BODY CORPORATE 366567 v EQUUS INDUSTRIES LIMITED [2022] NZCA 80

BODY CORPORATE 366567 v EQUUS INDUSTRIES LIMITED [2022] NZCA 80 [25 March 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA21/2022[2022] NZCA 80BETWEEN BODY CORPORATE 366567First AppellantAMER LIMITED & ORSSecond AppellantsAND EQUUS INDUSTRIES LIMITEDRespondentHearing: 22 March 2022Court: Kós P, Woolford and Dunningham JJCounsel: G B Lewis and S N Zellman for AppellantsE-J M Tucker for RespondentC M Meechan QC and S C Price for Auckland CouncilJudgment: 25 March 2022 at 3pmJUDGMENT OF THE COURTA The appeal is allowed.B The appellants are granted leave to adduce the reply evidence tendered.C There is no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by Kós P)[1] This appeal concerns an $140 million claim alleging defective approval andconstruction of a large apartment block on Gore Street, Auckland. Naturally, theprimary defendant is the local authority. Trial is expected to take 20 weeks.Three prior fixtures have been vacated. Trial is now due to commence in May 2022.Exigency abbreviates this judgment.[2] The question here is whether the appellant plaintiffs should have leave to fileevidence in reply to evidence filed by the respondent defendant, one of the buildingsubcontractors. The evidence filed by the respondent was to support an affirmativedefence of contributory negligence. Walker J declined the appellants leave to file replyevidence.1[3] The primary defendant, Auckland Council (the Council), pleaded contributorynegligence by the appellants in these terms, summarised by Lang J in a minute:2In an amended statement of defence filed on the close of pleadings date inNovember 2018 the Council pleaded affirmative defences based oncontributory negligence and voluntary assumption of risk. It will argue thatunit owners who obtained minutes of meetings of the body corporate held after25 June 2009 acquired their units with knowledge of the defects and thereforevoluntarily assumed risk when they did so. It will allege that unit owners whofailed to obtain copies of the minutes prior to acquiring their units are guiltyof contributory negligence.[4] The respondent however pleaded it in slightly different terms:3If the plaintiffs are able to satisfy the Court that damage has been suffered(which is denied) then the plaintiffs have caused or contributed to their ownloss in that they:(a) purchased the property without seeking appropriate expert advice inrelation to the condition to the building prior to purchase; and(b) purchased the property at a time when there was a heightenedawareness of defects to buildings and failed to protect themselvesfrom that loss.[5] The appellants failed to file a reply answering either affirmative defence, asrequired by r 5.62 of the High Court Rules 2016. As a result, by r 5.63(2) and formallyat least, the affirmative defences might be treated as admitted. However, and as1 Body Corporate 366567 v Auckland Council [2021] NZHC 3578 [Judgment appealed]. Theproceeding was filed in 2014, predating the Senior Courts Act 2016, so prior leave to appeal thisinterlocutory judgment is not required: Judicature Act 1908, s 66.2 Body Corporate 366567 v Auckland Council HC Auckland CIV-2014-404-716, 28 June 2019 at[2]. The Council's pleading is not before us.3 This is the current pleading, filed in January 2019. The original was filed in December 2014.Woolford J noted in Craig v Social Media Consultants Ltd, the Court has a substantialdiscretion to do justice here, and the absence of a reply may not be determinative.4[6] Here, this pleading omission does not seem to have been identified until late2021. We were advised by Mr Lewis, for the appellants, that applications to pleadreplies out of time were filed on 6 December 2021. They have not yet been determinedby the High Court. However, it appears neither the Council nor the respondent object,no doubt on the basis that everyone had proceeded on the basis that the affirmativedefences were live and contested.[7] The respondent filed evidence in support of the affirmative defence, in the formof a supplementary statement from its expert, a Mr Hunt, on 2 November 2021. It iscommendably brief: just seven paragraphs on the affirmative defence. Mr Lewis waswont to protest that it raised new matters beyond the scope of the affirmative defencepleaded by the respondent. Indeed it does, but those matters relate more to mattersalready put in issue by the Council's affirmative defence. We see neither error norprejudice.[8] Two weeks later the appellants sought leave to file evidence in reply from itsexpert, a Mr Jones. On the affirmative defence, it too is commendably brief.Excluding quotation of the respondent's pleading and evidence, it is justfive paragraphs. However, in a judgment largely concerned with other matters, thatapplication was declined.5[9] We are satisfied the High Court erred in doing so and that this appeal must beallowed. It may well be the following matters, exposed by our interrogation ofcounsel, are clearer now than they were in December. First, the respondent has notstood on the r 5.63 point. It has not sought to assert its affirmative defence is admittedby inaction. Secondly, the respondent's affirmative defence will be a live issue at trial.Thirdly, the respondent has the burden of proof on its affirmative defence. Fourthly,to discharge that burden it filed evidence in November to support the defence. Fifthly,natural justice requires that the appellants be allowed to adduce evidence in response4 Craig v Social Media Consultants Ltd [2017] NZHC 1315 at [16]–[18].5 Judgment appealed, above n 1, at [55].to that evidence unless, counterintuitively, to do so at this late stage would be contraryto the interests of justice.[10] Turning to the last point, the appellants must take some responsibility for whathas occurred. The evidence on both sides is late in part because of the appellants'failure to plead to the affirmative defences. But with the affirmative defences beinglive, evidence was always going to need to be filed by the defendants, including therespondent. And justice requires that the appellants be able to adduce evidence of theirown in reply. We do not accept Ms Tucker's submission that the appellants shouldhave anticipated the respondent's case, based on its very general pleading, and filedevidence before the respondent's evidence. That puts the cart firmly before the horse.It was the respondent's election to file evidence in November that has precipitated thisapplication, and now appeal. Nor do we see the receipt of this evidence being undulyonerous for the respondent. Indeed, it is not onerous at all, given its tiny proportions.There is no possibility its receipt might dislodge May's fixture or otherwise render aninjustice. A mountain is being made of a molehill.[11] We will therefore allow the appeal and grant leave for Mr Jones' evidence inreply to be adduced. However, given the fact this is an interlocutory appeal and theappellants must take some responsibility for what has occurred, we will make no orderfor costs.Result[12] The appeal is allowed.[13] The appellants are granted leave to adduce the reply evidence tendered.[14] There is no order for costs.Solicitors:Grimshaw & Co, Auckland for AppellantsGascoigne Wicks, Blenheim for Respondent