Collis v Hypower Electrical Limited [2016] NZHC 2686 (10 November 2016)

Last Updated: 24 November 2016

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000163 [2016] NZHC 2686

BETWEEN	MICHAEL COLLIS and KEITH CHARLES LANGTON Plaintiffs
AND	HYPOWER ELECTRICAL LIMITED First Defendant
AND	WAYNE MARK HYDES Second Defendant

Hearing:	7 November 2016
Appearances:	G M Brodie and A G M Whalan for the Plaintiffs P J L Hunt and T W Clark for the Defendants
Judgment:	10 November 2016

_{JUDGMENT AS TO REASONS OF NATION J}

[1] In these proceedings, the plaintiffs seek damages from the defendants following the loss of a reasonably substantial hut located in an area, largely of bush, near Kaikoura. The hut was destroyed in a fire that occurred on 25 October 2014.

[2] The plaintiffs filed proceedings on 30 March 2015. On 30 November 2015, Associate Judge Matthews made timetabling directions.¹ These included a direction that the close of pleadings date was to be 8 July 2016. On 11 February 2016 the proceedings were set down for hearing for ten days beginning 7 November 2016.

[3] On 4 November 2016, counsel for the plaintiffs, Mr Brodie, by memorandum, effectively sought leave from the Court to amend the statement of

_{claim. Counsel for the defendants filed a memorandum indicating the application}

¹ Collis v Hypower Electrical Ltd HC Christchurch CIV-2015-409-000163, 30 November 2015.

would be opposed. Because of my unavailability, the issue was discussed in telephone conferences with Davidson J on 4 November 2016.

[4] Further memoranda, including the draft amended statement of claim, were then filed by counsel. The parties’ positions with regard to the amendment remained the same. I heard argument when the proceedings were called. After hearing argument, I ruled that I would allow the amendment; I also refused the defendants’ request for an adjournment of the trial.² I now give reasons for both decisions.

[5] The defendants are a company and its director who carried out substantial work on the hut between January 2014 and May 2014. That work related to the installation of a solar powered electricity supply to the hut, integrated with electricity supplied from a generator (the integrated power system).

[6] No person was at the hut when the fire occurred on 25 October 2014. Because of the location of the hut, no one was able to fight the fire after it started. This led to the almost complete destruction of the building and difficulties in identifying what had caused the fire.

[7] In their first statement of claim, the plaintiffs alleged the defendants had failed to carry out the electrical work required of them with the required skill and care. In making that general allegation, they included six particulars. It was apparent from those particulars that they identified the fire as originating from a cupboard in which were installed various components relating to the integrated power system. One of the particulars alleged a particular fault in that the system had been installed and left operational by the defendants with only one power inverter in place and working when two were required.

[8] The statement of claim identified that the causes of action were based on a breach of the Consumer Guarantees Act 1993, breach of contract and in tort for

_negligence.

² Collis v Hypower Electrical Ltd [2016] NZHC 2652.

[9] In referring to breach of the Consumer Guarantees Act as a cause of action, the plaintiffs alleged that the defendants owed a statutory guarantee to the plaintiffs to carry out electrical services with reasonable care and skill, and that he failed to exercise the due care and skill in installing the integrated power system. The plaintiffs relied on the same particulars as had already been pleaded in relation to all causes of action.

[10] In their statements of defence, the defendants denied both the general allegation that the defendants had failed to exercise the required skill and care in carrying out their work and relevant aspects of the various particulars.

[11] On 29 July 2015, the plaintiffs filed an amended statement of claim. This included the same particulars of negligence as originally filed but added further particulars. It was alleged that the fire had been caused by a screw, used to secure a solar panel, going through the roofing iron into a cable so as to compromise the safety of the whole wiring system.

[12] A second amended statement of claim was filed on 28 June 2016. The only change related to quantum of damages claimed.

[13] Both parties briefed evidence on the basis of those allegations. The evidence included detailed, and no doubt expensive, evidence from experts.

[14] Mr Brodie was instructed as counsel only some two weeks before the trial. He explained to me that, after reviewing the evidence, he considered the pleadings as they stood did not fairly put before the Court what was really at issue between the parties. He submitted that, if the proceedings remained as they were, the plaintiffs could effectively be denied the benefit of the guarantees which he contends they were entitled to by legislation: the Consumer Guarantees Act.

[15] He argued that, with the proceedings as they stood, before amendment, it was clear the issue at trial would be and should be whether the fire resulted from some failure in the electrical work and installation carried out by the defendants. He said the plaintiffs would be establishing this by ruling out any other reasonable

explanation for the fire. He said that, if the plaintiffs could establish the fire had its origins in the electrical work carried out by the defendants, they would be entitled to the remedy they were seeking through the guarantee in relation to both goods and services provided by the defendant electricians under the Consumer Guarantees Act.

[16] In the proposed amended statement of claim, the plaintiffs added a further and alternative cause of action against both defendants. With that pleading, they in summary alleged that, in installing the integrated power system, the defendants had supplied goods and services covered by the Consumer Guarantees Act, subject to the guarantees provided for by that Act. It was alleged that those guarantees required that the installation would be carried out with reasonable care and skill, and the supply of the integrated power system and the system itself would be reasonably fit for purpose and of such a nature and quality that it could be expected to achieve a domestic electricity supply. It was alleged that, if the precise fault or defect which caused the fire could not be identified, the fire was nevertheless caused by the integrated power supply and thus could not have been:

(a) of acceptable quality;

(b) installed with reasonable care and skill; and

(c) fit for the intended purpose of a domestic electricity supply.

[17] After the conference which took place with Davidson J on 4 November 2016, Mr Brodie for the plaintiffs confirmed that the amendment to the pleadings would not require the plaintiffs to file any further or different evidence. Independent of that, he did give notice that he would be seeking leave to lead evidence from a further witness, essentially backing up the evidence to be given by a fire service investigator who had initially investigated the fire.

[18] Counsel for the defendants filed a memorandum setting out the grounds on which they opposed the amendment and the basis on which they said an amendment would require an adjournment of the proceedings. In that memorandum, counsel referred to dicta from Brownlie v Shotover Mining Limited and from Barker J in

Securitibank Limited (in rec and in liq) v Rutherford.³ Mr Brodie referred me to Heath J’s detailed discussion of applicable principles in EBR Holdings Ltd (in liquidation) v van Duyn.⁴

[19] These authorities emphasise the importance of pleadings. It is also important that the Court’s directions as to how and when proceedings are progressed to trial are observed. Failure to do so can result in avoidable delays which deny the parties justice. These delays also make it more difficult for the Court to manage its resources and time so that other parties can utilise the courts to resolve their litigation.⁵ Counsel and any experts assisting them do not serve well the parties involved, the public generally or the administration of justice if they do not abide by timetabling directions and only get to grips with the details of the evidence, the

difficult issues in the proceedings and the need for any change in the pleadings just prior to trial.

[20] Having said that, the Court of Appeal has acknowledged that:⁶

It will, of course, happen from time to time that there will be inadequacies in the original pleading, and these may not emerge until trial. In such cases, the proper course is for an appropriate amendment to be sought, and it will be allowed where this can be done without injustice.

[21] In assessing whether a proposed amendment will result in an injustice and whether it will require an adjournment of the trial, it is important that a party should not be prejudiced through being taken by surprise.

[22] It is also important that litigation between the parties and the trial should be conducted fairly, openly and incidentally to reduce cost. In the administration of justice generally, it is also important that time allocated for the hearing of proceedings should be utilised effectively if that can be achieved without causing an

_injustice.⁷

3. Brownlie v Shotover Mining Ltd CA181/87, 21 February 1992 at [19]; Securitibank Limited (in rec and in liq) v Rutherford HC Auckland A355/81, 10 October 1983 at 10.

⁴ _{EBR Holdings Ltd (in liquidation) v van Duyn [2016] NZHC 1169.}

⁵ SM v LFDB [2014] NZCA 326, [2014] 3 NZLR 494 at [27]; Aon Risk Services Australia Ltd v

_{Australian National University [2009] HCA 27, (2009) 239 CLR 175 at [5].}

⁶ _{Brownlie v Shotover Mining Limited, above n 3, at 19.}

⁷ Securitibank Limited (in rec and in liq) v Rutherford, above n 3, at 10.

[23] Mr Hunt for the defendants argued that the proposed amendment involved the inclusion of a new cause of action and was a new way of presenting the case. He also argued the amendments meant the pleadings had gone from pleading specific causes of the fire to a more general cause. He argued that the defendants would be prejudiced because, in preparing for the trial, the defendants had focused on the specific causes that had earlier been pleaded rather than the general. He argued that allowing the plaintiffs to plead a deficiency in the installation of the integrated power system did not give the defendants fair notice of the case against them or meet the plaintiffs’ requirements in terms of proof. He argued that, if the plaintiffs were allowed to amend the pleadings in this way, they would need to examine the whole of the integrated power system to assess potential defects and potential causes of the fire.

[24] Counsel for the plaintiffs who, as I said, has only been instructed very recently, acknowledged the lateness of the application for leave to amend and the need to consider prejudice arising out of this. He confirmed that the specific failures in installation are still being relied upon although he suggested that, with the benefit of the statutory guarantees, if the plaintiffs could establish that the fire resulted from a failure in the integrated power system, that might well be sufficient for the plaintiffs to prove the defendants were liable for the damage caused by the fire.

[25] He submitted that, with the amendment, the essential issues in this case will not change. The plaintiffs have always had to establish that the fire resulted from some failure with the integrated power system and not from some other cause. He argued that had been the issue on which the defendants’ main experts had been engaged from very soon after the fire occurred. Without being contradicted, he said the defendants’ main fire investigator and an electrical engineering expert had visited the scene of the fire to assess potential causes of the fire in the days immediately after it occurred. He submitted that it was unlikely they would need to make any further investigations which they could not have already carried out. Such investigations would always have been necessary given the defendants’ denial that the fire had resulted from any failure connected with the integrated power system.

[26] In the week before the trial was due to commence, the parties filed with the

Court copies of the expert evidence they were intending to provide to the Court.

[27] Mr House is an electrical inspector to give evidence for the plaintiffs. He said he was instructed to provide an opinion as to the conduct of the electrician in installing the solar power unit in the hut and whether negligent installation of the unit was the cause of the fire. His evidence relates solely to the nature of the system and the way a neutral wire associated with the system appears to have been compromised by a screw going through corrugated iron into a cable.

[28] Mr Shelton is an electrical engineer. His brief of evidence explained why he came to the same conclusion but he also explained why he considered the fire was not in the log-fire area but was electrical in origin.

[29] The plaintiffs were going to call evidence from Mr Irvine, a fire risk management officer with the New Zealand Fire Service. In his evidence, he referred to the investigations he had made in the days immediately after the fire, how he concluded the area of origin of the fire was within the electrical system and why he concluded the fire could not have been caused by any natural event or through being deliberately set alight. He produced a report for the fire service dated 9 March 2015 in which he expressed the conclusion:

It is determined that the fire is not suspicious in cause and that the origin was within the Area 2 of the building and not from the fire place, kitchen, stove or fridge within this area ... It is believed that the point of origin is somewhere near the Electrical switchboard area, including the solar power and generator control units. Exact cause could not be determined from the remaining evidence at the scene that we observed.

[30] The defendants have thus been on notice since soon after the fire that, from the fire investigator’s report and the plaintiffs’ subsequent briefs of evidence, it was claimed that this fire originated from a fault in the electrical system and that other potential causes could be excluded.

[31] I was also satisfied from reading the briefs of evidence that, although there is a considerable amount of expert evidence relating to the particular defect in the system which has been identified by the plaintiffs, the defendants’ expert had always

addressed the issue of whether the fire could have resulted from a cause other than the integrated power system.

[32] In a brief of evidence filed for the defendants, Mr Joseph said that on 31

October 2014 he was asked to:

1. investigate the origin and cause of the fire;

2. consider any evidence found by the New Zealand Fire Service investigation; and

3. advise as to what, in his opinion, was the likely origin and cause of the fire.

[33] He said in his brief that he has reviewed relevant information, reports and records. He said he inspected the scene on 1 November 2014 and revisited the scene on 5 August 2016 and examined additional items Mr Collis had taken from the fire scene. In his evidence, he says that, as a result of his investigation, he considered the most probable cause of the fire originated in the immediate vicinity of the wood- burner flue system at the eastern end of the open plan lounge/kitchen area of the hut. It is apparent that this was away from the area which Mr Irvine had identified as the origin of the fire.

[34] Mr Joseph confirmed he was giving his evidence as an expert witness and was complying with the code of conduct for expert witnesses. I thus proceeded on the basis that he would have carefully and fully investigated potential alternative causes of the fire, and the basis on which Mr Irvine and Mr Skelton considered the fire originated in the area of the integrated power system. It was also apparent from his brief that the fundamental dispute between the plaintiffs and the defendants has always been whether the fire originated from a fault in the integrated power system or from some other cause.

[35] Against that background, I did not consider the proposed amended pleading would take the defendants by surprise. Were I to refuse the amendment, potentially a defect in the pleadings could have denied the plaintiffs the benefit of guarantees to which they were entitled by legislation. The amendment was thus required to

determine, on the merits and on the basis of relevant evidence, the real controversy between the parties. For all those reasons, I considered it appropriate to give leave to the plaintiffs to file the amended statement of claim as provided to the Court.

[36] Counsel for the defendants had also suggested that, if the amendment was allowed, the proceedings should be adjourned so the defendants could consider the further basis on which the plaintiffs’ case was being pursued, and make other enquiries that might be relevant. It was suggested that such enquiries could include obtaining information as to the appropriateness and adequacy of the components used in the integrated power system which was installed and also the state of any appliances, such as a fridge, that remained at the property and which it was suggested could have been the cause of the fire.

[37] Given the expert evidence being led from Mr Joseph, I considered that these matters would or should have been investigated when he was asked to carry out his initial investigation. Given the extent of the destruction caused by the fire, it seemed unlikely that any further investigations of this sort would result in different and relevant evidence becoming available. The mere possibility that such evidence might be available did not, in my view, justify the prejudice that would be done to the administration of justice and to the plaintiffs if there was a further significant delay in bringing these proceedings on for hearing and having to abandon a hearing

which had been scheduled to take nine days.⁸

[38] For those reasons, an adjournment of the proceedings was denied. I did indicate in my ruling that I would consider allowing further evidence to be called at a later date if, in the interests of justice, this was required.⁹

Solicitors:

Geoffrey Brodie, Barrister, Christchurch

Rhodes & Co., Christchurch

McElroys, Auckland.

⁸ The fifth scheduled day falling on the Canterbury Anniversary. As to the “irreparable element of unfair prejudice in unnecessarily delaying proceedings”, the need to maintain public confidence in the judicial system and the allied need to use the court’s time efficiently, see Aon Risk Services Australia Ltd v Australian National University, above n 5, at [5].

⁹ The hearing thus began but the proceedings were settled on the second day.