MACDONALD AND ANOR v TOWER INSURANCE LIMITED [2014] NZHC 2876

MACDONALD AND ANOR v TOWER INSURANCE LIMITED [2014] NZHC 2876 [19 November 2014]ORDER PROHIBITING PUBLICATION OF THE JUDGMENT AND ANYPART OF THE PROCEEDINGS (INCLUDING THE RESULT) IN NEWSMEDIA OR ON THE INTERNET OR OTHER PUBLICLY AVAILABLEDATABASE UNTIL FINAL DISPOSITION OF TRIAL. PUBLICATION INLAW REPORT OR LAW DIGEST PERMITTED.IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2012-404-004848[2014] NZHC 2876BETWEEN ROBYN JEAN MACDONALD ANDBAILEY TRUSTEE SERVICES LTDPlaintiffsAND TOWER INSURANCE LIMITEDDefendantHearing: 13 November 2014 (By way of conference call)Appearances: GDR Shand for PlaintiffsM C Harris for DefendantJudgment: 19 November 2014RULING OF DUNNINGHAM J[1] This is an application to have certain evidence ruled inadmissible prior to trial.It is made in the context of a claim that the defendant, Tower Insurance Limited, is inbreach of its obligations under the relevant policy of insurance, to respond to damagethe plaintiffs' residential dwelling suffered in the Canterbury earthquakes.[2] The defendant proposes to repair the house, but the plaintiffs claim that:(a) such repairs will not comply with the policy;(b) the defendant has now lost its right to reinstate the damage; and(c) the plaintiffs are entitled to be paid the "full replacement value" in alump sum, as damages.Background to this application[3] The plaintiffs served all their briefs of evidence by 16 September 2014. Thedefendant notified the plaintiffs under r 9.11 of its objections to parts of their proposedevidence on 10 October 2014. Those concerns were also discussed at a telephoneconference on 23 October 2014. At that conference the defendant expressed the viewthat the identified evidence was inadmissible for a variety of stated reasons and inaddition, given the large number of witnesses proposed to be called in the hearing timeavailable, it was important to confine the evidence to that which was strictly relevantand helpful.[4] In the minute I issued following that conference, I expressed the view that thedefendant's concerns were properly raised. I invited counsel to see if the concernscould be resolved by consent, failing which a hearing to deal with admissibility issueswould be conducted by telephone on 13 November 2014.[5] Counsel have not been able to resolve those concerns. A formal application bythe defendant for orders as to admissibility of the plaintiffs' evidence was filed shortlyafterwards, and is opposed by the plaintiffs.[6] The plaintiffs have also, in a memorandum filed a day before this hearing,raised issues of admissibility in relation to the defendant's evidence. The defendantnotes these issues had not previously been raised with counsel as r 9.11 requires.However, in order not to have those issues delay the hearing getting underway on24 November 2014, I have decided to deal with these at the same time.The disputed evidence[7] The objections raised by the defendant relate to eight of the plaintiffs' briefs ofevidence. They are as follows:(a) The defendant says that eight identified paragraphs of the evidence ofRobyn McDonald, one of the plaintiffs, should be ruled inadmissiblebecause they are repetitive, irrelevant, argumentative and/or containargumentative speculation. The defendant relies on r 9.7(4)(e) and s 8of the Evidence Act 2006 (the Act) to support this submission.(b) The defendant says that paragraph 8 of the evidence of Guy Sayers, aclaims manager for WorldClaim New Zealand Limited (WorldClaim),should be ruled inadmissible because it is material in the nature of asubmission, (contrary to r 9.7(4)(d)), it is inadmissible opinionevidence having regard to ss 23, 25 and 26 of the Act, and is"conclusory".(c) The defendant says that three paragraphs of the evidence ofPeter Maynard, a builder, should be ruled inadmissible on the groundsthat it is non-expert opinion on the cause of damage and on whether thework was completed to regulatory standards of the time, and because italso fails to meet the "substantially helpful" test in s 25 of the Act.(d) The defendant seeks to have two paragraphs of the evidence ofDaniel Paltridge, a project manager for a building company, ruledinadmissible because it does not comply with ss 8 and 25 of the Act northe Code of Conduct for expert witnesses. The paragraphs express hisopinion that "the repairs are so extensive it is practically a rebuild inany event" and "it is likely that the cost to repair the house will faroutweigh the cost to rebuild it", but they do not identify the facts andassumptions on which those opinions are based.(e) The defendant says that both the principal and reply briefs of evidenceof Kevin Murphy, a loss assessor, are inadmissible, having regard to ss7, 8, 23, 25 and 26 of the Act, because they are neither substantiallyhelpful or relevant. The evidence gives an opinion on the cost ofrepairing the house in April 2012, but another of the plaintiffs'witnesses gives an up to date cost, which the defendant says is the onlyrelevant evidence.(f) The defendant says that the brief of evidence of Paul Kean, a builder,should be ruled inadmissible under ss 7, 8, 23, 25 and 26 of the Act andbecause it does not comply with the Code of Conduct for expertwitnesses. It baldly states that it is his professional opinion that theproperty is uneconomical to repair and there is not a feasible repairstrategy that could be developed to restore the property to 'as new'condition, but provides no cogent reasoning for this. He also providesa costing to rebuild the house in August 2012, which again thedefendant says is outdated.(g) The defendant says that the entire brief of Andrew Fusco, the chiefoperating officer of WorldClaim Global Claims Management, shouldbe ruled inadmissible under ss 7, 8, 23, 25 and 26 of the Act. Mr Fuscohas a direct personal financial interest in the outcome of this litigation,because he is the sole director and shareholder in WorldClaim, whichwill receive 8 per cent plus GST of the plaintiffs' recovery under thepolicy. The defendant says that, Mr Fusco's financial interest in theoutcome means he does not have the requisite independence.Furthermore, the defendant says that while Mr Fusco purports tocomply with the Code of Conduct for expert witnesses, the evidence hegives patently does not do so. The nature of his brief is a piece ofadvocacy, which contains a substantial amount of material in the natureof submission. The brief also fails to meet the substantially helpful testset out in s 25 as much of the brief is argumentative, rhetorical andemotive, and gives hearsay evidence as to the plaintiffs' feelings andopinions on various matters.Relevant principles for admissibility of evidence[8] Sections 7 and 8 of the Act contain the primary statutory tests as toadmissibility, and provide:7 Fundamental principle that relevant evidence admissible(1) All relevant evidence is admissible in a proceeding except evidencethat is—(a) inadmissible under this Act or any other Act; or(b) excluded under this Act or any other Act.(2) Evidence that is not relevant is not admissible in a proceeding.(3) Evidence is relevant in a proceeding if it has a tendency to prove ordisprove anything that is of consequence to the determination of theproceeding.8 General exclusion(1) In any proceeding, the Judge must exclude evidence if its probativevalue is outweighed by the risk that the evidence will—(a) have an unfairly prejudicial effect on the proceeding; or(b) needlessly prolong the proceeding.[9] Sections 23 to 25 of the Act address the admissibility of opinion evidence.They provide, in effect, that opinion evidence is not admissible, subject to twoexceptions. These exceptions apply where:(a) the expression of the opinion is necessary for the witness tocommunicate what they saw, heard or otherwise perceived; or(b) if it is expert evidence, admissible under s 25 of the Act.[10] Section 25(1) of the Act provides:25 Admissibility of expert opinion evidence(1) An opinion by an expert that is part of expert evidence offeredin a proceeding is admissible if the fact-finder is likely toobtain substantial help from the opinion in understandingother evidence in the proceeding or in ascertaining any factthat is of consequence to the determination of the proceeding.[11] As was said by the Court of Appeal in Mahomed v R, the "substantially" helpfulcriteria in s 25: 1 necessitates consideration of an amalgam of relevance, reliability andprobative value.Accordingly, the requirement that evidence be substantially helpful creates a higherthreshold than simply probativeness.[12] Section 26 goes on to impose an additional obligation on the conduct of expertsin civil proceedings saying:26 Conduct of experts in civil proceedings(1) In a civil proceeding, experts are to conduct themselves in preparingand giving expert evidence in accordance with the applicable rules ofcourt relating to the conduct of experts.(2) The expert evidence of an expert who has not complied with rules ofcourt of the kind specified in subsection (1) may be given only withthe permission of the Judge.Section 26 therefore engages the Code of Conduct for expert witnesses in civilproceedings, as recognised in r 9.43 of the High Court Rules, and found in sch 4 to theHigh Court Rules.[13] The current Code of Conduct reminds experts that they should remainimpartial. It also specifically provides that the expert witness must:(a) state his or her qualifications;(b) state the issues that the expert evidence addresses and confirm that it iswithin his or her area of expertise;(c) state the facts and assumptions upon which the opinion is based; and(d) give details regarding material relied upon to inform the opinion given.1 Mahomed v R [2010] NZCA 419.[14] While there is provision in s 26 to admit expert evidence which does notcomply with the rules of Court with the permission of the Judge, I consider there wouldbe a limited range of cases where such evidence would be admitted. For example,permission could be granted where the non compliance is minimal, so that it does notdetract from the evidence being substantially helpful, or where its deficiencies areaddressed by other evidence before the Court (such as where another witness explainsthe scope of instructions given to the expert). However, in most circumstances expertopinion evidence should meet the requirements in s 26 if it is to be admissible, becausewithout such compliance it is unlikely to meet the test in s 25 of being substantiallyhelpful.The defendant's submissions[15] The defendant traversed the relevant legal principles which determinedadmissibility, including the requirements of r 9.7 of the High Court Rules whichprovides, relevantly, that every brief:(a) must be in the words of the witness and not in the words of the lawyerinvolved in drafting the brief;(b) must not contain evidence that is inadmissible in the proceedings;(c) must not contain any material in the nature of a submission;(d) must avoid repetition; and(e) must be confined to the matters in issue.[16] As the defendant points out, the regime under part 9 of the High Court Ruleswas substantially amended in February 2014 in part, because of concerns that the rulesconfine briefs to relevant, admissible material were not being observed,2 and the rulesare designed to prohibit bad practice.3 Equally the key purposes of the Act include2 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at [HR 9.1.01].3 The new High Court case management regime (NZLSCLE Limited 2013) at 14.promoting fairness to parties and witnesses, and avoiding unjustifiable expense anddelay.4[17] In addressing the issue of intemperate or argumentative comments beingincluded in evidence, the defendant cites Walker v Walker, where Priestley J observed(albeit in the context of Family Court proceedings) that: 5... An affidavit is a mechanism to place relevant factual matters before theCourt. It is not a device to score points, denigrate, or indulge in advocacy.[18] It appears those submissions are addressed towards statements inMs MacDonald's evidence, although equally, there are statements of a similar ilk inthe evidence of Mr Fusco, who is with WorldClaim, the company assisting theplaintiffs in their claim against the defendant.[19] However, perhaps more importantly, the defendant is critical of the opinionevidence contained in a number of briefs. Again the defendant's submissions traversethe statutory framework for opinion evidence which has been set out above. The keycomplaints raised about the challenged opinion evidence are that:(a) opinions are given by people who are patently not impartial, but mostparticularly, Mr Fusco, who is the sole director and shareholder ofWorldClaim and who has a direct financial interest in the outcome ofthese proceedings;(b) some of the evidence is irrelevant because it is out of date. Thus, forexample, costings of a repair strategy done in 2012 cannot beconsidered helpful, when the defendant now has a building consent forthe proposed repair work (so the scope of works is known) and whenthe plaintiff is calling a quantity surveyor, Mr McMorran to giveevidence about the current costs of rebuilding the house; and4 Evidence Act 2006, s 6.5 Walker v Walker [2006] NZFLR 768 (HC) at [11].(c) the opinions given fail to comply with the Code of Conduct for expertwitnesses in that they do not identify the facts and assumptions onwhich the opinion is based, or the assumptions on which it is based areso scantily explained that they are not open to meaningful examination.[20] The defendant also submits that this is an appropriate case for the Court to dealwith admissibility objections in advance of trial and refers to the decision of Duffy Jin Parihoa Farms Ltd v Rodney District Council.6 In that case, it was observed thatthe jurisdiction to rule evidence admissible in advance of trial was usually "sparinglyexercised", but where a party's evidence has strayed beyond the bounds of what ispermissible:7 the opposing party should not be overly deterred from objecting to suchevidence in advance of the trial. Such applications impose discipline on theparties to ensure their evidence is properly admissible. Secondly, if they aresuccessful, they will also avoid the need for evidence in response for theopposing party...[21] I accept that where there are a number of alleged transgressions, and wherethey have the ability to enlarge the trial beyond the allotted hearing time, (as was thecase in Parihoa), then an application in advance of the trial is appropriate. I considerthe present application is such a case.The plaintiffs' submissions[22] Mr Shand submitted that admissibility issues should ordinarily be dealt with atthe hearing because:(a) the admissibility of evidence involves an assessment of relevance andthat is best determined by the trial Judge who is considering the issueto which the evidence is said to be relevant; and(b) issues about admissibility cannot always be readily separated fromissues as to weight and it is undesirable to separate out issues of6 Parihoa Farms Ltd v Rodney District Council (2010) 20 PRNZ 8.7 At [6].admissibility, and have those issues determined separately from issuesas to weight.[23] In response to the challenges to the independence of the WorldClaim witnesses,the plaintiffs say that that is an issue which goes to weight rather than admissibility ofthe evidence, citing, in particular, BNZ Investments Ltd v Commissioner of InlandRevenue,8 and ANZ National Bank Ltd v Commissioner of Inland Revenue.9[24] In relation to the specific briefs of evidence, the plaintiffs submitted that theevidence of Messrs Sayers, Fusco and Murphy was relevant, and they had recognisedexpertise to express opinions, so any concerns about their independence should simplygo to weight. In relation to the evidence of Mr Maynard, it was also submitted that hehad appropriate expertise to give all of the evidence in his witness statement. Inrelation to Messrs Paltridge and Kean, again, the plaintiffs considered they had theappropriate expertise and they were entitled to call multiple witnesses to give evidenceof the costs of appropriate repair work, whether those costs were 2012 costs or morerecent costs. Finally in relation to Ms MacDonald's evidence, the plaintiffs' view wasthat she was entitled to tell her story about the events and express her views about thedefendant's conduct, and that the Court should not adopt an overly technical approachin the pre-trial context.Should the identified evidence be ruled inadmissible?Evidence of Robyn MacDonald[25] The defendant's concerns about the identified passages of Ms MacDonald'sevidence was that some of it focused on the details of her cancer treatment in a waythat was repetitive, not directly relevant to the matters in issue and designed to beunfairly prejudicial to the defendant.[26] The balance of the impugned paragraphs were said to be argumentative, andirrelevant. They effectively comprised submissions about the defendant's motivations,8 BNZ Investments Ltd v Commissioner of Inland Revenue (2009) 19 PRNZ 71 (HC) at [22]-[24].9 ANZ National Bank Ltd v Commissioner of Inland Revenue (2005) 18 PRNZ 114 at [4].the alleged consequence for other Christchurch home owners and on even broaderissues, such as what the government should do about the situation.[27] While I understand the defendant's concerns about paragraphs 28 to 30, theydo outline the personal circumstances faced by Ms MacDonald, which might make herparticularly susceptible to stress and emotional suffering. They are therefore relevantto her claim for personal damages and I do not rule them inadmissible. However, Iam satisfied that there are passages in paragraphs 33, 36, and 38 to 40 which are nomore than submissions on broader issues which are not directly relevant to the currentproceedings, and which do not comply with r 9.7(c). Accordingly, the following partsof her evidence are ruled inadmissible:(a) the second sentence in paragraph 33;(b) all of paragraph 36; and(c) all of paragraphs 38 to 40, except for the first sentence in paragraph 38.Evidence of Guy Sayers[28] Mr Sayers is a claims manager employed by WorldClaim. While the defendantsubmitted that this called into question his independence, I do not consider that thisfactor, on its own, impeached his evidence sufficiently to have it ruled inadmissible.The more important challenge, however, was that it failed the test for expert opinionevidence set out in ss 25 and 26 of the Act.[29] Mr Sayers' brief consists of a single page comprising some introductoryparagraphs about his role with WorldClaim, and the fact that he visited the site andattended site meetings with Tower's project management company. The critical partof his evidence is the last paragraph which reads:I have read the Stream settlement report 20 January 2012 and revised tenderreport with attached work estimate. The proposed work does not return theproperty to "as new" condition as required by the policy.[30] In my view, this brief of evidence should be ruled inadmissible for almostidentical reasons to the reasons given by Asher J for ruling evidence inadmissible inO'Loughlin v Tower Insurance.10 As fact finder I am not likely to obtain substantialhelp from such an opinion. There is no outline of the facts relied on by the expert noris there any explanation of his reasoning to reach this conclusion. If, during thehearing, he was questioned as to his reasoning, that would be exposing the defendantpotentially to prejudice, and new material could come forward of which it had nonotice. Furthermore, in terms of s 8 of the Act, this statement has little or no probativevalue, but potentially has an unfairly prejudicial effect because it expresses aconclusion adverse to the defendant's position. For these reasons I rule Mr Sayers'evidence inadmissible.Evidence of Peter Maynard[31] Mr Maynard is a builder who has previously completed building work at theplaintiffs' house. The defendant has no objections to the bulk of his evidence whichdescribes the building work he was involved in. It does, however, object to theconclusion in the second sentence of paragraph 9 which gives evidence as to why theboundary concrete block wall has detached itself, and to paragraphs 22, 23 and 24which give opinions as to the cause of damage to the conservatory walls and the northwall collapse, and asserts the work he did was "completed to engineers and councilstandards at the time".[32] The first complaint is that, as the builder who worked on the house,Mr Maynard is not able to give these opinions independently or impartially. That maywell be so, but on its own would only go to weight. More importantly, Mr Maynardis not an engineer, nor does he purport to qualify himself as such. Therefore, I acceptthat the identified statements in 9, 22 and 23 are opinions which are not within hissphere of expertise and therefore do not comply with s 26(1) of the Act. Such evidenceis more appropriately given by engineers in the course of the hearing.10 O'Loughlin v Tower Insurance [2013] NZHC 438, (2013) 21 PRNZ 490.[33] Similarly, I accept that it is not clear Mr Maynard is qualified to make thestatement at paragraph 24. More importantly, he has not explained the reason forcoming to this conclusion.[34] The identified paragraphs are therefore inadmissible.Evidence of Daniel Paltridge[35] Mr Paltridge is a project manager for a Christchurch building company. Hehas inspected the property and has prepared what he describes as a "scope to repairthe house". The defendant objects to his summary which includes comments such as:The repairs are so extensive it is practically a rebuild in any event. Also, it islikely that the cost to repair the house will far outweigh the cost to rebuild it.[36] The defendant says these statements are conclusory and do not explainMr Paltridge's reasoning process. Equally the defendant says that what is describedas a scope to repair the house at paragraph 33 is expressed in such generalised termsthat trying to work out exactly what is contemplated in the described categories ofwork can only be guessed at. For example, one category of work is "Rebuilddownstairs structure. Engineer design required".[37] However, although Mr Paltridge's "scope of works" suffers from thisdeficiency, it is relied on by the plaintiffs for the costings done by the quantitysurveyor. I think, therefore, that it has some utility, although clearly (and unhelpfullyin my view), it will require considerable questioning to clarify the detail of what isrequired by this very generalised scope of works. Thus, on balance, I have decided toadmit this evidence, although the weight to be given to it is a matter to be determinedonce it has been heard.Evidence of Kevin Murphy[38] Mr Murphy is another employee of WorldClaim and he describes his expertiseas "a loss assessor/building consultant". As already stated, the defendant's concernsare that this evidence, which provides a cost to rebuild the plaintiffs' house in April2012, is not relevant because the current price is what is relevant, is not substantiallyhelpful and is inadmissible because of his relationship to WorldClaim.[39] While I have reservations about the helpfulness of a costing to build the housein 2012, there is a live issue about cost increases since 2012 (although the defendantsays these relate to increases in repair costs) and the brief does, at least,comprehensively set out how this cost is made up, so is open to examination andchallenge.[40] In respect of Mr Murphy's evidence, I do not consider that his connection toWorldClaim, as an employee, impeaches his evidence to the point where it isappropriate to rule it inadmissible in advance of the hearing. Its utility remains to bedetermined at the hearing. Accordingly his evidence is admitted.Evidence of Paul Kean[41] Mr Kean is a qualified builder. His brief is also short. Without any reasoningit expresses views that: the EDC report and house leveler's [sic] report are not supported by theStream/Tower Scope of works.11 there is not a feasible repair strategy that could be developed to restore thisproperty to as new condition.12 this property is uneconomical to repair and I would not put my reputationon the line by attempting to complete a restoration.13[42] Finally, he provides a rebuild costing to "restore the property to a newcondition" which he carried out in August 2012.[43] This evidence suffers from the same failings as Mr Sayers' evidence, in that itcomprises bald statements which are unsupported by the facts relied upon by the expertor by an explanation of his reasoning process. Simply listing the documents he hasread relating to the repairs required, as has been done at paragraph 4, does not address11 At [6].12 At [7].13 At [8].this concern. Without this material his statements of opinion have little or no probativevalue but have unfairly prejudicial effect.[44] This evidence is therefore ruled inadmissible.Evidence of Andrew Fusco[45] The evidence of Mr Fusco, the director and shareholder of WorldClaim, andwho is described as having expertise in "international insurance loss consulting andinsurance claim advocacy", is objected to in its entirety by the defendant.[46] The evidence sets out Mr Fusco's expertise, in particular, in: assessing and negotiating appropriate and successful insurance claimresults (globally) following catastrophic events, which include large-scaleearthquakes Mr Fusco explains WorldClaim's role in offering claims handling services to victimsof both natural disasters and other losses around the world and sets out his relationshipto the plaintiffs. He says:14Ms Macdonald reached out to WorldClaim to represent her interest in thedocumentation, preparation and negotiation of her insurance claim.Ms Macdonald realized that her upcoming chemotherapy treatments wouldnot only put a strain on her body but the continued stress of progressing herclaim would be unreasonable. Ms Macdonald realized once she hiredWorldClaim that she had someone fighting for her interests while she wasfighting for her own life.[47] He then provides a narrative of Tower's current workload and capacity as aninsurer and sets out a narrative of Ms MacDonald's dealing with Tower and howWorldClaim came to be involved. This narrative comprises approximately70 paragraphs covering a range of material, including hearsay evidence about whatwent on in pre-trial conferences and commentary on whether Mr Fusco believes Towerwas acting in good faith. There is also some commentary on what is described as"demand surge" where, following a clustered sequence of disaster events, such as theChristchurch earthquakes, the cost to repair buildings and infrastructure is"significantly greater than the cost to repair the same damage in a similar disaster".14 At [24].He says that Tower has failed to take account of this and so an offer of compensationto rebuild at "today's" price is unrealistic and will fail to provide the insured withadequate compensation to rebuild when able.[48] While Mr Shand tacitly acknowledged that Mr Fusco was not independent, hesubmitted that a lack of independence was not required by the Code of Conduct forexpert witnesses and that Mr Fusco's relative lack of independence would simply goto the weight to be placed on his evidence.[49] I accept that the Courts will not readily rule evidence inadmissible simplybecause evidence is perceived to be lacking independence. That is normally a matterwhich is tested through cross-examination and goes to the weight of the evidence.However, few challenges to the independence of expert evidence would be advancedin circumstances such as this, where the witness has openly acknowledged he is"fighting" for the plaintiff, and where the plaintiff herself has described this and otherWorldClaim witnesses as her "advocates". However, I am not prepared to rule theevidence inadmissible on that count alone. My primary concern is that the evidencepurports to provide expert opinion about:(a) The defendant's conduct in its negotiations; and(b) The concept of "demand surge".None of that evidence is, in my view, substantially helpful in resolving any issue thatis of consequence to the determination of this proceeding.[50] While Mr Fusco talks about the phenomenon of demand surge, there is nothingin his evidence which would obviously assist in predicting how much costs are likelyto continue to increase for the rebuild or repair of the plaintiffs' home in theChristchurch situation. He does not suggest the experience of cost increases in Floridato repair hurricane damage can provide an exact guide to cost increases in theCanterbury region. He adopts a figure of 30 per cent (although it is not clear whattime period this relates to) but then says this will be "insufficient" without saying whatreplacement figure should be used or when.[51] There will be evidence given by quantity surveyors on the increase in costswhich the Christchurch construction market has experienced post earthquake andwhether that is likely to continue. Nobody is suggesting that costs will remain staticand Mr Fusco's evidence does nothing to help quantify the likely continued costincreases. For these reasons, and having regard to the considerations in s 8, I considerthe probative value of the evidence is negligible and is outweighed by the risk it willneedlessly prolong the proceeding. I therefore rule Mr Fusco's evidence inadmissiblein its entirety.Plaintiffs' complaints about the defendant's evidence[52] The plaintiffs raised a number of specific complaints about the defendant'sevidence. They primarily related to whether the witness had the expertise to give theevidence or whether the evidence was inadmissible hearsay evidence.Evidence of David Andrew Ashe[53] Mr Ashe is the Manager-Earthquake Recovery for the defendant. His evidenceprovides a general overview of the defendant's involvement in Canterbury earthquakerelated claims and then, more specifically, in the plaintiffs' claim in relation to theirresidential property.[54] The plaintiffs object to paragraph 73 of his evidence which recounts Mr Ashe'smeeting with Ms MacDonald in order to try and settle the dispute. It sets out Tower'soffer to settle the claim at that date. The plaintiffs object to this, saying it is a "withoutprejudice" meeting, and so the substance of what was discussed should not be inevidence.[55] The defendant, on the other hand, say that there was no agreement that theirmeeting was conducted on a without prejudice basis, and its policy is to conduct suchmeetings on an open basis, so that it can subsequently point to the attempts it has madeto settle matters. In the present case, the plaintiffs claim the defendant hasunreasonably failed to settle their claim and, in order for the defendant to respond tothat assertion, it wishes to be able to point to meetings such as this where it has triedto settle the matter.[56] It is accepted that whether communications are protected as being "withoutprejudice" depends on the intention of the parties, which may be inferred where notexpressly stated, and the application of the rule is not dependent on the use of thephrase "without prejudice".15 Furthermore, in the normal course, where discussionsare held or documents exchanged, for the purpose of settling a dispute withoutlitigation, the parties should be able to avail themselves of the rule that such offers arenot admissible in the litigation.[57] However, in the present case, the defendant only seeks to admit evidence ofthe offers it has made prior to the litigation. Even if its offer was made on a withoutprejudice basis (which the defendant denies), it is entitled to waive that privilege inrespect of its own offers. The defendant is not seeking to give evidence of any counteroffers made by the plaintiffs. Accordingly, paragraph 73 is admissible.[58] The same complaint is raised in relation to paragraph 91, which again relatesto communications about resolving the dispute. Here the concern appeared to relateto offers made by the plaintiff which were incorporated by reference to emailsexchanged between the plaintiffs and the defendant. Mr Harris, for the defendant, hasagreed to ensure the emails do not refer to any counter offer made by the plaintiffs.On that basis, paragraph 91 is admissible, for the same reasons as articulated in relationto paragraph 73.[59] The plaintiffs object to statements in paragraph 96 that the defendant is"prepared to go further than the policy requires" and that the amounts claimed byMs MacDonald far exceed anything that could form a reasonable basis for resolution.[60] In both cases, the defendant has explained that these are simply statements ofits position and has agreed to reword the statements to make it clear that it is notexpressing an opinion on the correctness of that position, but simply stating what itsposition is. On the basis that the amendments proposed by the defendant in its furthermemorandum dated 13 November 2014 are incorporated, these statements areadmissible.15 Rush and Tompkins Ltd v Greater London Council [1989] AC 1280, [1988] 3 WLR 939.[61] The last criticism of Mr Ashe's evidence is his statement in paragraph 100 that"construction costs have risen". The plaintiffs say he is not qualified to express suchan opinion. The defendant says the statement is uncontroversial. It is confirmed bythe defendant's quantity surveyor and the plaintiffs' witnesses. It is simply a statementof fact which Mr Ashe, in his role as Manager-Earthquake Recovery, is perfectlycapable of giving.[62] I accept that this is a statement of fact which is reflected in uncontested factualevidence, and there is no basis for ruling it inadmissible.Evidence of Michael William O'Leary[63] Mr O'Leary is the project team manager of Stream Group New Zealand(Stream), which is used by the defendant to provide loss adjusting and projectmanagement services. It is managing the claim relating to the plaintiffs' residentialproperty. Mr O'Leary's evidence summarises the investigations which have beenmade of the damage to the plaintiffs' property, and the steps taken to develop theproposed repair strategy.[64] Mr Shand makes a general criticism of Mr O'Leary's evidence in that manysentences use the phrase "we" rather than "I", and thus some of his evidence is notbased on personal experience. To the extent some of the evidence is hearsay, he is notsatisfied it falls within the exceptions which permit hearsay evidence.[65] The defendant says that Mr O'Leary's evidence simply summarises the processfollowed by Stream and relies on Stream's documentary records and his personalexperience. To the extent his evidence relies on the company's documentary records,his evidence comes within the exception in s 19 of the Act.[66] I am not satisfied that these general criticisms of the brief of evidence reachthe threshold for ruling the brief of evidence inadmissible. It is clear that Mr O'Learyhas had direct involvement in the claim which is the subject of these proceedings. Hisevidence usefully summarises the progress of the claim from the defendant'sperspective and to the extent that he describes events which he may not have beendirectly involved in, he relies on a business records of the defendant.[67] I am satisfied that the documents referred to all fall clearly within the definitionof "business record" contained in s 19 of the Evidence Act, being documents that aremade:19(a) (ii) in the course of a business, and as a record or part of a recordof that business; and(b) that is made from information supplied directly or indirectly by aperson who had or may reasonably be supposed by the Court to havehad personal knowledge of the matters dealt with and the informationhe or she supplied.[68] The documents are correspondence and reports created by, or held by thedefendant for the purpose of responding to the plaintiffs' insurance claim and there isno reason to suppose the authors of those documents were not directly involved in thematters addressed or the information supplied. Thus I do not consider the evidence,as a whole, is objectionable and I go on to deal with the specific issues raised aboutthis evidence.[69] The plaintiffs object to paragraphs 70, 98, 107, 123 and 125 which all makereference to a report by Prendos New Zealand Limited (Prendos), a consulting firmwhich undertakes, among other things, residential building surveying. The plaintiffssay that if the defendant wants to rely on the report for the truth of its contents, it willneed to call the relevant author or consultant from Prendos.[70] The defendant says that the report is produced by Mr O'Leary primarily toexplain that, in his role for Stream, he has taken into account the defects and damageidentified in the Prendos report, in devising a scope of works for the repair of thehouse. The defendant goes on to say that it does not understand the truth of thecontents of the Prendos report to be in issue as the plaintiffs do not say that defects ordamage identified by Prendos should not be repaired and Tower does not rely on thePrendos report to justify not repairing damage or defects the plaintiffs seek to haverepaired.[71] I am satisfied that, at least to the extent the document is used for the purposerelied on by the defendant which is to develop its scope of repair works, it falls withinthe definition of a business record, and is one where it seems undue expense or delaywould be caused if the writer of that report were required to be a witness.16 It istherefore admissible.[72] However, should the defendant wish to rely on the report to prove the truth ofsome issue, for example, that the existing building did not comply with the buildingcode, then that would be a different matter, and it may be inadmissible for that purpose,unless the person expressing that opinion was called as a witness.[73] The next objection is to paragraph 76 which refers to advice from C S RoofingCanterbury Limited. Again I am satisfied that, like the Prendos report, this is abusiness record, and is introduced into evidence simply to explain why Stream hasincorporated repair of the defects and damage identified in the roof into its scope ofworks. In that regard it is simply part of the narrative explaining what the defendantand Stream have done. For the reasons given above, I am satisfied it is admissible.[74] The next challenge is to paragraph 88 where Mr O'Leary refers to his firmundertaking an equilibrium moisture content test in October 2014, and the results ofthat testing. The plaintiffs say that the person who conducted the testing should givethat evidence. However, the test results appear to replicate the findings of theplaintiffs' witness, Mr Greig, so to that extent, they appear unobjectionable.Furthermore, the defendant is not relying on that testing to confine its repair strategyas it records, in the following paragraph, that any further defects discovered duringconstruction will be addressed and treated as a variation to the tendered works.[75] I am satisfied, therefore, that for the same reasons as given in relation to thePrendos report and C S Roofing Canterbury Limited report, this document should be16 Evidence Act 2006, s 19(1)(c).admitted. If it transpires that an issue arises as to the truth of the contents, the issue ofadmissibility can be revisited.[76] The plaintiffs object to statements in paragraphs 92 and 115 of Mr O'Leary'sbrief of evidence where they say that Mr O'Leary expresses an opinion which he isnot qualified to give on structural engineering issues. The defendant has agreed todelete the sentences in question as currently worded, and replace them with simplefactual statements about the issues in question. On the basis that those amendmentswill be made, the evidence is admissible.[77] The plaintiffs challenge paragraph 131 which refers to a report byLaser Plumbing, when Laser Plumbing is not being called to give evidence. This fallsinto the same category as the reports discussed above. The defendant does notunderstand that the plaintiffs challenge the drain repair strategy and it is referred to aspart of the narrative explaining what the defendant has done.[78] For the reasons already given in relation to the other reports which havecontributed to the scope of works devised by the defandant, I rule this paragraph isadmissible.[79] Finally, the plaintiffs object to paragraphs 134 and 135 where Mr O'Learygives evidence that he conducted a tender process and received a tender from a firmcalled Kingston Builders Limited to undertake the proposed scope of works. Theplaintiffs object to this evidence being given because no witness from Kingston isgoing to give evidence. However, the defendant explains that this is simply part of thefactual narrative and Mr O'Leary is entitled to give evidence that he conducted atender process and received a tender for the amount specified for the proposed scopeof works. The appropriateness of the sum tendered is addressed by another witnessfor the defendant, Mr Eggleton.[80] Once again, I am satisfied that this is in the circumstances, simply a businessrecord being produced by Mr O'Leary and it would involve undue expense or delay ifsomeone from Kingston were required to give evidence confirming that they tenderedthe specified price. The defendant relies on another witness, the quantity surveyor MrEggleton, to give opinion evidence on whether the tendered sum is reasonable for thescope of works to which it relates. This evidence is therefore admissible.Evidence of Mr Peter Ross Eggleton[81] Mr Eggleton is a quantity surveyor. The plaintiffs' criticism is that he refers tothe Kingston tender where no-one from Kingston is giving evidence. For the reasonsdiscussed above in relation to Mr O'Leary's evidence, I am satisfied that thisparagraph is admissible. The receipt of the tendered price from Kingston is simplypart of the factual narrative. Mr Eggleton is appropriately qualified to give an opinionon whether the tender sum is reasonable for the scope of works to which it relates.Outcome[82] The application by the defendant to have portions of the plaintiffs' evidenceruled inadmissible has been largely successful. I also note that the plaintiffs did nottake the opportunity to review the evidence in light of these issues being raised inaccordance with r 9.11 and it was therefore necessary to proceed with the hearing on13 November 2014.[83] The plaintiffs' informal application in relation to the defendant has notsucceeded, except in relation to some minor wording amendments, which werevoluntarily agreed to by the defendant as soon as the issues were raised.[84] For these reasons, and in accordance with r 14.8, I consider the defendant isentitled to costs on this application, to be determined independently from costs in thesubstantive claim. My preliminary view is that 2B costs should be awarded. However,if the parties wish to be heard on costs, they are to advise the court of that on the firstday of the hearing. Depending on the views expressed, I will then either fix costs orset a timetable for filing costs memoranda.Procedural Issues[85] At the hearing on 13 November certain procedural defaults by the plaintiffswere discussed. The defendant had advised by way of a memorandum that theplaintiffs' reply evidence, which was due on 7 November, had still not been supplied.A draft index to the common bundle, due on 29 September 2014 had also not beensupplied nor had an updated list of documents. The failure to serve a draft index tothe common bundle put in doubt the possibility of the common bundle being filed andserved by Monday 24 November 2014.[86] Court Registry staff have also advised that the plaintiffs have yet to pay thehearing fee, and that was due on 10 November 2014.[87] Mr Shand advises that reply evidence will be served on 14 November 2014 aswill a draft index to the common bundle. The bundle itself is under preparation andwill be served in the week commencing 24 November. He also confirms the hearingfee will be paid in the week prior to the hearing commencing.[88] I expect that the plaintiffs will remedy these non-compliances in thetimeframes agreed. I note that a failure to pay the hearing fee prior to hearing couldresult in adjournment of the hearing, and there is a risk of costs orders being made asa consequence.Solicitors:Grant Shand, AucklandGilbert Walker, Auckland