IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE	
CIV-2019-485-349
[2020] NZHC 2898	

BETWEEN	DANIEL JOSEPH MILES AND
ELIZABETH CHARLOTTE MILES
Plaintiffs	
AND	BRUCE WILLIAM GADD
Defendant	

Hearing:	On the papers	
Appearances:	B M Easton and D J Powell for Plaintiffs D A Bleier for Respondent	
Judgment:	4 November 2020	

JUDGMENT OF CLARK J
(Admissibility of Evidence)

[1]	This judgment determines the defendant’s challenges to the admissibility of evidence in briefs served by the plaintiffs.

The proceeding

[2]	In this proceeding the purchasers (the plaintiffs) of a unit title property sue the defendant for breaches of warranty in the agreement for sale and purchase (the Agreement) entered into in June 2013. In 2014 an engineers’ report revealed a number of weathertightness defects in the Wellington apartment complex known as Sirocco Apartments. As a result the plaintiffs became liable to contribute towards the cost of remedial works and special levies charged to the Body Corporate to cover the costs of investigating the defects.

MILES AND MILES v GADD [2020] NZHC 2898 [4 November 2020]

[3]	The defendant pleads affirmative defences of contributory negligence, failure to mitigate loss, waiver of reliance on the warranties and voluntary assumption of risk (volenti non fit injuria).

Challenges to admissibility of plaintiffs’ evidence

[4]	The defendant filed a memorandum challenging the admissibility of parts of the brief of evidence of Mr Andrew Gray who addresses the nature of the defects and the scope of remedial work required to repair the defects.

[5]	The defendant challenges the admissibility of the entire brief of evidence of Mr Patrick Hanlon who is a quantity surveyor and whose evidence relates to the estimate of repair costs and the time required to repair. This is the second apartment in the Sirocco complex in relation which Mr Hanlon has calculated unit-specific repair costs.

[6]	The defendant seeks orders that  the plaintiffs file a replacement  brief  for  Mr Gray pursuant to s 91 of the Evidence Act 2006 omitting all of the paragraphs to which objection is taken and an order that Mr Hanlon’s brief is withdrawn and not read.

Decision

The issues

[7]	The essential issues are threefold:1

(a)	whether the defendant was required to obtain a building consent for re- tiling work carried out on the balcony to the apartment;

(b)	whether the defendant had knowledge or notice of any fact that might give rise to or indicate the possibility of the plaintiffs incurring liability under the Unit Titles Act 2010 and breached the warranty by not

1	The plaintiffs agreed to this, the defendant’s formulation of the issues, except in relation to   issue (b) which I have recast to reflect the plaintiffs’ statement of this issue (and which, I agree, arises on the pleadings).

informing the plaintiffs about their pending liability about which (the plaintiffs say) the defendant was aware; and

(c)	the extent of the plaintiffs’ loss, if any, if the warranties were breached.

[8]	Broadly speaking, the plaintiffs contend in relation to issue (a) that if the defendant had complied with cl 6.25 of the Agreement and obtained the relevant building consents, the broader defects would have been discovered, the plaintiffs would have received notice of the defects and they would not have purchased the property.

[9]	In relation to issue (b) and again, broadly speaking, the plaintiffs say that due to the defendant’s participation in Body Corporate meetings he had knowledge or notice of facts that gave rise to the possibility of the owner or purchaser incurring liability under the Unit Titles Act.

[10]	If the Court finds there was a breach, the calculation of loss becomes a key issue particularly as the plaintiffs have provided alternative methods of quantification one based on lost opportunity to purchase other properties and one based on diminution in value of the property and related losses.

Mr Gray’s evidence

[11]	One of the objections taken to Mr Gray’s evidence is that his paragraphs [20]–
[53] relate to matters that have been admitted via a reply to a notice to admit facts. In my view however these paragraphs go beyond the matters admitted. The effect of the admissions is that the plaintiffs will not have to prove the weathertightness defects itemised at [19](a)–(g) of their statement of claim. The defendant admits that, as originally constructed, the apartment complex contained the itemised defects. But, as Mr Gray explains, his commentary on the admitted defects is necessary to assist the Court’s understanding as to why extensive repairs to the complex were required.

[12]	Further, the defendant did not admit that as originally constructed the apartments did not comply with clauses B2 or E2 of the New Zealand Building Code. Mr Gray’s evidence is to the effect that the defects amount to breaches of those clauses.

I consider it is relevant for Mr Gray to give evidence as to the nature and extent of the building defects in order to conclude they were defects in the original construction which breached the Code and therefore why the building repairs are necessary and how long they are likely to take.

[13]	It follows that I do not regard this evidence as breaching r 9.7(4)(f) of the High Court Rules 2016 which states that a brief “must avoid the recital of the contents or a summary of documents that are to be produced in any event”.

[14]	In terms of the criticism that paragraphs [58]–[102] contain recitals of the contents of documents that are to be produced in any event, the plaintiffs say Mr Gray has only quoted from the relevant Body Corporate documents to the extent necessary to support the conclusions he reaches at [114] and [115] of his brief.

[15]	Nevertheless, while I appreciate the plaintiffs’ point and their further point that it will be convenient  for the trial Judge to avoid having to cross-refer between       Mr Gray’s brief and the documents — and then locate the relevant part of the documents — the paragraphs constitute a technical breach of the rule requiring briefs to avoid recital of documents to be produced. If they wish, the plaintiffs can achieve the same goal of facilitating the hearing by having this same content form an appendix to their written submissions.

[16]	To avoid the unnecessary time and expense of having Mr Gray actually excise these paragraphs from his brief I simply direct that paragraphs [58]–[102] not be read.

[17]	For reasons similar to those I have outlined I see [113] as unobjectionable. The evidence is relevant to the alleged breaches of the New Zealand Building Code and Mr Gray reiterates his comments with regard to the scope of remedial works in that a full re-clad is necessary to repair the Sirocco apartment complex.

[18]	The plaintiffs accept that the last sentence in para [107] is a matter of opinion and that it should be removed from Mr Gray’s brief.

[19]	In conclusion, the evidence at [58]–[102], and the last sentence in paragraph
[107] of Mr Gray’s brief are either to be excised in a replacement brief, or simply not read.

Mr Hanlon’s brief

[20]	The defendant says that given the plaintiffs have sold the property and are no longer claiming a contribution to the repair costs as part of their assessment of loss, Mr Hanlon’s brief of evidence should be excluded as irrelevant. The plaintiff says this is an unduly simplistic interpretation of the quantum issues to be determined at trial. The plaintiff’s cite the following passage from McGregor on Damages:2
The most that the cost of repairs can provide, as Steward v Rapley indicates, is material evidence as to what would be a proper price for the property. Thus in that case the Court of Appeal considered the cost of repairs as the most reliable method of market valuation and reversed the judge below who had awarded a lower amount because, it was said, he had failed to distinguish between recovering cost of repairs as a head of damage and as a method of arriving at market value.

[21]	The plaintiffs make the point that when they served the briefs of evidence the relevant statement of defence was that dated 3 July 2020 in which the defendant pleaded he had no knowledge and therefore denied the estimated total cost of the remedial works and the share of the estimated total cost of the works attributable to the subject property.

[22]	Not until the statement of defence dated 23 September 2020 (filed in response to the Court’s request) did the defendant admit the estimated cost of the remedial works and the amount attributable to the subject property.

[23]	Presently I see the evidence as relevant. I consider an assessment of irrelevance is one that is best determined at trial in the context of the presentation of the case and in light of all the evidence to be adduced. At that stage I will have a better

2	James Edelman (ed) McGregor on Damages (20th ed, Sweet & Maxwell, London, 2009) at [34- 055].

understanding of the nature and scope of the issues in the litigation and the evidence tendered by both parties.3 It may be that Mr Hanlon’s brief of evidence is irrelevant but I wish to make that determination in the context of the hearing for the reasons just mentioned.

[24]	Mr Hanlon’s brief occupies only five pages. His evidence will have no unfairly prejudicial effect on the proceeding nor needlessly prolong the trial which is set down for seven days.

Concluding comments

[25]	I address timeframes. Following receipt of the memorandum of counsel for the defendant filed 21 September 2020 I issued a Minute on 22 September setting a timetable for the filing of responses. I also requested copies of the briefs of evidence in dispute and raised the issue of a statement of defence to the third amended statement of claim.

[26]	Unfortunately, although the final memorandum on the issue of admissibility was filed on 6 October 2020 there was a considerable delay in the registry between that date and 19 October when the file was referred to me. I was in the second week of a jury trial at the time. I regret any uncertainty for the parties arising from the delay.

[27]	While I note the plaintiffs’ concern about possible prejudice the defendant may have until five working days before the hearing to serve any reply evidence. I also direct the registry to arrange a telephone conference with counsel either this week or early next week.

[28]	As both parties have had a measure of success I consider costs should lie

3	Commissioner of Inland Revenue v BNZ Investments Ltd [2009] NZCA 47, (2009) 19 PRNZ 553 at [45] upholding the High Court’s conclusions in Commissioner of Inland Revenue v BNZ Investments Ltd (2008) 19 PRNZ 71.

where they fall but I am open to reassessing that view in light of the eventual outcome of the trial.

Karen Clark J

Solicitors:
Grimshaw & Co, Auckland for Plaintiffs Succeed Legal, Wellington for Defendant