DEAN SELAK CARRYING CO LTD v LONERGAN [2015] NZHC 2230

DEAN SELAK CARRYING CO LTD v LONERGAN [2015] NZHC 2230 [16 September 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2015-404-515[2015] NZHC 2230BETWEEN DEAN SELAK CARRYING COMPANYLIMITEDAppellantAND GRAHAM REG KEREHAMALONERGANRespondentHearing: 18 August 2015Counsel: I Hutcheson for AppellantF Peters for RespondentJudgment 16 September 2015JUDGMENT OF FOGARTY JThis judgment was delivered by me on 16 September 2015 at 11.30 a.m.,pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate: .Solicitors: The Small Law Firm Ltd, AucklandCorban Revell, AucklandIntroduction[1] This is an application for leave to adduce further evidence on the appeal by Dean Selak Carrying Company Limited (Dean Selak) against the decision in the District Court at Waitakere of Judge GM Harrison, in favour of the plaintiff, now respondent, Mr Graham Lonergan (Mr Lonergan). 1[2] The District Court awarded judgment for the plaintiff (Mr Lonergan) in the sum of $10,659.57, together with interest and costs. This was for unpaid maintenance costs. Mr Lonergan was the mechanic who serviced trucks of the defendant. The appellant, Dean Selak, had counterclaimed, seeking a judgment in the sum of $31,108.33, being the cost of repairing a damaged engine, loss of profits and incidental costs, including towing and legal costs. That claim was dismissed, as the appellant had not proved that Mr Lonergan caused the damage to the engine.The damage[3] The cause of the damage to the truck was the failure of the number five cylinder. The reason the cylinder failed is that the oil "squirter jet" was blocked.That jet functioned to squirt oil into the cylinder in order to cool the mechanism.[4] On inspection, the jet was found to be blocked by debris; the debris being nitrile rubber. Nitrile rubber is used for various purposes in engines and is also used to make gloves. Dean Selak claimed that the only way the squirter jet could have been blocked by nitrile rubber was by reason of parts of a nitrile glove being left in the engine during maintenance. A filter made it impossible for any foreign materials to get to the squirter jet. As the filter stops anything more than 30 microns in diameter and the debris found was thicker than that, therefore that debris must have been left by the mechanic, Mr Lonergan.[5] The mechanic's case in reply was that the debris could not have come fromgloves as the debris was thicker than gloves measured by an expert, Dr Smith.1 Lonergan v Dean Selak Carrying Company Ltd DC Waitakere CIV-2012-090-1422.[6] Dr Smith, relying second hand on the usages of Mr Lonergan, had measured the diameter of three samples of gloves. His evidence was that the thickness of these gloves was not as great as the thickness of the debris found. Therefore the nitrile debris did not come from the nitrile gloves used by the mechanic.[7] In his evidence in chief, Mr Lonergan said he had probably bought the glovesfrom "Brakes and Transmission". However, there were no measurements of the thickness of this source of gloves before the Court, as these purchases had not been brought to the attention of Dr Smith.The trial issues in more detail[8] It was accepted that Dean Selak had the onus of proving negligence or breach of contract by Mr Lonergan. Effectively, the trial issue was that Dean Selak must prove it more likely than not that Mr Lonergan left part of a nitrile rubber glove in the truck engine while undertaking its servicing.2 It is common ground that Mr Lonergan used to wear such gloves and they occasionally snagged and tore during his work.[9] The Judge found that the ultimate burden on Dean Selak was to establish: 3The inference that there was no other way in which the debris blocked the squirter, that is the cooling valve, than by part of the glove being worn by Mr Lonergan finding its way into the engine.[10] Dr Smith's analysis of the glove samples indicated that they were relatively consistent in their thickness and significantly thinner than the debris.4 He also found that the debris decomposed at a different rate to the glove samples.5 The Judge was not satisfied there was any proof that Mr Lonergan was wearing gloves from Brakes and Transmission or, if samples had been obtained, any different measurement result would have been achieved.6 More significantly, the trial Judge rejected the proposition that the debris had to be left by the mechanic. He accepted the evidence of an insurance assessor, Mr Cossey, that it was possible that the debris was in the oil2 At [15].3 At [17].4 At [20]5 At [14] – [15].6 Ar [21].filter when supplied by the manufacturer. That Dean Selak had supplied the filters to Mr Lonergan and there was no evidence as to the packaging of them, nor from where Dean Selak obtained them.7History of expert opinions[11] It is common ground that nitrile rubbers are widely used in products which are in contact with hydrocarbon liquids, oils and greases, and as components of hoses, gaskets, oil seals and tank linings. They are also used for rubber gloves which can be worn when handling engine parts.[12] Mr Lonergan completed a general liability claim form with Lumley General, his insurer, and in the part of the form requiring completion on the issue of who is responsible for the loss, Mr Lonergan wrote:Disposable gloves tear sometimes when changing oil and filters and suspect a piece has fallen into the oil when fitting new.[13] Mr Cossey, the assessor for the insurers was not convinced. He engaged another expert, Dr Jonathon Smith, an expert chemist, who was provided with three samples of gloves – one each from Repco and New Zealand Safety and one from the workshop of UD Truck Distributors who repaired the engine. He found that these gloves were considerably thinner than the debris sample and, furthermore, the gloves were shiny on both sides, leading to the conclusion that the failure was not the result of pieces of disposable gloves falling into the oil when fitting new oil filters.[14] In the ensuing litigation, Dean Selak retained a Mr John Routen as its expert. He is an expert in the failure modes of automotive components, specialising in engine parts and metal fatigue failure. He acknowledged that he is not a chemist andcould not dispute Dr Smith's analysis.[15] It was Mr Routen's evidence for Dean Selak that there were two oil filters – a bypass oil filter and the main oil filter itself. The main oil filter will not allow any material greater than 30 microns in diameter to pass through. Mr Routen's evidencewas that there was no chance of debris getting past the main oil filter and to the oil7 At [25].squirter jet located at the base of the cylinder. Therefore it was his opinion that the debris found blocking the oil squirter jet had to have been deposited into the engine on the filtered side of the oil filter.[16] It was Mr Routen's evidence that the blockage found in the oil squirterappeared to look like particles of a thin plastic glove. Mr Routen rejected the view that nitrile rubber could have come from other possible sources. He remained adamant that the only way the foreign material could have found its way into the filtered side of the main filter was by having been introduced at the time of service.[17] If Mr Routen's evidence is accepted, then on the probabilities the debris came from a glove worn by the mechanic servicing the engine containing the implicit inference that parts of that glove were left on the filtered side of the main filter through careless work and thus the damage was the liability of the mechanic.[18] It will be seen that Mr Routen's approach did not require him to directly challenge the measurements of Dr Smith. Dr Smith's evidence depended upon therelevance of his sample gloves.[19] When Mr Lonergan gave evidence, he was asked in evidence in chief:Q Where did you get your gloves from?A From a few different suppliers, I was actually trialling a few different types of gloves at that stage where I think those ones were probably bought from a supplier called Brake and Transmission but I also purchase ... gloves from Repco as well.[20] In his will say statement, Mr Lonergan had not discussed where he got the gloves from. In the will say statement of Mr Cossey, he reported Mr Lonergan as saying:Mr Lonergan did not supply a sample glove as he said he no longer purchased them, but when he had done so in the past, he just went to Repco or other similar suppliers.[21] Dr Smith relied upon Mr Cossey and tested gloves from Repco and other suppliers, but not Brake and Transmission. So the case went to trial without anyone examining gloves supplied by Brake and Transmission. Mr Hutcheson submittedthat in the reality of a one day trial there was no possibility of going away and getting evidence as to the characteristics of nitrile gloves supplied by Brake and Transmission upon learning in the course of the trial that Mr Lonergan had obtained gloves from this source.[22] The Judge made findings of fact on the significance of the characteristics of nitrile rubber gloves;8 and on Mr Routen's proposition that the debris had to have been left by a mechanic.9The samples were not valid[19] It was accepted by all witnesses that there are a large number of nitrile rubber gloves on the market of varying thicknesses and which are used for different purposes. Some are used in surgical matters, others when handling acidic or corrosive substances and so on. Mr Lonergan said that he obtained gloves from different sources. Repco was one of them and he said that gloves obtained from an outlet called Brakes and Transmission were the best sort. It is clear that Mr Cossey tried to obtain a representative sample of gloves. One of them came from Repco, another from NZ Safety and one from the workshop of UD Distributors.[20] As I have already described, Dr Smith's analysis of these samplesindicated that they were relatively consistent in their thickness and significantly thinner than the debris. Dean Selak claimed that Dr Smith should also have tested a sample from Brakes and Transmission, but there was no evidence that gloves supplied by that outlet were any different from the samples obtained by Mr Cossey and tested by Dr Smith. There was no evidence from Dean Selak of any attempts to obtain a glove sample from that outlet and to have it tested further by Dr Smith or by some other properly qualified metallurgist.[21] I am therefore not persuaded that there was any proof that Mr Lonergan was wearing gloves from that outlet when he conducted the service on the truck, nor that if sample gloves had been obtained from Brake and Transmission, any different measurement result would have been achieved.The closed system[22] Dean Selak produced in evidence a lubrication schematic diagram. It indicated the direction of oil flowing through the engine. There are two oil filters: a bypass oil filter and the main oil filter itself, the former being larger than the latter. Mr Routen initially confused the bypass oil filter as the main oil filter which led him to suggest that Mr Lonergan may have severed part of the glove he was wearing by picking up the oil filter with his middle finger inserted through the aperture. It seems the bypass oil filter had sharp8 At [19]-[21].9 At [22]-[27].spring steel flaps but the main oil filter does not and Mr Routen accepted that he had been mistaken in that regard.[23] The main oil filter will not allow any material greater than 30microns to pass through it. Once past the oil filter, Dean Selak's case wasthat there was no chance of debris getting into the oil and passing to the oil squirter jet which is located at the base of the piston cylinder. It is held in place by what is described as a banjo fitting which is a nut inside of which is a piston which reacts to heat. As I understood it, the hotter the engine became the more the piston would open to allow cooling oil to be squirted through the aperture into the piston cylinder to cool it. When stripped down, the banjo bolt and squirter aperture were blocked with the debris.[24] The inference Dean Selak sought to draw from this was that only debris deposited on the inside of the oil filter before it was fixed into position could have caused the blockage.[25] Mr Cossey, however, would not accept that the system was as free from the introduction of debris as suggested. He said that it was possible that debris was in the oil filter when supplied by the manufacturer. Dean Selak supplied the filters to Mr Lonergan and there was no evidence as to the packaging of them, if any, or from where Dean Selak obtained them.[26] Mr Cossey complained that he was not permitted to cut the oil filter open to ascertain whether debris could have come from within it. He also would not accept that past the filter there were no seals, gaskets, linings or other nitrile material from which the debris could have become dislodged, or"spalled", as Dr Smith described it.[27] My conclusion on this is that Dean Selak has not established that the debris could not have been introduced into the oil lubrication system except from a glove worn by Mr Lonergan.Evidence sought to be introduced[23] The appellant wishes to adduce in evidence the measurement by Mr Bleaken, an analytical chemist, of a sample Brakes and Transmission gloves showing thicknesses – palm 0.07 mm; thumb 0.11 mm; index finger 0.12 mm; little finger 0.11 mm. The purpose of this information is to prove that the Brake and Transmission gloves were significantly thicker than the gloves tested by Dr Smith and thus refute [21] of the judgment discussed above. On the argument of Mr Selak in his affidavit in support of the application, these measurements support a conclusion that the thickness of the Brake and Transmission gloves were comparable to the debris, rather than to the significantly thinner samples examined by Dr Smith.[24] It may be noticed immediately that this additional evidence does not displace the Judge's findings in [25], [26] and [27], relying on Mr Cossey, that the debris could have been in the oil filter when supplied by the manufacturer.[25] Mr Hutcheson submits that the only purpose of seeking this evidence is to get rid of [21] of the judgment. The new evidence is inconsistent with that paragraph and its preceding [20]. Mr Hutcheson submitted he simply wanted [21] to be out and for the appeal court to examine the rest of the judgment.Opposition to the interlocutory application[26] It is common ground that appeals from the District Court to the High Court are normally a rehearing on the record. High Court Rule 20.16 provides:20.16 Further evidence(1) Without leave, a party to an appeal may adduce further evidence on a question of fact if the evidence is necessary to determine an interlocutory application that relates to the appeal.(2) In all other cases, a party to an appeal may adduce further evidence only with the leave of the court.(3) The court may grant leave only if there are special reasons for hearing the evidence. An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal.(4) Further evidence under this rule must be given by affidavit, unless the court otherwise directs.[27] There have been a number of discussions of what are "special reasons" in theauthorities. The general test is the new evidence must be cogent and likely to be material and could not reasonably have been discovered at an earlier stage.10[28] Mr Peters submitted that if this new evidence was allowed, he would have to make an application to admit further evidence in reply. He submitted that Brake and Transmission carry a number of different brands of gloves and the appellant has10 See, for example, H v M-P HC Auckland CIV-2007-404-6512, 13 December 2007 at [6]–[11].merely sought to selectively rely on a sample that has a similar thickness to thefragments found in the engine. That the respondent's scientific analysis by Dr Smith was much more thorough and involved different scanning calorimeter testing and established essentially the debris sample was chemically different from the sample rubber gloves in question.[29] Mr Peters also says that the will say statement of Dr Jonathan Smith was filed in Court and served on the applicant a significant time prior to the trial. That Dean Selak had ample opportunity of undertaking their own independent scientific testing of samples using an expert of comparable expertise to Dr Smith. Rather, they preferred to rely on mechanical related evidence of Mr John Routen and two other witnesses, rather than scientific or chemical testing. Had Dean Selak obtained their own scientific or chemical testing analysis, they might well have obtained other rubber glove samples from other retailers.[30] Mr Peters submitted that admitting further evidence would reopen issues and also have the collateral effect of further delaying recovery by Mr Lonergan of his claim for $10,000 in respect of previous repair work.Analysis[31] On the probabilities, if this application is granted, there is likely to be a new contest in the appeal court between experts on what inferences can be drawn from the Brake and Transmission analysis, including a dispute as to the range of gloves sold by Brake and Transmission, and what sort of gloves from its range that Mr Lonergan was wanting to buy. As a result, the factual issues may be different from those as assessed by the Judge at trial. Materially, this will become a different case.[32] Counsel confirmed to the Court that this is not a dispute between two different (well resourced) insurance companies. Therefore another consequence would be that admitting this evidence will impose a more significant burden on the respondent than would otherwise be the case if the appeal is pursued on the record such as it is. It will also involve significant delays. The appeal itself is set down for hearing on 8 October.[33] There is no doubt that the applicant did have ample opportunity prior to the trial to select expert opinion to use at the trial. There was a deliberate decision not todirectly challenge Dr Smith's evidence.[34] Without new evidence being admitted, it is still open for the appellant to challenge the findings in [21] of the judgment. This would be based on the cross- examination of Dr Smith by Mr Hutcheson which he says extracted concessions from Dr Smith which are at odds with the findings of fact made by the trial Judge in [21]. I refer to the notes of evidence (pages 36 to 37):Q Dr Smith, you were given three samples of Nitrile rubber gloves to test, is that correct?A Yes, that's correct.Q And Mr Lonergan has given evidence today and said that the most likely source of the rubber glove used at that time was from Brake &Transmission. You didn't test any gloves obtained from Brake &Transmission, did you?A I only tested the gloves supplied and so I didn't actually select thosegloves, they were provided to me by the insurance assessor.Q So it's fair to say that your assessment is limited to those three typesof gloves that were given to you for testing, for comparative testing, is that right?A The testing was a comparison between those Nitrile gloves and the debris, yes.Q Yes and do you accept that there are many, many brands of Nitrile gloves on the market?A There are many different brands, yes.Q Yes and evidence has been given that Nitrile gloves come in different thicknesses, would you agree with that?A Yes, they do, yes.Q Yes and evidence has been given that different thicknesses of the glove – different thicknesses are within a particular glove, as well? Like gloves at different thicknesses between, for example, the finger and the palm and the cuff, would you agree with that?A Yes they do, yes they vary, yes.Q So it would seem that the three gloves that were given to you for testing had a similar thickness?A They were all in a similar thickness range, yes.Q Yes so you weren't given gloves that had a different thickness range,for example?A No, we were not supplied those.[35] My conclusion is that Dean Selak deliberately went to trial based on the opinion of Mr Routen to the effect that because of the fine nature of the oil filter, there was no chance of any debris getting into the oil and passing to the oil squirter jet except by being debris left there in the course of maintenance and so by Mr Lonergan.[36] The High Court Rules do not define "special reasons". Nonetheless, they canbe read against a long common law history of placing the greatest value on the trial. Prior to the trial the parties choose which arguments to run and the evidence in support thereof. It is an adversarial system. It is not an inquisitorial system. Unless there are special reasons, the appellate court holds the parties to the pre-trial judgments made by solicitors and counsel as to how the case is to be run at trial.[37] It is important not to undermine that policy because it is perceived as generating one of the critical efficiencies of the adversarial trial.[38] The special reasons rule also reflects the continued wisdom that the trial judge who hears all the evidence from witnesses or as put in by consent, is in the best position to make findings as to the credibility and reliability of that evidence. The discussions of the dangers of mini trials are in addition to those deeper presumptions.11[39] In this case, Dean Selak elected to run with the simple proposition that the debris which blocked the squirter jet had to have been left there by a serviceman/mechanic as the debris could not have got past the filter. That11 See, for example, Telecom Corporation of New Zealand Ltd v Commerce Commission [1991] 2 NZLR 557 (CA) and Rugby Union Players Assoc Inc v Commerce Commission [1997] 3 NZLR 79 (HC) at 83-84.proposition was dismissed by the finding that replacement oil filters can themselves contain debris, the Court adopting the opinion of Mr Cossey.12[40] While there is nothing to suggest that the proposed evidence is not credible and material to the issue of whether the debris found came from gloves, it is my overall judgment that this is not a case where there are special reasons warranting the admission of the further evidence. The problem is that allowing this evidence to be admitted on appeal will open up, at the very least, an argument as to what particular types of gloves were used and then a probability argument as to the presence of these gloves alongside perhaps Repco and other gloves. Cross-examination is likely. A further reason for refusing to allow this further evidence on appeal is the appellant's decision not to directly challenge Dr Smith's evidence. While Mr Lonergan'srevelation at trial means that the significance of this tactical decision may have changed, it does not, to my mind, remove this as a relevant consideration.[41] Rather, the better course is for the appeal to continue. If the appellant can sufficiently unsettle the confidence of the High Court on appeal in the judgment of the District Court, then the High Court can send the matter back for a rehearing. Otherwise, the judgment will stand. For these reasons, this application is dismissed with costs on a 2B basis for the respondent.[42] In my view, for all of these reasons, there are no special reasons why the subject of Brakes and Transmission gloves should be opened up for argument. This application fails.[43] The respondent is entitled to costs on a 2B basis.12 At [24]-[27].