AUCKLAND WATERFRONT DEVELOPMENT AGENCY LIMITED v MOBIL OIL NEW ZEALAND LIMITED [2013] NZHC 2160

AUCKLAND WATERFRONT DEVELOPMENT AGENCY LIMITED v MOBIL OIL NEW ZEALAND LIMITED [2013] NZHC 2160 [22 AUGUST 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2012-404-2138[2013] NZHC 2160BETWEEN AUCKLAND WATERFRONTDEVELOPMENT AGENCY LIMITEDPlaintiffAND MOBIL OIL NEW ZEALAND LIMITEDDefendantHearing: 22 August 2013Appearances: AR Galbraith QC and M Smith for PlaintiffMG Ring QC, Philip Rzepecky and A Colgan for DefendantJudgment: 22 August 2013ORAL JUDGMENT OF KATZ J(Admissibility of expert evidence)Solicitors:Greenwood Roche Chisnall, WellingtonGilbert/Walker, AucklandCounsel:AR Galbraith QC, Shortland Chambers, AucklandMG Ring QC, AucklandP Rzepecky, MGP Chambers, AucklandIntroduction[1] This judgment deals with an objection raised by the plaintiff, AucklandWaterfront Development Agency Limited ("AWDA"), to the admissibility of expertevidence that the defendant, Mobil Oil New Zealand Limited ("Mobil"), proposes to call.[2] I will briefly set out the factual background. I note that this trial is at a relatively early stage and I have not yet made any factual findings. Any views expressed are therefore preliminary only and are solely for the purposes of providing some factual context for the admissibility issue that I must determine.[3] These proceedings relate to two properties owned by AWDA in what is now known as the Wynyard Quarter. The Wynyard Quarter is located on land that historically has been referred to as the Western Reclamation. The Western Reclamation was reclaimed from the sea between 1905 and 1931. It covers approximately 255 acres. Until recently, the area was occupied by heavy industry, much of it port related.[4] The properties which are the subject of these proceedings were part of an area known as the Tank Farm. They were used for the bulk storage of petroleumproducts and chemicals from the 1920's onwards. From various dates in the late 1920s and 1930s until the 1950s and 1960s companies associated with Mobil'sAustralian operations leased the sites. Mobil, the legal entity that is the defendant to these proceedings, occupied the sites from the 1950s and 1960s through until 2011. Following the expiry of the original 50 year leases, Mobil's occupancy was pursuant to periodic tenancies and/or holding over tenancies.[5] The key issue in these proceedings is whether Mobil is contractually required, pursuant to the periodic tenancies it entered into with AWDA in 1985 (which were subsequently held over and continued on a month to month basis from 1 January 1994) to remediate the properties at the conclusion of the lease terms.[6] It does not appear to be in dispute that the properties were significantly contaminated over the 80 years or so that the sites were used as bulk storage facilities. It also appears to be common ground that not all of the sub-surface contamination is due to activities undertaken by Mobil. For example, evidence has been given that the sub-surface of the sites was contaminated, at least to some extent, from inception. This is primarily due to the fact that industrial waste products from the nearby gas-works were used during the reclamation of the land on which the sites are located. In addition there has been evidence of a very significant jet fuel spillage by a neighbouring tenant.AWDA's claims against Mobil[7] AWDA pleads two causes of action against Mobil, both in contract. The first cause of action alleges that Mobil breached express clauses in the tenancy agreements. For example, in one of the tenancy agreements, Mobil covenanted:At all times to keep the said land hereby demised in good order and clean and tidy and free from rubbish weeds and growth and will at all times keep all buildings oil storage tanks structures fixtures and other improvements in or upon the said land in good and tenantable repair and condition to the reasonable satisfaction of the [lessor] and will upon the determination of this tenancy or any new tenancy for any reason or cause whatsoever yield up and deliver to the [lessor] the said land and any improvements left thereon in such good and tenantable repair and condition and clean and tidy to the reasonable satisfaction of the [lessor].[8] Each of the other tenancy agreements contains obligations in the same or similar terms.[9] AWDA pleads that pursuant to such clauses Mobil was obliged, on termination of the tenancy agreements, to deliver possession of the land to AWDA in an uncontaminated condition, save in respect of any inorganic contaminants associated with gas-works derived wastes which formed part of the original reclamation, so that the land can be used for any permitted activity. AWDA says that Mobil has breached this requirement by, in essence, failing to remove all historic sub-surface contamination, except the gas works derived waste, so as to bring the land back to its condition prior to any oil company occupation.[10] Mobil admits that the relevant clauses form part of the tenancy agreements, but says that AWDA is seeking to interpret the clauses in a manner that is simply not tenable. Mobil says that the correct interpretation of the clauses is that it was required to leave the sites in a condition reasonably fit for occupation by the class of tenant (heavy industrial) reasonably likely to have taken them as at 1 January 1994, when the holding over tenancies commenced. Mobil says that it did so.[11] AWDA's second or alternative claim is that Mobil owed and breached animplied term in the tenancy agreements that, on termination, Mobil would"remediate the hycrocarbon contamination caused by it or its predecessor's activities" from the sub-surface. Mobil denies that there is any such implied term.Proposed Evidence[12] Mobil proposes to call expert evidence from Mr Timothy Jones, a partner in the law firm Glaister Ennor. I have reviewed Mr Jones' proposed evidence.[13] Mr Jones records his instructions as follows:2.1 I have been instructed by Mobil's solicitors to consider five tenancyagreements entered into between Mobil and the Auckland Harbour Board on 23 October 1985 and, in particular, the make good clauses, the essential words of which are the same in each agreement. I have been asked to advise on the way that these clauses were used by solicitors in 1985 in commercial leases and, in particular:Whether the formula of words used had a customary use in the legal/commercial property industry.What a reasonable and competent solicitor would have advised a prospective landlord or tenant about the circumstances in which the use of the clause was appropriate.[14] Mr Jones' proposed brief concludes as follows:6.1 In summary, in 1985, I would have expected that:If a landlord had communicated to its solicitor a desire to impose on an oil industry tenant an obligation to remove existing and any further sub-surface contamination, that solicitor acting reasonably and competently, would not have advised the landlord to use the standard clause.If an oil industry tenant had communicated to its solicitor that the landlord had proposed using the standard clause, that solicitor acting reasonably and competently, would not have advised the tenant that, by agreeing to the clause, it would assume an obligation to remove existing and any further sub-surface contamination.[15] AWDA objects to the admissibility of such evidence.Discussion[16] AWDA's key challenge to Mr Jones' proposed evidence was not based on lack of expertise, although Mr Galbraith QC did submit that in some respects theevidence went outside the scope of Mr Jones' relevant expertise. The key issue however, is whether Mr Jones' evidence meets the "substantially helpful" test set out in s 25 of the Evidence Act 2006. If it does not, his evidence will not be admissible,regardless of Mr Jones' status as an expert.[17] Section 25(1) of the Evidence Act provides as follows:25 Admissibility of expert opinion evidence(1) An opinion by an expert that is part of expert evidence offered in a proceeding is admissible if the fact-finder 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 proceeding.[18] Accordingly, as the fact-finder, I must be satisfied that I will be likely to obtain substantial help from Mr Jones' opinion evidence in either:[a] understanding other evidence in the proceeding; or[b] ascertaining any fact that is of consequence to the determination of the proceeding.[19] The common law "ultimate issue" and "common knowledge" rules were notcarried over into the Evidence Act. In its report preceding the Act, the LawCommission expressed the view that the substantial helpfulness test would be able tomore consistently and predictably fulfil the function performed by these rules,namely to prevent evidence that usurped the function of the fact-finder or resulted in time being wasted. In any event, as the Law Commission observed, the common lawapproach, as applied in practice, did not significantly differ from that contained ins 25.1[20] Courts are generally reluctant to admit expert opinion evidence on legal issues. Such issues are usually addressed through submissions of counsel, with reference to previous cases, legal texts and so on.[21] The test for the admissibility of expert opinion evidence is higher than that of mere relevance. Nor will it suffice that the expert opinion evidence might possibly be helpful to the decision-maker. The threshold in section 25 is that the fact-finder islikely to obtain substantial help from the proposed expert opinion evidence.[22] In terms of the two limbs set out in s 25 of the Evidence Act, Mr Ring QCacknowledged that Mr Jones' evidence would not be likely to substantially help the Court to understand other evidence in the proceedings. However, he submitted that the proposed evidence came within the second limb of s 25(1), namely that it wouldlikely be substantially helpful in ascertaining "a fact that is of consequence to the determination of the proceedings".[23] Mr Ring submitted that the relevant factual issue is: "what were theintentions of the parties when they entered into the tenancy agreements?" However, the parties intentions must be determined objectively, not subjectively. In my view,Mr Jones' evidence as to what a reasonable and competent solicitor would have advised the parties the relevant clauses meant in 1985 will not be likely tosubstantially help me in determining the parties' objective intentions at the outset of the tenancies. Nor will any other aspect of Mr Jones' evidence provide such assistance.1 Law Commission Evidence (NZLC, R55, 1999) at [76]. See also Diagnostic Medlab Ltd v Auckland District Health Board HC Auckland, CIV-2006-404-4724, 5 December 2006 at [20]-[21][24] In accordance with orthodox contractual interpretation principles, I must determine, objectively, what the common intention of the parties was. The necessary starting point is the words used by the parties in the relevant clauses, considered in the context of the agreements as a whole. I am also entitled to take into account the wider factual matrix. There is extensive evidence before the Court regarding this.Mr Jones' evidence will not be substantially helpful to me in undertaking this interpretation exercise.[25] I have not overlooked Mr Ring's submission that expert evidence on legalissues is sometimes permitted. In particular, Mr Ring noted that expert opinion evidence of conveyancing practice, in the context of particular terms of a specified agreement, is often allowed. He referred to YB Properties Limited v DOH Young Choi & Ors as a recent example.2 In that case expert opinion evidence was allowed as to the consequences for conveyancing practice if a new version of the standard form ADLS "Agreement for Sale and Purchase of Real Estate" was interpreted in the manner put forward by the defendants. Andrews J concluded that such evidence would be substantially helpful. I note that her Honour rejected the defendant'ssubmission that the evidence was, in effect, an expert's opinion as to how the Courtshould interpret the agreement. Rather, the permissible scope of the evidence was identified as the impact on conveyancing practice of a particular interpretation of the agreement.[26] I do not see Mr Jones' proposed evidence in this case as analogous. Matters of presentation aside, the reality is that Mr Jones seeks to give evidence as to the correct interpretation of the relevant lease documents. Although this is presented in terms of what a reasonable and competent lawyer would have advised their client in 1985, the end result is essentially the same. I further note that this is not a solicitor'snegligence case. It is not directly in issue what a reasonable and competent lawyer may have advised their client in 1985. I accept Mr Galbraith's submission thatpresenting the evidence in this manner does not disguise its underlying intent. The issue the proposed evidence relates to is the correct interpretation of the key clauses of the tenancy agreements, which is a question of law. Indeed it is the primary issue of law in this case and is quintessentially a matter for the Court and not an expert.2 YB Properties Limited v DOH Young Choi & Ors [2013] NZHC 1829.[27] I note that, in opening, counsel for Mobil stated that this case involves orthodox principles of contract law and their orthodox application to well established principles of landlord and tenant law. I was referred, by both parties, to a number of helpful authorities on such issues and will no doubt receive further assistance on the legal issues in closing submissions. The correct interpretation of the tenancy agreements should be addressed in that context, as against the background of the extensive factual matrix evidence that has been adduced at trial.[28] Mr Jones' opinion on the matters referred to in his brief of evidence are not likely to be of substantial help to me, as the fact finder, in either understanding any of the evidence in these proceedings or ascertaining any fact that is of consequence to a determination of the proceeding. It therefore fails to meet the requirements of s 25 of the Evidence Act.[29] I am reinforced in my conclusion by the observations of the Supreme Court in Penny v Commissioner of Inland Revenue.3 Blanchard J, in delivering the reasons of the Court in that case, observed as follows:4[32] For his part, the Commissioner objects to portions of Mr Shewan'sevidence in which Mr Shewan expressed his views on some of the legal issues in the case. It seems to us that the Court of Appeal dealt correctly with this objection. Randerson J said that this material had no place in the evidence of an expert witness and should more properly have come from counsel. To that extent, the Court of Appeal put Mr Shewan's evidence toone side. So do we. But of course this Court did hear the same arguments canvassed by Mr Harley in his submissions. So there is no practical consequence of the upholding of the objection. It should, however, be observed that it is undesirable and wasteful of time and effort of both parties when such material appears in expert briefs of evidence. The practice of including it should stop. If it persists, courts should require amended briefs to be filed.Result[30] For all of the reasons outlined above, I rule that Mr Jones' evidence is inadmissible pursuant to s 25 of the Evidence Act 2006.____________________________Katz J3 Penny v Commissioner of Inland Revenue [2012] 1 NZLR 433 (SC).4 At [32]