EASTON AGRICULTURE LIMITED AND EVELEIGH FARMING COMPANY LIMITED (IN RECEIVERSHIP) V MANAWATU-WANGANUI REGIONAL COUNCIL COA CA733/2011

EASTON AGRICULTURE LIMITED AND EVELEIGH FARMING COMPANY LIMITED (IN RECEIVERSHIP) V MANAWATU-WANGANUI REGIONAL COUNCIL COA CA733/2011 [26 March 2013]IN THE COURT OF APPEAL OF NEW ZEALANDCA733/2011[2013] NZCA 79BETWEEN EASTON AGRICULTURE LIMITEDAND EVELEIGH FARMING COMPANYLIMITED (IN RECEIVERSHIP)AppellantsAND MANAWATU-WANGANUI REGIONALCOUNCILRespondentHearing: 13 November 2012Court: Arnold, French and Miller JJCounsel: J O Upton QC and M S Dobson for AppellantsD J Heaney SC and S H Macky for RespondentJudgment: 26 March 2013 at 11.00 amJUDGMENT OF THE COURTA The appellants' application for leave to adduce further evidence is dismissed.B The appeal is dismissed.C The appellants must pay the respondent's costs for a standard appeal ona band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by French J)Table of ContentsPara NoIntroduction [1]Factual background [5]The decision of the High Court [23]Grounds of appeal [37]Application for leave to call further evidenceProposed new evidence [40]Principles relating to the granting of leave to call further evidence [43]Arguments in support of the application [44]Discussion [46]The substantive appealOur approach [50]Concrete bag formation and layout [52]The importance of the gap [67]Design levels [72]Concession that the sandbags may still have been in place at the time of the 6.30 am breach [76]The eyewitness accounts [84]The Sutherland Report [95]The large volume of water already in the Moutoa Basin by 3.00 am on 17 February 2004 [105]The "but for" causation test [117]Conclusion on substantive appeal [123]The costs decision [127]Outcome [138]Introduction[1] The appellants operate farming properties in the Moutoa Basin near Foxton. On 17 February 2004, the farms were inundated with flood waters following the failure of a floodway stopbank maintained by the Manawatu-Wanganui Regional Council (the Council). The flooding caused substantial damage. The appellants sought to make the Council liable for the losses they had sustained and issued proceedings in the High Court.[2] The appellants' claim was heard by Kós J. He found that the Council hadbeen negligent in its maintenance of the stopbank, but was not satisfied that theCouncil's negligence had caused the loss. The Judge accordingly dismissed the claim1 and in a subsequent judgment awarded costs against the appellants.21 Easton Agriculture Ltd v Manawatu-Wanganui Regional Council HC Palmerston North CIV-2008-454-31, 7 September 2011.2 Easton Agriculture Ltd v Manawatu-Wanganui Regional Council HC Palmerston North CIV-2008-454-31, 22 December 2011.[3] The appellants now appeal both the decision on liability and the costs decision. They also apply for leave to adduce fresh evidence in support of their substantive appeal.[4] The key issues raised by the substantive appeal concern the Judge's analysisof the evidence and his approach to causation.Factual background[5] The Moutoa Basin lies along a floodway. The floodway and an associated sluice gate were constructed as part of a series of substantial flood protection measures undertaken on the Lower Manawatu River between 1959 and 1965 by theCouncil's predecessor the Manawatu Catchment Board. The surrounding farmlandis fertile and highly productive, but low lying and prone to flooding. In the event of flooding, the floodway was designed to provide an additional channel to convey some of the flood flow past a reach of the river that has insufficient capacity to convey a full design flood.[6] Other flood protection measures taken during the same period included construction of a major system of earth embankments or stopbanks. A total length of 250 kilometres of stopbanking was constructed as part of the Lower Manawatu Flood Control Scheme. The stopbanks were largely made from silt and with a freeboard or crest 450 millimetres higher than calculated design flood levels.[7] The Moutoa floodway is some 10 kilometres long and 600 metres wide. It bypasses 30 kilometres of meandering river channel and is contained by 20 kilometres of stopbanking.[8] State Highway 1 runs at right angles to the floodway. Just south of Foxton, the highway crosses the floodway using a trestle bridge. The bridge is at the centre of this case.[9] The bridge was constructed in the 1930's, well before the stopbank. Built ofconcrete, the bridge is one kilometre long, which is much longer than the width of the floodway. The deck of the bridge sits on trestle piers or piles. Under the bridgethere is a series of beams running the length of the bridge supporting the deck and with a cross beam at each trestle. The following photo was produced in evidence:[10] The bridge is lower than the adjacent stopbanks. Accordingly, it effectively cuts through them. Either side of the bridge, the stopbank crest runs up against the outer facia of the bridge at about road level.[11] The exact nature of the structure erected by the stopbank builders under the bridge is a subject of some controversy which we address later. At this stage, it is sufficient to note that the builders built the crest as far beneath the bridge as they could and then used concrete bags as a means of filling any spaces.[12] In 1989, following a local government reorganisation, the property of the Manawatu Catchment Board including its flood control scheme was vested in the Council. The Council also assumed all the statutory powers and duties of the Board under the Soil Conservation and Rivers Control Act 1941 to protect and maintain its waterways. The evidence established that in discharging those functions the Council makes provision in its budget for maintenance and monitoring of the floodwaystopbank including regular inspections. It was common ground that stopbank security is dependent on good maintenance practices.[13] In February 2004, the Central North Island suffered severe storms that generated prolonged heavy rainfall in the headwaters of the Manawatu River. This caused water levels in the Manawatu River to rise markedly. On 16 February 2004, a decision was made to open the Moutoa Sluice Gate at 7.00 am to relieve the pressure on the river and avoid the risk of flooding up-stream.[14] At some unknown time during the night of 16 February 2004 and the early hours of 17 February 2004, the southern stopbank of the floodway failed and breached in the vicinity of the bridge. The first actual sighting of a breach was at approximately 3.20 am on 17 February 2004, when a local farmer saw a breach on the upstream side of the bridge. There were also sightings at 5.30 am of a breach downstream of the bridge as well as upstream. Then, at 6.30 am, there was what was described in evidence as a catastrophic breach of the stopbank downstream of thebridge when the stopbank "blew out".[15] The breach ultimately reached 23 metres upstream from the centre line of the bridge and 17 metres downstream.[16] The breached stopbank flooded the Moutoa Basin. The flood waters coveredthe appellants' properties for approximately 12 days and caused substantial damageto their pasture and crops. The bridge itself remained intact.[17] Following the floods, the Council initiated a review of the stopbank failure. The review report, known as the Sutherland Report, concluded that the likely cause of the failure at the bridge was the interaction between the bridge structure and the stopbank. The report recommended repairs at the bridge, which the Council duly carried out.[18] Subsequently, the appellants issued proceedings in the High Court seeking to recover compensation from the Council for their losses. The statement of claim pleaded four causes of action – negligence, private nuisance, Rylands v Fletcherliability and breach of statutory duty. However, Kós J held that because of s 148(1) of the Soil Conservation and Rivers Control Act, the Council could only be liable (if at all) in negligence. There has been no challenge on appeal to that ruling and accordingly we need say no more about the other causes of action. Our sole focus is on the negligence claim relating to the monitoring and maintenance of the stopbank and causation.3[19] As regards causation, the statement of claim contended that the stopbank failure occurred because of a combination of factors including:(a) the inadequate condition of the stopbank under the trestle bridge and in particular at the interface between the stopbank and the bridge;(b) the relatively complex landform geometry in the floodway at the failure site, both in plan and in vertical variation;(c) the poor condition of the sandbagged fill under and in the vicinity of the bridge;(d) floodwaters lapping onto the bridge beams;(e) scouring and erosion of the stopbank due to eddies and vortices generated by the floodwaters under the bridge; and(f) pulsing of water surface levels that occurred as pressure flow commenced at the bridge.[20] As regards negligence, the statement of claim alleged that the Council had failed to generally maintain to design standard and/or monitor the condition of the stopbank under the bridge.3 The claim in negligence was not confined to stopbank maintenance and monitoring. However,Kós J dismissed all the other pleaded allegations of negligence, which included allegationsregarding the Council's response to the emergency. The appellants have not challenged thatruling.[21] For its part, the Council denied it owed the appellants a duty of care, denied that it had been negligent and denied that anything that it had done or omitted to do had caused the loss.[22] The hearing before Kós J lasted nine days. Both parties called expert witnesses to give evidence about the likely causes of the stopbank failure. The essential difference between the expert witnesses was that whereas the appellants'expert considered that the problem started under the bridge and then developed and spread from there,4 the Council's experts considered that the stopbank failure wasinitiated either side of the bridge, not under it, and was primarily due to voids in the stopbank material. That is to say, the Council argued that the failure was due to unforeseen seepage or piping within the stopbank structure.5The decision of the High Court[23] In his decision, Kós J identified the issues requiring determination as being:6whether the Council could be liable other than in negligence;whether the Council owed the appellants a duty of care in its monitoring and maintenance of the stopbank;whether the Council had been negligent; andwhether the Council's negligence had caused the appellants' loss.[24] Kós J then structured his judgment by reference to these issues, addressing each in turn.4 According to the appellants' expert, the breach of the stopbank was a process which startedunder the bridge with overtopping. That overtopping, combined with the flow variations at the bridge, would have created a scouring process during the evening so that by the early hours ofthe morning of 17 February 2004 there was significant water flowing over and through thestopbank under the bridge, definitely upstream of the bridge and most likely downstream. Thecollapse observed by the witnesses at 6 am was the result of the overtopping, scouring anderosion of the previous night and early hours of the morning.5 This was the final position of the Council's experts. As Mr Upton QC emphasised to us, theCouncil's position underwent various changes.6 At [93].[25] As already mentioned, the Judge found that the only cause of action available to the appellants was the claim in negligence.7 Having made that finding, Kós J went on to hold that the Council owed the appellants a duty of care in performing its function of monitoring and maintaining the floodway stopbank.8[26] Turning to the issue of whether the Council had breached its duty, the Judgesaid the appellants' argument was focused very substantially upon a contention thatthere was a gap between the cement bags on top of the stopbank and the underside of the bridge.9 The existence of a gap was said to be significant because it meant that there was not a watertight seal between the top of the stopbank and the underside of the bridge, the watertight seal being central to the integrity of the stopbank.[27] The existence of a gap had been strongly contested. However, the Judge was satisfied on the evidence that there was a gap of approximately 150 millimetres above the cement bags topping the stopbank crest under the bridge on the southern side of the floodway.10 It was common ground that the gap was most likely due to settlement of the bags which would have occurred in the first 10 years following construction.[28] The Judge was also satisfied that the failure of the Council to identify and remedy the gap in the course of its routine operational monitoring and maintenance of the stopbank constituted a breach of its duty of care.11 He discounted two other allegations of negligence relating to drains and the construction of a nearby cycle- way ramp, concluding that it was only in respect of the gap that the Council had acted negligently.[29] Having found that the Council had been negligent, the Judge then consideredwhether the Council's negligence had caused the appellants' loss. The Judgecommenced his discussion of causation by identifying the legal test to be applied. Citing Johnson v Watson,12 the Judge said that the Council's action must be a7 At [106].8 At [142].9 At [146].10 At [169]. The northern stopbank had a different construction and did not fail.11 At [185].12 Johnson v Watson [2003] 1 NZLR 626 (CA).substantial and material cause which meant that it must have had a real influence on the occurrence of the loss or damage.13 The Judge continued by saying that theCourt applies a "but for" test. Would the loss or damage have occurred but for thenegligent act or omission?[30] Kós J then summarised the competing submissions.[31] He said that the appellants' case was that when the floodwaters breached the150 millimetre gap it resulted in scouring under the bridge, which in turn initiatedbreaches of the stopbank on both sides of the bridge. Under the appellants' theory, itwas wrong to find there had been a separate downstream breach. Rather, it was probable that there had been a progressive breach both upstream and downstream emanating from the conditions under the bridge. All of the events around and under the bridge during the night of 16-17 February 2004 were intimately connected and all part of the same causative incident.[32] The Council, on the other hand, contended that the cause of the failure initially was probably water working its way through loose materials immediately upstream of the bridge. It was this erosion that allowed substantial volumes of water into the Basin, the sandbags under the bridge almost certainly being still intact at that stage. The Council also submitted that overtopping downstream of the bridge resulted in the sequence of failures which occurred near the cycleway and between the cycleway and the bridge. In the Council's submission, there was no evidence tosuggest that any of these failures was connected to the gap under the bridge.[33] The Judge then reviewed the testimony of the various experts. He said that although he had at first been faced with somewhat diametrically opposed evidence, a"critically important" concession emerged during the hearing, namely that thesandbags under the bridge may still have been in place at the time of the 6.30 am failure.[34] Following his review of the evidence, Kós J found that the appellants had failed to prove that the presence of the gap had caused the catastrophic failures that13 At [195].had occurred to the stopbank.14 In the Judge's view, the failures both upstream anddownstream of the bridge were probably caused by factors independent of the gap.[35] The Judge said his reasons for that conclusion were as follows:15(a) It was clear that by 5.30 am on 17 February 2004 the stopbank had eroded significantly upstream of the bridge, the clearest evidence of this being from the appellants' own witness, a Mr Doug Easton.(b) The expert evidence did not establish any convincing link between the initial upstream failure and the existence of the 150 millimetre gap between the cement bags and the underside of the bridge.(c) The fact that a significant breach was occurring downstream of the bridge and there was still some intact stopbank between the bridge and the initial downstream breach suggested that there was not a continuous failure of the stopbank originating at the gap.(d) The 150 millimetre gap would still have been above the maximum water level during the flood, putting to one side the disturbed water patterns beneath the beams. What was likely to have occurred under the bridge was splash and slop through the gap rather than a continuous erosive overflow.(e) The preceding conclusions were reinforced very substantially by theexperts' joint position that at the time of the catastrophic failuredownstream the cement bags may still have been intact beneath the bridge. That joint assessment severely undermined the appellants'causation theory.(f) While the exact cause of the failure is not now known, it is known that this was a flood event of a magnitude that exceeded the design standard of the Lower Manawatu Scheme. The flood event was14 At [220]–[221].15 At [221].always going to challenge the capacity of the floodway and the river system to cope. The fact that ultimately they did not cannot be attributed with any clarity to the limited deficiency identified in theCouncil's maintenance processes.[36] The Judge went on to say:[222] I therefore agree with the tenor of the evidence given by the experts called by the Council that it was unlikely that the gap beneath the bridge caused the catastrophic failures that occurred to the stopbank both upstream and downstream of the bridge. The gap was insufficiently material to cause those failures. It is more probable than not that those failures were caused by factors independent of the gap, exposed in the course of an exceptional 1 in 110 year, over-standard weather event. And, that being so, it is more probable than not that the Moutoa basin would have flooded to exactly the same extent on Tuesday 17 February 2004, had the gap not been there.Grounds of appeal[37] On appeal, the appellants contend that the Judge erred in concluding that nothing apart from the gap had been shown to be actionable and erred in rejectingthe appellants' theory of causation, namely that the failure had emanated from underthe bridge. Counsel, Mr Upton QC, described the High Court judgment as being unsatisfactory in various significant ways. In his submission, it was incorrect and incomplete in some areas and also downplayed important aspects of the evidence.[38] In support of those central contentions, Mr Upton advanced the following arguments:(a) The Judge misdirected himself on the issue of causation by taking toonarrow an approach. The "but for" test does not apply in a caseinvolving multiple possible causes.(b) The Judge failed to properly address evidence given by Mr Stuart Barber about the formation and layout of the concrete bags under the bridge.(c) The Judge was wrong to find that the flood exceeded design levels.(d) The Judge attributed undue significance to the supposed concession that the concrete bags may still have been in place at the time of the catastrophic breach at 6.30 am.(e) The Judge failed to address properly, or at all, the significance of the large volume of water already in the Moutoa Basin by 3.00 am on 17 February 2004.(f) The Judge failed to properly address the opinions in the Sutherland Report and wrongly excluded aspects of it from consideration.(g) The Judge took too narrow a view of the appellants' case, wronglycharacterising it as dependent on the gap.[39] Before considering the merits of the appeal, it is necessary for us first to determine the appellants' application for leave to adduce further evidence.Application for leave to call further evidenceProposed new evidence[40] The appellants apply for leave to adduce further evidence from Mr Williams. Mr Williams is a consulting engineer and hydrologist who gave expert evidence at the High Court hearing for the appellants. His opinion was that the most logical cause of the stopbank failure in the vicinity of the bridge was water flowing through the gap under the bridge, eroding the stopbank and causing progressive failure both upstream and downstream of the bridge. In his view, there were two significant collapses of the stopbank prior to the one at 6.30 am, the first smaller collapse being at around 1.30 am and a second large one at around 2.45 am.[41] The proposed further evidence concerns the volume of water in the Moutoa Basin before the collapse at 6.30 am and the overflows required to produce those volumes of water. Since the trial, Mr Williams has undertaken some modelling andcalculated the amount of water in the Moutoa Basin before the 6.30 am collapse to have been around 1.5 million cubic metres.[42] The reason the appellants want this further evidence to be considered is because they contend that it (a) shows that the amount of flood water in the Basin before 6.30 am was vastly more than could have escaped from the shallow andnarrow breaches postulated by the Council's experts; (b) supports the propositionthat there must have been a breach of sufficient width and depth to cause the damage to the appellants' properties irrespective of what happened at 6.30 am; (c) refutes the Council's theories on water flows and bag formation/layout under the bridge; and (d)reinforces the point that the 6.30 am collapse was not an independent event, but must have been the culmination of events which had already taken place.Principles relating to the granting of leave to call further evidence[43] The power to grant leave to adduce further evidence on appeal is derived from r 45 of the Court of Appeal (Civil) Rules 2005. The principles governing the exercise of that power are well established:16Litigants have a duty to adduce at trial all their evidence that is reasonably discoverable.The constraints on the admission of further evidence are very strict. Evidence which could with reasonable diligence have been produced at the trial should only be admitted in exceptional and compelling circumstances and will also need to pass the tests of credibility and cogency.While a balancing of the interests of the applicant and opposing parties is required, the aim is to ensure that parties put their best case forward at trial and that the public resources of the Court system are not wasted.16 See Airwork (NZ) Limited v Vertical Flight Management Limited [1999] 1 NZLR 641 (CA); Raev International Insurance Brokers (Nelson Marlborough) Limited [1998] 3 NZLR 190 (CA).Arguments in support of the application[44] Mr Upton submits that the proposed further evidence in this case could not have been produced with reasonable diligence at trial, because the significance of the amount of water in the Basin only became an issue on the last day of evidence and only then because of a change in emphasis in the evidence of one of the Council'sexperts, Mr Luxford, a geo-technical engineer. Mr Upton says that Mr Luxford'soriginal brief of evidence was limited to issues about the stability of sandbags. As the hearing progressed, however, Mr Luxford ventured into failure mechanisms and on the second to last day of the evidence he produced a series of sketches, which he had only recently prepared, to explain how the catastrophic failure may have come about. On the last day of the evidence, in cross-examination, Mr Luxford conceded for the first time that there was an overtopping on the upstream side of the bridge, although he insisted that it was not a major collapse. He would not concede the volumes of water and could not explain the amount and behaviour of the water in the Basin prior to 6.30 am.[45] After receiving Kós J's decision, the appellants asked Mr Williams toundertake a further engineering investigation in response to what they describe as MrLuxford's "additional" evidence. In an affidavit, Mr Williams says the modelling he did was the simplest way for him to test the causation hypothesis advanced by Mr Luxford.Discussion[46] In our view, the proposed evidence does not qualify as fresh evidence. The fact of there being large volumes of water in the Basin was the subject of evidence called by the appellants themselves. Mr Upton also cross-examined the Council'sexperts about this. It would have been open to Mr Williams to have undertaken the modelling exercise at any time and indeed his evidence suggests that the amount of water in the Basin before 6.00 am had always been a matter of interest to him. He already had all the information on which he relies in the schedule attached to hisproposed further evidence. While we accept that Mr Luxford's evidence appears tohave evolved in the course of the hearing,17 it is a stretch to attempt to use that as justification for not adducing the modelling evidence before.[47] The other difficulty is that if leave were to be granted Mr Williams would need to be cross-examined and the Council's experts would need to be given theopportunity to consider and address the new evidence, necessitating further evidence and cross-examination. This is obviously problematic in the context of an appeal. Indeed, Mr Luxford has already sworn an affidavit contending that the modellingdoes not provide any added support to Mr Williams' causation theory and isconsistent with his own theory. The object of r 45 is to allow the evidence given at trial to be supplemented, not to open the door to a complete or substantial rehearing of the case.18[48] For those reasons, we have come to a clear view that the application for leave should be declined.[49] Our assessment of the substantive merits of the appeal is therefore based on the evidence that was given at the trial.The substantive appealOur approach[50] The appellants are asking us to overturn factual findings made by the trial Judge. This is a general appeal and accordingly it is incumbent on us to consider the merits of the case afresh. We must review the evidence and form our own opinion.19That does not, however, mean that we are required to disregard the reasoning in theHigh Court decision. The weight that this Court gives to the High Court's reasoningis a matter for its assessment. The Court is entitled to take Kós J's reasoning into17 As indeed did the evidence of the Council's other two expert witnesses Mr Doull and Mr Hamilton.18 Sulco Limited v ES Redit & Co Limited [1959] NZLR 45 (CA).19 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].account, or it may reach a different conclusion with little reference to that reasoning.20[51] Mindful of those general principles, we turn now to consider the grounds of appeal.Concrete bag formation and layout[52] The Judge's treatment of the evidence about the formation and layout of the concrete bags under and around the bridge beams was a key focus of the appeal.[53] Two of Mr Luxford's sketches were cross sectional diagrams purporting todepict the probable southern stopbank/bridge conjunction as at 2002. One was labelled Figure A and the other Exhibit 1. Both diagrams showed the 150 millimetre gap on top of the bags.21 More controversially for present purposes, the diagrams also showed rows of bags tightly packed up against the longitudinal beams as well as under the longitudinal beams.[54] The difference between Figure A and Exhibit 1 was that in Figure A Mr Luxford had shown the bags as ending at the inside edge of the beams, whereas in Exhibit 1 the bags extend beyond the outside edges of the beams and right up to the soffit of the bridge.[55] In his judgment, the Judge reproduced a copy of Exhibit 1:20 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [31].21 The Judge had told the experts that their analysis should be undertaken on the basis that the gapexisted.[56] For his part, the appellants' expert Mr Williams accepted that in general termsthe method of construction of the stopbank was likely to be as depicted in Figure Aand Exhibit 1, although he had "some difficulty" with the representation of thenature and the extent of the sandbagging.[57] The reason Mr Williams had some difficulty was because the depiction of the sandbag formation was contrary to the evidence of an eyewitness, Mr Stuart Barber.[58] Mr Stuart Barber is a farmer who has farmed all his life on a property near the trestle bridge. He has always taken a strong interest in the floodway and was for 30 years a member of the local drainage board. He testified that in late 2003 he had occasion to walk under the bridge, climb up the southern side of the bank and look over the top of the bank. He said he saw the gap on top of the bags, which was found to exist by the Judge, and gaps between the bags. Mr Barber also said he did not see any more than four rows of cement bags packed side by side between the longitudinal beams of the bridge, four high and four wide. According to Mr Barber, the bags were not around the beams and not under the beams. There was only dirt under the beams.[59] Apart from replicating Exhibit 1 in the judgment, the Judge did not directly address the issue of sandbag layout and formation and in particular did not refer toMr Barber's evidence on that topic.[60] Mr Upton was highly critical of this omission. He submitted that it waswrong for the Judge to endorse the Council's theory as to bag layout and formationwhen it was based purely on surmise and when it was contrary to the unshaken evidence of an eyewitness whom the Judge described elsewhere as a reliable witness.Mr Upton further submitted that Mr Barber's evidence was the only evidence aboutthe sandbag layout and formation and was supported by the fact that none of the sandbags were found after the flood.[61] We accept that if there were no sandbags outside the beams then on the evidence that would mean there was potential for erosion in that area.22 To thatextent it was therefore evidence that supported the appellants' theory of causation.[62] We also accept that ideally the judgment should have expressly identified theconflict in the evidence and explained why the Judge preferred Mr Luxford'sevidence. The notes of evidence show that the Judge was alive to the issues. At one stage, he sought clarification as to the differences between Exhibit 1 and Mr Barber'sdescription of the bags.[63] However in our view, the Judge was entitled to accept Exhibit 1 as accurate.[64] The exhibit was based on much more than pure surmise. It was based on evidence of usual stopbank construction methods as well as logic, having regard to the dimensions of the bridge and the tight working spaces for machinery. The logistics of compacting earth under the bridge were such it would have made little sense for bags not to have been used under the beams and outside of the beams.23[65] Further, contrary to Mr Upton's submission, Mr Barber was not in fact theonly eyewitness account of the bag layout. Two Council witnesses, Mr Doull and Mr Anderson, gave evidence that is consistent with Exhibit 1.24[66] In our assessment, having regard to all the evidence, it is more likely that thebags were as shown in Exhibit 1 and that Mr Barber's recollection is mistaken.22 The absence of bags under the beams does not advance the appellants' case. It was common ground that regardless of whether there were bags there or not, the settlement which had causedthe gap between the top of the bags and the underside of the bridge would have also created asmall gap under the beams – whether it be a gap between dirt and beam or bag and beam.Further, Mr Luxford gave evidence that if Mr Barber was correct and there were no bags at allunder the beams, but only compacted earth, that would in fact be less favourable to theappellants.23 In cross-examination, Mr Williams appears to have conceded this as regards the use of concretebags outside the beams.24 Mr Doull was not cross-examined on the issue.The importance of the gap[67] In his judgment, Kós J described the gap as the "linchpin" of the appellants'case.25[68] On appeal, Mr Upton was critical of the Judge's use of this term. Mr Uptonsubmitted that while the gap was an important part of the claim, it was not the linchpin. In his submission, the case as presented was more accurately summarisedin the Judge's quote of a statement he (Mr Upton) had made in cross-examination:Mr Easton and Eveleigh's claim to the Court is on the basis that the problemstarted under the bridge and then developed and spread from there.[69] In our view, the criticism lacks focus. In order to succeed, the appellants had to do more than prove that the problem started under the bridge. They also had toshow that any problem starting under the bridge was the result of the Council'snegligence. For example, the fact that the area of stopbank under the bridge was lower than the stopbank either side of the bridge was not negligent. The only other possible particular of negligence (other than the gap) which Mr Upton identified was the concrete bag formation/layout. However, for the reasons already discussed, we do not consider that the evidence establishes any negligence relating to the bag formation/layout.[70] We note too that the gap was expressly identified by the appellants' own expert, Mr Williams, as "the most significant inadequacy" of the stopbank at thebridge.[71] The focus of the hearing was very much on the gap and in our view theJudge's use of the word linchpin was justifiable.Design levels[72] The Lower Manawatu Scheme was designed to cope with a one in 100 year flood, the stopbanks being constructed with the design objective of a freeboard of25 At [147].450 millimetres. At all points, the stopbank crest would be 450 millimetres higher than the calculated one in 100 year flood level.[73] In his judgment, Kós J describes the February 2004 flood as being a one in 110 year flood and notes that it was a flood event of a magnitude that exceeded the design standard of the Lower Manawatu Scheme. This is cited as one of his six reasons for concluding that the appellants had failed to prove causation.[74] The correct position, however, is that while the flood levels at Palmerston North certainly exceeded design levels, the levels at the bridge did not. The experts had in fact agreed that the flood flows down the floodway were within design.[75] We accept that the Judge has made a mistake. However, in our view, it was not a material mistake in the sense that it does not undermine the ultimate conclusion in any significant way.Concession that the sandbags may still have been in place at the time of the 6.30 am breach[76] Before giving evidence, the experts caucused. The caucus produced a joint report identifying areas of agreement. One of the agreed statements was that the"sandbags may still have been in place at the time of the 6.30 am breach".[77] As already mentioned, the Judge described this as a critically importantconcession on the part of Mr Williams, the appellants' expert. The reason the Judgeconsidered it critically important was because the Judge saw it as meaning that the large amount of water observed in the Basin at 2.00 am and 3.00 am had to have come from an overtopping or breach either upstream or downstream of the bridge. It could not possibly have come just from water forcing itself through the narrow gap between the bags, even allowing for additional volumes flowing around the bags. The gap could also not have accounted for evidence of a huge flow of water which raced like a wave across a nearby farm property at 3.00 am.[78] Mr Upton takes issue with the Judge's use of the word concession. Mr Upton said it was simply a statement of fact. Mr Upton also contends that in any event, even if it was a concession, three points emerge.[79] The first point is that the Judge's reliance on the bags still being in placeoverlooks evidence that at 5.00 pm on 16 February 2004 there was water observed flowing over the stopbank under the bridge. However, the witness who gave that evidence, Mr Jamieson, said in cross-examination, that the water was only coming out in a slow trickle. We therefore do not accept that the evidence of Mr Jamiesonnegates the significance of Mr Williams' concession, nor does it undermine the Judge's reasoning as to why the concession was significant.[80] Mr Upton's second point is that Mr Luxford's sketches were generated afterthe experts had issued their caucus report. Accordingly, if Mr Williams did make a concession, it must have been made on the basis that the sandbag layout was as described by Mr Barber (that is, four up and down and with no bags under the beams) not the diagram.[81] That may well be. The argument is presumably that if Mr Williams hadunderstood the sandbag formation was as per Mr Luxford's diagram, he would neverhave agreed that the sandbags would still have been in place at 6.30 am. However,Mr Luxford's diagram was generally of a more robust construction than that described by Mr Barber which logically would suggest that it was more likely that the bags would still have been in place, not less likely. Mr Upton did not explain why Mr Williams would have taken a contrary view had he known about the sketches and Mr Williams himself never suggested it. In our view, the point is a non sequitur.[82] Mr Upton's third point is that it is unlikely that the bags were in fact still inplace at the time of the catastrophic failure, because no trace of them was found afterwards. However, the experts knew that no trace of the bags had been found when they reached their agreement. The Judge was entitled to rely on the agreement of the experts and our preference is to do the same.[83] We agree with the Judge that this was a crucial concession for the reasons that the Judge identified.The eyewitness accounts[84] In his decision, the Judge summarised the eyewitness accounts of the stopbank failure. He said they were of considerable importance in considering the issue of causation.[85] Mr Upton submits that the Judge's summaries are in some places inaccurateand downplay important aspects. In particular, Mr Upton contends that the Judge:downplayed or overlooked the evidence of there being simultaneous overtopping on both sides of the bridge at 5.30 am, this being evidence consistent with something having happened under the bridge;was wrong to describe Mr Stuart Barber as equivocal and imprecise; andwas wrong to find that the majority of the witnesses put the breach at a point remote to the bridge.[86] We do not accept those arguments.[87] The issue on which the Judge found Mr Barber equivocal concerned the location of the downstream breach Mr Barber had observed immediately on arrival at the bridge. The Judge found that Mr Barber's evidence was ultimately unclear asto whether the breach was immediately adjacent to the bridge or not.[88] Mr Barber's written brief of evidence said he and his son Richard arrived atthe bridge at about 6.15 am. At that time, he could clearly see water flowing through the stopbank on the downstream side of the bridge. About five minutes later, he saw"the bank between the bridge and cycleway" located some 10 metres downstream of the bridge "give way in a spectacular way".[89] The impression given by this evidence is that at the time Mr Barber first arrived, the bank between the bridge and the breach was still intact and that it was only after the 6.30 am breach that this section of bank collapsed. However, when Mr Barber was subsequently recalled, he talked about the bank on the downstreamside as being 'basically" the same as the upstream situation, that is, as having "disappeared". He also talked about the bank on the downstream side as "tapering off" towards the bridge (which suggests that it had not disappeared, but was stillthere albeit disintegrating). This occurred "probably two to three metres away from the edge of the bridge, if that ... can't say ... it was ... quite a distance".[90] During cross-examination, Mr Barber conceded that he could only give a"guesstimate" of distance having regard to the limitations of his vantage point. Healso stated (contrary to the impression he had given in some parts of his evidence in chief) that two to three metres of bank immediately beside the bridge had disappeared. On re-examination he was asked whether there was a piece leftbetween the collapse and bridge or whether it had all gone. He replied: "It all went."Mr Upton relies on Mr Barber's repetition of the statement that "[i]t all went" asdemonstrating that far from being equivocal, Mr Barber was completely unequivocal. However, this was evidence about the post-6.30 am situation and the issue on which the Judge found Mr Barber to be equivocal was the location of the breach he had observed pre-6.30 am. While we might not go so far as to describe MrBarber's evidence on this issue as equivocal, it was certainly confusing. We wouldnot regard it as strong evidence and would not place the weight on it that Mr Upton sought to attach.[91] Nor do we consider that the Judge was wrong in finding that the majority of the witnesses put the breach at a point remote to the bridge. There were four witnesses who gave evidence about seeing a breach downstream before the 6.30 am collapse. They were Mr Richard Barber, Mr Stuart Barber, Mr Anderson and MrBonis. In Mr Upton's submission, Mr Stuart Barber and Mr Anderson both gaveevidence to the effect that the bank had all gone. That is not correct. As the Judgerecords, Mr Anderson said that there were six or seven metres of the bank left immediately downstream of the bridge. As for Mr Bonis, he testified that looking towards the downstream bridge he was still able to see a couple of metres of stopbank between the bridge and the breach. Contrary to another submission madeby Mr Utpon, Mr Bonis' evidence tallies with Mr Anderson's on this point.Mr Richard Barber did not give any evidence about location.[92] It follows that of the three witnesses who did give evidence about location, there was a majority (two) saying that there was some bank intact before the 6.30 am failure. The evidence of the other witness (Mr Stuart Barber) was not compelling.[93] As for the evidence of simultaneous overtopping on both sides of the bridge, this was expressly noted by the Judge during the course of his summary of the eyewitness evidence, which he said was of considerable importance when considering causation. The Judge was clearly cognisant of this overtopping evidence as he was of the argument that the breaches should not be seen as separate, but as progressing both upstream and downstream, emanating from the conditions under the bridge. The Judge expressly records the submission in the judgment and demonstrates in his formulation of the competing theories that he fully understoodthe appellants' case.26[94] However, if it is accepted there was still some bank left intact immediately downstream of the bridge, then the fact that the overtopping was occurring on both sides does not have the importance Mr Upton seeks to attribute to it. For the reasons already discussed, we consider the Judge was right to find there was still some bank left intact.The Sutherland Report[95] As previously mentioned, shortly after the flood the Council commissioned a review. The Review Panel comprised engineers. It was tasked with inquiring into the possible causes of the stopbank failure and making recommendations as to the26 At [197] and [198].remedial work required to prevent any similar future occurrences. The Panel produced a report known as the Sutherland Report.[96] Mr Upton was critical of the Judge's treatment of the report on two fronts –first that the Judge had wrongly excluded aspects of it for consideration and secondly that he had failed to properly address the opinions in it.[97] In his decision, Kós J described the Sutherland Report as being a mixture of expert analysis and reportage. As regards reportage, he noted that the report containssome information which was not in evidence and which he "must put aside".27 Mr Upton says that the Judge did not specify exactly what information he was thereby excluding. However, the Judge did give some examples that demonstrate that what was being excluded were hearsay statements of fact from informants who had not given evidence at the hearing.[98] Mr Upton contends that the Judge was wrong to disregard the informationbecause, as was stated in the appellants' opening, it had been agreed that the whole of the report would come in as part of the appellants' case by consent. Further, theexperts had agreed that where no comment was made to the contrary, the report findings were accepted.[99] Mr Heaney SC did not dispute the existence of an agreement that the contents of the report would go in by consent. However, in our view, even if the Judge has erred in disregarding the hearsay statements, nothing turns on it. Even if the statements had been taken into account, little weight could properly have been attributed to them, having regard to the fact that the statements were relied upon for the truth of their contents and those who made them did not give evidence and so were not available for cross-examination. Further Mr Upton did not identify anyparticular hearsay statement that was crucial to the appellants' case, the exclusion ofwhich would have caused significant prejudice. Ironically, the notes of evidenceshow the Council's expert wanting to rely on hearsay statements in the SutherlandReport and being prevented from doing so by the Judge.27 At [64].[100] As regards criticism that the Judge failed to address the opinions in the Sutherland Report, Mr Upton contended that the Judge makes no mention of the fact that in the opinion of the Panel, the likely cause of failure of the bridge was the interaction between the bridge structure and the stopbank. However, the Judge expressly quotes that statement from the report in his judgment.28[101] A further criticism that the Judge had misquoted the Sutherland Report inanother passage of his judgment by using the word "could" rather than "would" is inour view insignificant.[102] There is no question that aspects of the Sutherland Report were favourable tothe appellants' case. The report for example says that the presence of the bridgeplayed a significant part in the failure; that the initial flow from the floodway would have been through the gap between the bags and the underside of the bridge and through any gaps that had opened up between bags; that this would have been at about 8.00 pm on 16 February 2004 and would explain the presence of the water in the Basin as reported at 1.30 am; and that a seepage related (piping) failure was unlikely.[103] However, the Judge was well aware of all this. In his later costs decision, he expressly notes that the Sutherland Report offered some encouragement to the appellants on causation and footnotes a cross-reference to passages in his substantive decision.[104] In our view, there are no grounds for saying that the Judge has failed to take the opinions of the Sutherland Report into account. He was not, in any event, bound by the report. The report writers did not have the benefit of all the expert evidence heard by the Judge. In particular, they did not hear from Mr Luxford. Nor were the eyewitnesses they spoke to cross-examined. Further, the Sutherland Report itself expressly states that the details of the failure mode will never be known.28 At [65].The large volume of water already in the Moutoa Basin by 3.00 am on 17 February 2004[105] Unchallenged evidence was given by two local farmers, a Mr Stratton and a Mr Doug Easton, that there was a large volume of water in the Basin by 3.00 am on 17 February 2004.[106] Mr Stratton farmed a property in the Moutoa Basin. His farmhouse was located some 1.5 kilometres from the bridge. He testified that at 1.30 am he phoned the Council to report that the Basin was filling up with water. He further testified that at 3.00 am he heard what sounded like a huge roar. He looked out his bedroom window and could see his farm was under water. The water was being held by a metre high cattle race which sat beside the stopbank and his home. As he stood observing, the water suddenly came over the cattle race and in a wave like motion rushed towards the house. In about two minutes, the water was knee deep inside the house.[107] Mr Easton was on the scene shortly after 3.20 am. His was the first actual sighting of the stopbank breach. He saw water pouring through the stopbank on the eastern (upstream) side of the bridge and testified that there was a huge amount of water in the Basin.[108] Mr Upton contends that the existence of a large amount of water in the Basin prior to the 6.30 am breach is inconsistent with the Council's causation theory andwas not properly addressed by the Judge. Mr Upton drew our attention to passagesin the evidence where the Council's expert, Mr Luxford, accepted that what MrStratton had observed at 2.45 am – 3.00 am was consistent with catastrophic failure at the bridge and that he was unable to offer any alternative explanation for the rush of water on to the Stratton property.[109] There is no doubt that there must have been a significant volume of water in the Basin prior to the 6.30 am breach and the Council experts fully acknowledged this.[110] They also acknowledged that the most likely explanation for the volume of water was that there must have been a breach in the stopbank prior to 2.45 am, which allowed floodwater to flow out of the floodway into the Basin.[111] However, these acknowledgements are not necessarily inconsistent with theCouncil's theory of causation. The key issue was the location and cause of thebreach(es).[112] In the view of the Council's experts, the water in the Basin was notattributable to any deficiencies under the bridge, but was most likely attributable to an overtopping upstream of the breach. Whether the breach seen by Mr Easton could account for all the water in the Basin could never be known for certain because the size of the breach was unknown. However, what was certain was that any earlier breaches could not have been of the same type of breach as the one observed at 6.30 am, because otherwise those arriving at the bridge at 6.00 am would have seen everything gone.[113] This analysis is of course supported by the concession that the concrete bags may still have been in place at 6.30 am. As the Judge noted, if the concrete bags were still in place then the large amounts of water in the Basin at 2.30 am could not have come just from water forcing itself through the narrow gap above the bags.[114] Further, there was no evidence of anyone seeing water flowing under the bridge prior to 3.00 am. All that was seen was a slow trickle, which Mr Luxford considered was consistent with expected seepage.[115] As the Judge also noted, the appellants' own expert, Mr Williams,acknowledged that he could not be certain about the source of the water in the Basin prior to 3.00 am.[116] Having regard to all the evidence in its entirety, we do not accept that the Judge has failed to properly address the significance of the large volume of water in the Moutoa Basin by 3.00 am on 17 February 2004.The "but for" causation test[117] During the course of the hearing, Kós J had this to say about causation: the critical question that I've got to grapple with is the connectionbetween these two collapses. The plaintiff has to convince me that the two are connected. If there is an independent collapse downstream of the bridge, at six in the morning, which would have flooded the fields anyway, theneverything that's happened upstream is immaterial from a lawyer'sperspective, although fascinating to engineers.[118] Then in the judgment itself, he discussed causation in these terms:[195] A negligent defendant will only be liable if its conduct causes damage.The defendant's action must be a substantial and material cause: Johnson v Watson.29 That is, it "must have had a real influence on the occurrence of the loss or damage".30 The Courts apply a "but for" test.31 Would the loss or damage have occurred but for the negligent act or omission? A robust approach is taken. As Glazebrook J said in Accident Compensation Corporation v Ambros:32It must, however, always be borne in mind that there must be sufficient material pointing to proof of causation on the balance of probabilities for a court to draw even a robust inference on causation. Risk of causation does not suffice.[119] Elsewhere in the judgment, the Judge said the appellants must show on the balance of probability that but for the negligently overlooked gap between the underside of the bridge and cement bags, the Moutoa Basin would have been inundated by the February 2004 flood.33[120] On appeal, Mr Upton submitted that the Judge erred in applying the "but for"formula because this was a case involving multiple possible causes of damage, where each cause was sufficient to cause the damage even without the other.[121] We agree that in such cases the "but for" test is modified.34 A claimant is notrequired to show that the tortfeasor's negligence was the sole cause of their loss, or29 Johnson v Watson above n 12.30 Ibid at [18].31 Accident Compensation Corporation v Ambros [2008] 1 NZLR 340 (CA).32 Ibid at [70].33 At [220].34 See Stephen Todd "Causation and Remoteness of Damage" in Stephen Todd (ed) The Law ofTorts in New Zealand (Brookers, Wellington, 2009) 941 at [20.2.02].that it would never have happened at all but for the negligence. It is sufficient to show that the negligence made a substantial or a material contribution to the loss.35Thus, the fact that the floods would have occurred anyway, even if there had been no gap under the bridge, would not of itself have been necessarily fatal to theappellants' claim. However, the Judge's findings went further than that. He alsofound that the gap was insufficiently material to cause the stopbank failures and that the failures were more likely caused by factors independent of the gap. In other words, he found that the gap was not an operative or material cause. While it is likely that there was some slop, the gap was not a means of stopbank failure.[122] In those circumstances, we do not consider that there has been any error of principle which has affected the outcome.Conclusion on substantive appeal[123] In our assessment, none of the matters raised by Mr Upton, viewed either individually or collectively, warrant appellate intervention.[124] The conclusion reached by the Judge had a sufficient evidential basis to support it. It is a conclusion which we, having independently reviewed all the evidence ourselves, would also reach for broadly similar reasons.[125] We identify the key aspects of this case to be as follows:(a) The experts agreed that the exact details of the failure mechanism would never be known.(b) There was no reliable evidence as to the exact size, location and timing of the breaches observed.(c) Of all the material used in constructing the stopbank, the cement stabilised sandbag material beneath the bridge was the most resistant to erosion.35 Bonnington Castings Limited v Wardlaw [1956] AC 613 (HL).(d) There is a reasonable possibility that the bags were still in place at 6.30 am.(e) The weight of evidence established that at the time of the downstream breach observed between 5.30 am and 6.00 am, there was still some bank intact.(f) The Council would have had no reason to appreciate the potential weaknesses in the stopbank material identified by the Council experts as being the likely cause of the failure.[126] Having regard to those aspects and the burden of proof, we consider the Judge was right to find that causation had not been established, and that the Council was not liable.The costs decision[127] We turn now to consider the costs decision.[128] The Judge awarded the Council scale costs on a 2B basis. He declined toincrease the costs on account of the appellants' rejection of a pre-trial settlement offer. He also declined the appellants' application to reduce the costs under r 14.7(d)and (e) of the High Court Rules.[129] On appeal, the appellants challenge two aspects of the decision:(a) the Judge's refusal to reduce the scale costs; and(b) the Judge's refusal to reduce the Council's witness expenses.[130] Rule 14.7 relevantly provides:14.7 Refusal of, or reduction in, costsDespite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—(d) although the party claiming costs has succeeded overall,that party has failed in relation to a cause of action or issuewhich significantly increased the costs of the partyopposing costs; or(e) the proceeding concerned a matter of public interest, andthe party opposing costs acted reasonably in the conduct ofthe proceeding ...[131] The appellants contend that scale costs should have been reduced because the Council had been unsuccessful on the key issues of duty and breach and had unreasonably conducted the litigation by unreasonably denying the existence of the gap and by retracting its previous acknowledgement that the failure had been a progressive one. The appellants say further that the proceedings concerned a matter of public interest and although they were ultimately unsuccessful on causation, they had sought expert opinion on that issue and advanced an arguable case which only caucusing had negated.[132] In rejecting those arguments Kós J held that it made no difference that the appellants had succeeded on some essential steps in their negligence claim when they had failed on the final step and so failed altogether.36 That made the case distinguishable from the decision of Packing In (in liq) v Chilcott cited by the appellants.37 Packing had concerned applications to set aside discrete transactions, some of which were set aside and some of which were not resulting in the honours being evenly divided. In the present case, the Judge pointed out that the appellants had failed in their alternative causes of action of private nuisance, Rylands v Fletcherliability and breach of statutory duty. In his view, it made no difference that the appellants had expert evidence in support and an arguable case because that was the norm. Nor did the Judge consider that this was a true public interest case justifying reduction under r 14.7(e), observing that the appellants were seeking to recover over $2.5 million for themselves in damages. Finally, the Judge said he did not consider the Council had conducted the litigation unreasonably. It was entitled to advance contrary evidence regarding the existence of the gap and while the gap occupied a36 At [29].37 Packing In (in liq) v Chilcott (2003) PRNZ 869 (CA).considerable amount of hearing time, that was occasioned by the appellants'causation theory, which depended almost entirely on it.[133] The Judge's decision declining to reduce the costs involved the exercise ofdiscretion.38 The costs judgment is comprehensive and well reasoned. Mr Upton didnot identify any error of principle in the Judge's decision. Nor was it suggested thatthe Judge had overlooked a relevant matter, or been influenced by an irrelevant matter. We see no grounds for appellate intervention and for the same reasons advanced by the Judge consider that his decision was correct.[134] As regards the Council's witness and expert fees, the appellants sought a50 per cent reduction on the ground that recoverability should be limited to disbursements incurred in respect of issues on which the Council had succeeded. In addition, the appellants sought a further 25 per cent reduction on the grounds that the Council had failed to provide any basis on which the reasonableness of the disbursements could be assessed or approved. In particular, it was contended that the amounts invoiced by a forensic accountant were excessive; that the invoices of Mr Luxford contained no breakdown and minimal narrations; that Mr Luxford and Mr Hamilton had covered the same evidence which was unnecessary and thatindividually the fees of the Council's experts were far in excess of the fees invoiced by the appellants' experts for comparable work.[135] Justice Kós did not consider that a reduction in costs in respect of Messrs Luxford and Hamilton could be justified. The Judge regarded their time as reasonably necessary for the conduct of the proceedings and their fees as a reasonable amount. Further, although there was some duplication, both men provided crucial evidence. The Judge did not however consider that the full amountof the forensic accountant's fee could be justified and therefore could only certify itin part.[136] Finally, Kós J rejected the argument that disbursements should be reduced to reflect the fact that the Council had been unsuccessful on two of the four main issues, citing the same reasons for declining to reduce costs on that ground. The38 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523.Judge reiterated that that the evidence was still specific to and necessary for the conduct of the proceedings to respond to the case, which ultimately failed.[137] Again on appeal, the appellants do not identify any errors of reasoning in theJudge's exercise of his discretion. The decision was one that was plainly open tohim and one with which we agree.Outcome[138] The application for leave to adduce further evidence is dismissed.[139] The appeal is dismissed.[140] The appellants must pay the respondent's costs for a standard appeal on aband A basis and usual disbursements.Solicitors:Wadham Goodham, Palmerston North for AppellantsHeaney & Co, Auckland for Respondent