Body Corporate 330324 v Auckland Council [2015] NZHC 1232 (5 June 2015)

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BETWEEN	BODY CORPORATE 330324 Plaintiff MATTHEW NICHOLAS BROWN & ORS Second Plaintiffs
AND	AUCKLAND COUNCIL First Defendant WATTS & HUGHES LTD Second Defendant DOWNER NEW ZEALAND LTD Third Defendant _{Continued over page}

Hearing:	3 June 2015
Appearances:	G B Lewis and C E Lane for Plaintiffs S A Thodey and S Mitchell for First Defendant S Loveys for Second Defendant S Ladd and B J Ward for Third Defendant S Thompson for Fourth Defendant H Macfarlane and S Holderness for First Third Party A Hazelton for Fifth Third Party
_Judgment:	_{05 June 2015}

This judgment was delivered by me on 5 June 2015 at 9.30 am pursuant to Rule 11.5 of the High Court Rules.

H Macfarlane, Hesketh Henry, Auckland S Holderness Hesketh Henry, Auckland A Hazelton, Hazelton Law, Wellington

[1] The first and third defendants (supported by a memorandum filed by the second defendant) apply for adjournment of the trial date currently scheduled to commence on 20 July for 12 weeks. At the conclusion of argument I indicated that I intended to decline the application. I now give my brief reasons.

[2] The application is advanced primarily on the basis that draft reply briefs provided to the first and third defendants in early May (for the purposes of a mediation which was ultimately cancelled), foreshadow an enormous “amount of additional evidence” which:

(iii) raises new allegations which will necessitate additional on-site testing which cannot be reasonably undertaken within the remaining time available.

[3] Reference is made to 275 pages of proposed evidence, and many hundreds more of photographs and exhibits. It is said that the draft reply evidence principally addresses the waterproofing issues only and not the cladding, fire, ventilation and window (alleged) defects. Ms Thodey for the Council says that the parties can therefore reasonably anticipate an even greater volume of evidence when it is ultimately filed.

17 May 2015 had been set at previous conferences, but delays in provision of defendants’ expert evidence (I exclude from this the third defendant which was compliant with former orders) required these dates to be readjusted. The Court’s existing orders recognise a leave requirement in relation to the reply evidence to be dealt with either at a pre-trial conference or the commencement of the trial.

[5] The first and third defendants say that the problems with the draft evidence compound existing timetable problems and, in particular, the fact that experts’ conferences are yet to take place. They say that the conferences can only sensibly occur after all admissibility issues are resolved.

[6] They point to a further complication being the plaintiffs’ intended application for leave to file an eleventh amended statement of claim. No formal application has yet been filed, the matter having been raised by way of memorandum only. The first and third defendants say that the new allegations in the proposed amended pleading give rise to additional issues of discovery, would inevitably result in amended third party and cross-claims and will require supplementary evidence and possibly additional testing, all of which cannot reasonably be undertaken in the time available.

[7] They further say that the plaintiffs have not yet obtained Auckland Council consent to the proposed remediation works, so it is not yet clear whether the proposed works, for which associated costs are now said to exceed $28 million, are in fact permitted. Whether if permitted they are excessive is identified as a separate issue.

[8] Finally, the first and third defendants say that there is no prejudice to the plaintiffs because the remedial works are not scheduled to occur until 2016 and, if plaintiffs’ counsel were to co-operate in substituting this case for another unrelated fixture scheduled for 16 April 2016, this matter could proceed at that time.

[9] The plaintiffs oppose the application. They say that the evidential foundation for it comprises draft briefs provided on a without prejudice basis and that the application offends the privilege recognised in s 57 of the Evidence Act 2006. They say that, apart from this objection, it is premature for the defendants to speculate on the contents of the reply evidence and that were such evidence to breach the Rule requirements that it be strictly in reply, the appropriate response is for leave to be denied in relation to that evidence or for its admissibility to be challenged before, or at, trial.

[10] They place considerable emphasis on the fact that the proceedings have been extant for five years; that were it not for delays in the provision of defendants’ expert evidence, any issues arising out of the reply briefs could have been dealt with in ample time before trial; and the considerable distress and anxiety which individual unit owners have experienced. Excerpts from individual plaintiffs’ briefs are exhibited emphasising that distress. They say that any delay in commencement of trial will inevitably reflect in increased costs and that the plaintiffs are entitled to know where they stand legally before embarking on a remedial project of this size.

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.

However, the essential question which the court always has to consider when asked for an adjournment, is whether or not that is necessary in order to do justice between the parties. One must not overlook that not only is it necessary to do justice to the party who is seeking the adjournment but also justice to the party who wishes to retain the benefit of the fixture. It is essentially a balancing exercise.

[14] I accept the essential points made by the plaintiffs. Although reference to the fact of a without prejudice communication may not of itself be objectionable,²the defendants’ affidavits go beyond that and use (albeit in a generalised way) the content of the privileged communications as the evidential foundation for their arguments. An example occurs at paragraphs 23 and 24 of Mr Smith’s affidavit in

¹_{O’Malley v Southern Lakes Helicopters Ltd HC
Christchurch CP513/89, 4 December 1990 at 1.}

²New Zealand Institute of Chartered Accountants v Clarke [2009] NZHC 249; [2009] 3 NZLR 264, (2009) 19 PRNZ

246; Consolidated Alloys (NZ) Ltd v Edging Systems (NZ) Limited [2012] NZHC 2818.

23 The plaintiffs’ experts initially said that the product did not comply with the NZBC and was thus not fit for purpose. The defending parties’ experts pointed out in their evidence that the product is an acceptable solution under the NZBC for a number of reasons including that it complies with an applicable British Standard.

24 The plaintiffs’ reply evidence suggests that the plaintiffs now intend to pursue a substantially difference (sic) complaint from that originally made.

[15] The same observation about the reply evidence is made in relation to other defects, including allegedly inadequate waterproofing at the membrane to parapet junction, inadequate waterproofing of nibs, insufficient fall to boiler room floor, and absence of sealing of the rigid air barrier.

[16] In respect of other defects, Mr Smith deposes that the plaintiffs appear to have changed emphasis in their draft reply briefs.

[17] In my view, the first and third defendants’ evidence goes beyond the limits allowable in relation to what were clearly privileged communications for the purposes of mediation.

[18] At a substantive level, I consider the plaintiffs to also be correct. The due date for service of the reply briefs is eight days away. Drafts provided some weeks ago for the purposes of mediation may be in a form substantially different from those offered in evidence and which for that purpose must necessarily comply with the Rules. At this stage it is, in my view, speculative to say that the plaintiffs’ reply evidence gives rise to new matters of an effectively supplementary kind.

[19] In addition, were the reply briefs to in fact contain evidence not strictly in reply, the usual response is a challenge to admissibility, not adjournment of the trial.

[20] I accept that any outstanding admissibility challenge may have implications in terms of the quality of the outcome from the experts’ conferences. Issues may have to be quarantined in that context. Alternatively, the experts may choose to deal with all issues while reserving admissibility arguments. I accept that neither course is ideal. It is possible also that the purported reply evidence could so significantly

change the evidential landscape that experts’ conferences could not practically occur until admissibility challenges were resolved. All of that is, however, speculative at this stage.

[21] Likewise, I must resolve the present application on the current pleadings. If the plaintiffs wish to further amend their statement of claim, a formal application will be required with supporting evidence. All of the current indications are that it will be opposed. If it is granted, the plaintiffs are clearly on notice that a further application for adjournment may be made.

[22] Nor do I regard the fact that the plaintiffs have yet to obtain a building consent for their proposed works as requiring an adjournment. Ultimately, it will be for the plaintiffs to prove that their scope of works is appropriate in all respects. The absence of a building consent may be relevant in that context. It goes to proof, not the timing of trial.

1. Time pressure in dealing with the plaintiffs’ proposed reply evidence has undoubtedly been exacerbated by delays in provision of defendants’ expert briefs. In terms of the Minute of Faire J dated 19

November 2014, these were due by 20 December 2014. That date was relaxed to 20 February 2015 by his Honour’s Minute of 21

November 2014. His Honour’s subsequent Minute of 24 April 2015, recorded “some slippage” with the result that the final date for filing defendants’ briefs was enlarged to 1 May 2015. The proposition that a trial should be delayed because of the content of reply briefs which predicate additional enquiries and testing which cannot itself be completed before trial, is not assisted by the fact that the defendants’

“Whether the parties and those representing them have done everything reasonably practicable to avoid having to seek an adjournment will be a consideration.”

2. I cannot be confident that the case can be allocated an alternative 12 week fixture commencing 16 April 2016. To do so, an existing long cause on the leaky building list would need to be deferred. The solicitors for the plaintiffs in the present proceeding are solicitors for the plaintiff in that case. They have no instructions in respect of its deferment and indeed anticipate significant client opposition.

3. I accept that any deferment of trial for what realistically will be one year or more, will inevitably reflect in additional costs to the plaintiffs in circumstances where many of the individual unit holders are already suffering from financial pressure and associated anxieties. This has already been long-running litigation. The plaintiffs understandably seek an early resolution.

4. Interests relating to the administration of justice are also a relevant factor in considering the application. That was confirmed by Penlington J in Gray v Thom where His Honour stated at page 13:⁴

... An adjournment affects not only the party opposing the adjournment, but also other patient litigants waiting in the queue. The opponent of an adjournment is inevitably delayed in getting a resolution of the matter to which he or she is a party. Likewise, waiting litigants are deprived of the opportunity of using the Court time because of the inadequate lead time to get ready for trial. An adjournment disrupts the Court programme. It sometimes leads to the wastage of a scarce resource, judicial time.

Those considerations have particular resonance in the context of a 12 week trial scheduled to commence in six weeks time.

[25] In doing so, I sound a note of caution to the plaintiffs. Amendment of their statement of claim so close to trial always runs the risk that an adjournment

application will follow. In assessing whether formally to seek leave and assessing the content of their proposed pleading, the plaintiffs will need to weigh that risk. Similar observations apply in respect of their proposed reply evidence. If not strictly in reply, admissibility challenges are inevitable. Depending on the scope of those challenges, the utility of the experts’ conferences may, as I have indicated, be undermined. Moreover, any grant of leave pursuant to r 9.8 to file supplementary briefs may create a level of prejudice only properly mitigated by adjournment. The plaintiffs will need to reflect carefully on those potential consequences.

High Court of New Zealand Decisions

Body Corporate 330324 v Auckland Council [2015] NZHC 1232 (5 June 2015)