the new regime.

[22] It is then submitted that r 2.49 does not permit an interlocutory application of the type made here for inspection and discovery. Mr Browne relies on r 2.49.1: “This rule applies to all interlocutory applications under the Act” (emphasis added). Therefore, he submits, it is not necessary for subrr 2.49.2, 3 and 4 to say a party may apply for ... only in the following circumstances. The first sub rule makes that clear by saying, in effect, that all interlocutory applications are governed by this rule. I agree that this is the correct way to read r 2.49.1 - that is, as meaning that all

[23] The scheme of the rule is then that one type of application only can be made before the start of proceedings, namely pre-trial discovery. Certain applications can be made only at or after the start of a judicial directions conference (and, unless the Judge exercises the discretion in r 2.49.5 and .6, within 30 days of the beginning of the conference). All other applications can be made, in effect, at any stage after the proceedings start - eight types of applications are listed specifically, including strike-out applications, service of documents out of New Zealand, applications for injunctions and so on, and importantly in paragraph 9 of r 2.49.3 there is the “wrap

_{up” provision: “any other interlocutory order, or relief,
not covered by r 2.49.4.”}

[24] Thus the structure of the rule does provide for every possible type of application. Either it is one made before the proceeding is filed, or it is at or after the commencement of the proceedings. After proceedings commence, only certain types of applications are able to be made before a judicial directions conference has commenced. I agree with Mr Browne’s submission that that is the scheme of the rule.

[25] That being the case and given that these applications are for discovery and inspection which are specifically listed as types of application required to be made “at or after the start of the judicial directions conference,” the question then is whether r 2.49 imposes a jurisdictional bar on the Court considering such an application at this stage, or whether on the other hand it merely raises some sort of presumption against the granting of such applications at this time.

[26] This brings me back to r 1.18 (see para 4 above) to which I said I would return. Mr Mark’s argument had been that there is a residual discretion to be found in r 1.18 and, as I understand him, this approach could be adopted by the Court even if it accepted Mr Browne’s submission that the general scheme of the rules is as laid out in r 2.49.

[27] The argument advanced is that r 1.18 deals with extending or shortening time. What in effect is being sought here is altering the time at which an application may be made under r 2.49 by bringing forward (i.e. shortening) that time so that it maybe before the convening of a judicial settlement conference.

[28] Against that, it is argued by Mr Browne that first of all the wording of r 1.18 is aimed at a different type of situation, i.e. the situation where a rule or Court order gives a specific time in terms of numbers of days, and the party seeks to either extend or shorten such time fixed by these rules or by a Court order. By contrast, r 2.49 does not fix times (for example, after the commencement of proceedings) but rather states the order in which things are to be done by reference to whether or not a judicial directions conference has been started.

[29] The way I read r 1.18 is that it is dealing with a different situation - fixed time limits - to the regime laid down in r 2.49 (based on the stage reached in a proceeding). I agree with Mr Browne’s argument to that effect. Further, it is noted that r 2.49.5 does provide a specific time, namely a 30-day period, but also has its own inbuilt flexibility “...or within any further time that the Judge may allow by leave.” The following sub rule explains: “A Judge may, for good reason consistent with the objective of these rules, grant leave allowing an extension of the 30-day period in rule 2.49.5.”

[30] I do not read r 1.18 as being applicable to this application in these two respects, that is discovery and inspection. But even if I did, so that the Court had a discretion under r 1.18, I would not have granted it because, in my view, there is nothing that really distinguishes this case from others in a striking sort of way. In

my view, it would take a striking exception to justify a departure from the general scheme of the new rules which is to bring the parties to a very early settlement conference presided over by a judicial officer but with limited information.

[31] Counsel and Judges are familiar with the old type of judicial settlement conference which was often held shortly before an impending trial and after interlocutory matters had been canvassed at length so that all parties were fully prepared, in terms of information and reports and the like. This is not that type of settlement conference and I do not agree with the submission that parties must be able to go into a judicial settlement conference (of the type now established as being the norm early in District Court proceedings) fully armed with all the information they would have had under the old rules. I agree with Mr Browne’s submission that the intention is to try and settle matters at an early stage without the expenditure of a lot of money and costs on interlocutory matters and without the delays that those involve. The great majority of cases will benefit by that approach.

[32] In any event, the Court is obliged to give effect to the objective in r 1.3, which I have already set out at para [6], when interpreting these rules or doing any act under these rules – see r 1.4. In my view, both these parties and others in a like situation are much more likely to have their proceedings dealt with justly, speedily and without great expense, if the scheme of interlocutory applications, as set out in r

2.49 is followed in all such cases. Whether there is a residual discretion of the Court to override that, I very much doubt, but I do not have to decide that in this case. I have not been provided with any legal authority for overriding the rules. I believe they are meant to be a complete account of the approach to be taken to litigation under the new regime, and they have to be interpreted and applied, both by the Courts and legal advisors, in the spirit of those rules as already explained.

[33] For those reasons the applications for discovery and for inspection of the property are declined.

[34] I add, however, a few words about those applications to assist in the future. First of all, as far as discovery is concerned, I would hope that the plaintiff will make available by way of a belated package of documents or an amended information package, the documents relating to the work done, without the need for any order of the Court. But if that does not happen, then the application already made can be relied on, in my view, without the need to file a separate application. The Judge dealing with the directions conference can be referred to the application - and indeed to this decision, if counsel wish, indicating that no further application will be needed for either type of order.

[35] Secondly in terms of inspection of the property, there was a concern expressed by the plaintiff that his property might be damaged during the inspection process. Assurances were given that no such physical alteration of the property was intended. That being the case I would have thought that an order at a judicial directions conference (should the matter not settle) would be able to be made in limited terms making it clear that no alteration or interference with the physical fabric of the property is encompassed by any order that might be made.

[36] As to costs, both sides sought costs. I have already indicated that costs are appropriate in favour of the plaintiff in respect of the extension of time. In view of the outcome of the other two aspects of the application, I make an order for costs in favour of the respondent/plaintiff, in respect of the application and amended application. By agreement between counsel, costs on a 2B basis will provide the appropriate quantum. I make an order accordingly.

District Court of New Zealand

Mikitasov v Lindsday DC Whangarei CIV-2010-027-99 [2010] NZDC 2100 (15 December 2010)