REMEDIATION (NZ) LTD v ENVIRO (NZ) LTD [2023] NZHC 1218

REMEDIATION (NZ) LTD v ENVIRO (NZ) LTD [2023] NZHC 1218 [23 May 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-1140[2023] NZHC 1218BETWEEN REMEDIATION (NZ) LIMITEDPlaintiffAND ENVIRO (NZ) LIMITEDFirst DefendantENVIRO WASTE SERVICES LIMITEDSecond DefendantHearing: 22 and 23 May 2023Appearances: J W Maassen and M A Black for the PlaintiffG C Williams, T J Lindsay and MBE Morrison for the DefendantsJudgment: 23 May 2023JUDGMENT OF GAULT J(Application to recall witness and file supplementary brief)This judgment was delivered by me on 23 May 2023 at 4:00 pmpursuant to r 11.5 of the High Court Rules 2016.Registrar/Deputy RegistrarSolicitors / Counsel:Mr J W Maassen, Barrister, WellingtonMr J D Cameron and Ms M A Black (plaintiff's instructing solicitor), Willis Legal, NapierMr G Williams, Barrister, AucklandMr T J Lindsay and Ms MBE Morrison (defendants' instructing solicitor), Lindsay & Francis,Auckland[1] Yesterday, on day seven of an 11 day trial,1 I heard an application by theplaintiff (Revital) to recall a witness, Mr Buist, and file his supplementary brief toaddress a gap in Revital's fact evidence underpinning its expert accounting evidence.In the alternative, Revital seeks to sever quantum to be determined subsequently(bifurcation) or an adjournment of trial.[2] The defendants (Enviro) oppose. On Friday afternoon Enviro also filed anapplication for admissibility rulings and strike out. However, they did not pursue theseapplications yesterday on the basis that I granted leave to amend their opposition toincorporate the grounds raised in relation to admissibility. In the event, they reservedtheir admissibility objections for consideration if leave to file a supplementary brief isgranted.Background[3] Revital alleges breach of contract, breach of fiduciary duty and misleading anddeceptive conduct under the Fair Trading Act 1986 by Enviro in relation to the parties'collaboration on a tender proposal to the Tauranga City Council and Western Bay ofPlenty District Council (Council) for waste management services. The quantum of thebreach of contract damages claim is based on expert evidence from Revital'saccounting expert, Mr Dobson.Discovery and exchange of briefs[1] Following the judgment of Associate Judge Taylor on 29 August 2022determining the scope of discovery,2 on 29 November 2022 Enviro's solicitors wroteto Revital's solicitors stating that Revital had discovered no documents within twocategories of tailored discovery relating to quantum and seeking such documents,failing which Enviro would seek an order for further and better discovery.3 Revital'ssolicitors did not respond.1 The proceeding had been allocated a three week trial commencing on 8 May 2023. However, ata pre-trial conference on 4 May 2023, I advised counsel of the Court's timing constraints andcounsel agreed that the 11 days available for trial would be sufficient.2 Remediation (NZ) Ltd v Enviro NZ) Ltd [2022] NZHC 2155.3 There is no suggestion these categories also required discovery by Enviro, but all parties remainsubject to the residual discovery obligation in r 8.18(2).[2] On 19 December 2022, Enviro's solicitors wrote again to Revital's solicitorsnoting that no response had been received to the earlier letter, stating that they assumedthat Revital does not hold any documents relevant to its profits or quantification of itsdamages claim and reserving Enviro's rights. There was no response.[3] On 22 or 23 December 2022, Revital served its briefs of evidence, including abrief from Mr Dobson.4[4] On 24 January 2023, Enviro's solicitors again wrote to Revital's solicitorsrepeating their discovery request dated 29 November 2022 and seeking a response byFriday, 27 January 2023. There was no response.[5] On 13 February 2023, Enviro's solicitors wrote to Revital's solicitorsidentifying objections to parts of the proposed evidence in chief of Revital's witnesses.Relevantly, the letter stated:Mr Dobson's proposed evidence in chief is inadmissible as a whole because,despite repeated requests, his report contains mere calculations withoutfoundation (the primary evidence itself) and is unqualified expert opinion(Mr Dobson is not a waste management industry expert). As such hisproposed evidence is inadmissible opinion and also lacks relevance and isinadmissible for the purposes of s7, EA. The practical effect is that hisevidence as a whole is inadmissible.[6] The same day, Revital's solicitor gave Enviro's solicitors a copy of thefinancial model relied on by Mr Dobson albeit the model provided was hard-coded(that is, without the formulae behind the figures enabled).[7] On 8 March 2023, Enviro's solicitors served a brief of evidence fromMr (Jay) Shaw, Enviro's accounting expert. Mr Shaw responded to Mr Dobson'sbrief. Mr Shaw's brief is largely, but not only, a critique of Mr Dobson's calculation.Mr Shaw has in some respects undertaken alternative calculations.[8] On 8 May 2023, counsel for Enviro filed a memorandum in relation toadmissibility of Revital's evidence in which they referred to their admissibilityobjections but stated that, subject to the Court's views, Enviro did not seek a ruling on4 Subsequently, an amended brief of Mr Dobson was served reducing the quantum calculation.admissibility issues prior to Revital's witnesses giving evidence. Enviro were contentfor the Court to receive the evidence from Revital on a provisional basis and foradmissibility objections to be addressed in closing and determined by the Court as partof its final judgment. The evidence at trial proceeded in that way.[9] By consent, I directed that the parties' expert evidence would be clustered afterthe evidence of the fact witnesses. Subject to the current application, the fact evidenceis now complete, with the health and safety experts giving evidence concurrentlytoday, and the quantum experts to follow.Revital's identification of the gap[10] The parties accounting experts conferred on Monday, 15 May 2023, day fourof the trial.5 That afternoon, the experts contacted counsel indicating that a significantissue had arisen, namely that Mr Dobson had identified that the assumptions on whichhis evidence was based were not all supported by underlying evidence. Mr Maassen,for Revital, signalled that Revital would need to make an application to file asupplementary brief from Mr Buist, one of Revital's witnesses who had already givenevidence. Mr Maassen acknowledged it was a critical issue.[11] On Tuesday, 16 May 2023, Mr Maassen updated the Court. He indicated thathe would file and serve a formal application to file a supplementary brief and recallMr Buist by midday on Wednesday, 17 May 2023. He also indicated that if thatapplication were not granted, Revital would consider filing an application to adjournthe trial, or alternatively, an application to sever the questions of liability and quantum.Mr Williams, for Enviro, indicated that Enviro could file and serve any notice ofopposition and affidavits by 4:00 pm on Friday, 19 May 2023.[12] Mr Buist's proposed supplementary brief states that he was responsible fordeveloping the financial model for the Council tender process. He produces as anappendix a snapshot extract of the key assumptions within the model and addressesfactual matters relevant to the assumptions. Some factual matters are already in5 In the absence of earlier pre-trial directions in relation to expert conferencing, on 5 May 2023I made directions by consent that the experts confer and prepare a joint witness statement statingthe matters on which they agree and disagree, including the reasons for their disagreement.evidence, but others are only dealt with in his proposed supplementary brief and theannexed documents. Some of these raise questions about the need for furtherdiscovery.6Applicable principles[13] It is common ground that the applicable test is the interests of justice.[14] In relation to recall, s 99(1) of the Evidence Act 2006 provides that in anyproceeding the Judge may recall a witness who has given evidence if the Judgeconsiders that it is in the interests of justice to do so.[15] Rule 9.8 of the High Court Rules states:Supplementary briefs(1) A party wishing to offer a supplementary brief must serve it as soonas possible.(2) The acceptance and use of the supplementary brief in court will be atthe discretion of the trial Judge.[16] Recent cases in this Court have summarised the principles guiding the exerciseof this wide discretion:7(a) Leave will necessarily depend on the particular facts andcircumstances of the case.8(b) A balancing of where the overall justice of the case lies is required,weighing the prejudice to the party that served the supplementarybrief if leave is reserved against that to other parties if leave is granted;(c) The fact that the supplementary brief improves the evidential case ofthe party seeking to offer it is not, without more, a basis for refusingleave;(d) The prejudice may be especially significant where the supplementarybrief is provided at a late stage in the proceeding;(e) Granting an adjournment to allow more time to respond and/orordering costs that reflect the extra work required in responding to the6 Such as any earlier iteration of the financial model used for the tender process.7 Body Corporate 406198 & HHTS Ltd v Argon Construction Ltd [2023] NZHC 1072 at [13],quoting Body Corporate 384825 v Queenstown Lakes District Council [2021] NZHC 1207 at [32].8 Signal v Berry [2016] NZHC 1126 at [24].supplementary evidence may minimise prejudice resulting from agrant of leave;(f) The effect on public resources if a trial needs to be vacated due to thesupplementary evidence being provided at the last minute.9(g) To the extent that further evidence is a response to evidence adducedby the defendants, the plaintiff is entitled to provide that furtherevidence orally.10(h) Leave to adduce further evidence that improves a party's position maybe allowed if the trial date is a sufficient time away.11[17] In relation to adjournment of trial, the Court may, before or at the trial, if it isin the interests of justice, postpone or adjourn the trial for any time, to any place, andupon any terms it thinks just.12 The interests of justice include the interests of theparties, other litigants waiting in the queue for hearing and the public interest in theefficient use of court resources.13Discussion[18] Mr Maassen acknowledged that there is a gap in Revital's fact evidenceunderpinning its expert accounting evidence. He also acknowledged that this gap hadbeen overlooked by Revital's legal advisers due to confusion as to the source of thefinancial model referred to by their expert – Revital's solicitor understood thatMr Dobson had created the model based on his assessment of source documents.14Although Revital's supplementary opening on 9 May 2023 referred to its expertrelying on its witnesses, I accept the issue was not the focus of attention by Revital'slegal advisers before Mr Buist gave evidence on 10 May 2023. As Mr Maassenacknowledged, there was a failure both as to the need for the source documents to bein evidence and for the expert's evidence to state (with sufficient particularity)the facts and assumptions on which the expert's opinions are based.159 Body Corporate 354085 "Perspective Apartments" v Auckland Council (No 1) [2016] NZHC 200at [9].10 Currie v Goodwin HC Auckland CIV-2002-404-001820, 27 August 2004.11 Madretsma Farm Ltd v Frizzell HC Napier CP 9/94, 28 March 2001 at [5].12 High Court Rules 2016, r 10.2.13 Botany Downs Secondary School v H Construction North Island Ltd [2017] NZHC 3228 at [19];PBL Solutions Ltd v AFT Pharmaceuticals Ltd [2022] NZHC 1576 at [39].14 This was at least in part due to a difficult handover from the plaintiff's former counsel.The defendants' solicitors also thought the model was Mr Dobson's.15 High Court Rules 2016, Schedule 4, para 3(d).[19] Mr Maassen submitted that the model and Revital's operation were notparticularly complex, that Enviro would have some familiarity with it given thecollaboration for the tender and Enviro's own business at Hampton Downs, and thatMr Shaw would be in a position to deal with matters. However, Mr Maassennevertheless accepted that the prejudice to Enviro would be insurmountable if thesupplementary evidence were received and Enviro had to respond to it andcross-examine Mr Buist this week. Accordingly, Mr Maassen accepted that if leave isgranted, an adjournment of the trial will be required.[20] It is also common ground that, if leave is granted, an adjournment is preferableto bifurcation in which the Court would determine liability and then both parties couldaddress quantum afresh with potentially a new methodology. An adjournment wouldavoid revisiting quantum evidence already given and constrain the further hearing tothe issues now identified.[21] The parties agree that the scope of the supplementary evidence is set out inparagraph 8.27 of Mr Shaw's brief of evidence dated 8 March 2023. On that basis,Mr Maassen seeks to adduce only Mr Buist's proposed supplementary brief subject tothese qualifications:(a) Mr Buist may need to refer to documents provided in response to thefurther discovery requests;(b) Revital may address CAPEX more fully (possibly through anotherwitness);16 and(c) Mr Dobson's brief requires revision to identify the factual mattersrelied on and any within the scope of his expertise.[22] Thus, the issue for determination is whether Revital should be granted leave inrelation to this supplementary evidence and the trial adjourned (following today'sconcurrent evidence of the health and safety experts).16 The defendants maintain a hearsay objection to some parts of Mr Buist's proposed supplementarybrief.[23] Mr Lindsay, for Enviro, submitted that Revital should be held to its currentevidence given the interests in finality for Enviro and Court resources. He submittedit is for Revital to prove its case and it has been on notice for some time as a result ofthe correspondence seeking discovery of documents relevant to quantum, theobjection as to the admissibility of Mr Dobson's brief and the proposed evidence inMr Shaw's brief.[24] Finality in the current hearing and holding Revital to its current evidence is aconsideration weighing in favour of Enviro and Court resources. However, incircumstances where the evidential gap had been overlooked by Revital's legaladvisers, I consider this factor is outweighed by the prejudice to Revital if leave werenot granted. Revital is not seeking to amend its case in relation to quantum. Rather,its legal advisers have belatedly realised there is an unintended gap in the expert'sevidential foundation. They seek to underpin the existing expert evidence and model.Precluding Revital's damages claim in its entirety as a result would be something of awindfall gain to Enviro. The prospect of discontinuance and further litigation is alsoundesirable. If the experts had conferred sufficiently before trial, the gap would havebeen identified then. The balance is particularly in favour of leave where the greaterprejudice to Enviro in relation to its ability to respond to the supplementary evidenceis accommodated by an adjournment,17 which Revital accepts will be a necessaryconsequence of leave.[25] Mr Shaw estimates he would need one to two weeks to complete hisassessment. Allowing also for proposed CAPEX evidence from Mr George, Envirorequires an adjournment of six weeks. The timing of a further hearing date remainsuncertain. It may be that the roster can be adjusted to accommodate a hearing in thecoming months but a hearing within this timeframe cannot be guaranteed at this stage.Mr Maassen had estimated a further three day hearing whereas Mr Lindsay estimatedas many as six days may be required. In the circumstances, I consider that a weekshould be more than enough. Counsel have proceeded efficiently during the trial todate.17 Rather than bifurcation with wider scope for Revital to revisit its case, as indicated.Result[26] I grant Revital's application to recall Mr Buist and file his supplementary brief.However, as with Enviro's earlier evidential objections, I will receive the evidencede bene esse.[27] As a result of granting Revital's application, it is necessary to adjourn the trialfollowing the evidence of the health and safety experts.[28] I direct the registry to allocate a further one week hearing before me on the firstavailable date after 30 June 2023. Subject to an update in relation to another matteron Friday, counsel should now be aware the registry is looking to allocate a five dayhearing commencing on 3 July 2023.[29] The parties are to confer and file a joint memorandum by tomorrow addressingfurther proposed timetable directions. This timetable should include directions for anyfurther discovery, any further supplementary briefs and for the accounting experts tocontinue their conferencing sooner rather than later in an effort to narrow the scope offurther supplementary briefs. The experts should confer again once the supplementarybriefs have been exchanged in advance of the further hearing.[30] Even where such an application is granted, costs may be awarded in respect ofextra work required to respond to the supplementary brief or caused by theadjournment. If costs cannot be agreed, I will receive memoranda (not exceeding fourpages) within 20 working days and determine costs on the papers.________________________________Gault J