Supreme Court New South Wales Medium Neutral Citation: Strata Plan 61287 & Anor v Brookfield Multiplex Limited & Ors [2011] NSWSC 1302 Hearing dates: 13 October 2011 Decision date: 02 November 2011 Jurisdiction: Equity Division - Commercial List Before: Brereton J Decision: Proceedings deconsolidated. Proceedings to be heard together with evidence in one to be evidence in the other. Second plaintiff granted leave to supplement evidence. Catchwords: PRACTICE AND PROCEDURE - Deconsolidation of proceedings - proceedings involving residential and commercial strata corporations previously consolidated as shared common substratum of facts - commercial corporation unable rely on statutory warranties - of itself insufficient to warrant deconsolidation - general position that plaintiffs should be represented by one solicitor - rule may be dispensed with in certain circumstances - circumstance that commercial corporation loses faith in solicitor - sufficient degree of change in circumstance to warrant deconsolidation - defendants contend deconsolidation will result in trial being attended by issues such as double cross-examination of defendant witnesses - extent to which such issues arise attenuated by (NSW) Evidence Act provisions allowing court to control cross-examination - proceedings deconsolidated and to be heard together with evidence in one to be evidence in other. PRACTICE AND PROCEDURE - Commercial strata corporation seeks leave to supplement liability and quantum evidence - deficiencies identified as to quantum evidence - Makita v Sprowles concerns as to admissibility of expert evidence on liability - different judges take different views as to requirements for admissibility of expert evidence - (NSW) Civil Procedure Act, s 56, makes just resolution of proceedings paramount concern - justice requires parties be permitted to adduce relevant and admissible evidence - only possible prejudice to defendants is that hearing may be delayed - interests of justice demand plaintiff be given leave to supplement quantum and liability evidence. Legislation Cited: (NSW) Civil Procedure Act, 2005, s 56 (NSW) Evidence Act, 1995, s 26, s 42 (NSW) Home Building Act 1989, Part 2C (NSW) Uniform Civil Procedure Rules, 2005, r 6.19, r 6.22, r 12.1, r 28.5 Cases Cited: Carnie v Esanda Finance Corporation Limited (1996) 38 NSWLR 465 Fox v Olsen [1999] SASC 411 Herbert v Badgery (1893) 14 LR (NSW) Eq 321 Lewis v Daily Telegraph Limited (No 2) [1964] 2 QB 601 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Riebolge & Hambros Australia Ltd v Hynd Andary Pty Ltd (1994) 176 LSJS 172 Category: Interlocutory applications Parties: Owners Corporation SP 61287 (first plaintiff) Owners Corporation SP 61288 (second plaintiff) Brookfield Multiplex Limited (first defendant) Multiplex Corporate Agency Pty Limited (second defendant) Building Insurers Guarantee Corporation (third defendant) Representation: Counsel: D S Weinberger (first plaintiff) F Corsaro SC w P Bambagiotti (second plaintiff) J Simpkins SC w T French (first & second defendants) H Rayfield (solicitor) (third defendant) Solicitors: Maccullum Lawyers (first plaintiff) Grace Lawyers (second plaintiff) Gilbert + Tobin Lawyers (first and second defendants) Mills Oakley Lawyers (third defendant) File Number(s): 2008/290669 Judgment 1The plaintiffs Owners Corporation SP 61287 and Owners Corporation SP 61288 are respectively the proprietors of residential and commercial (serviced apartment) strata plans in the same building, which was constructed by the first and second defendants Brookfield Multiplex Limited and Multiplex Corporate Agency Pty Limited, whom they sue for damages in respect of building defects said to be occasioned by negligence and by breaches of the statutory warranties given by (NSW) Home Building Act 1989, Part 2C. The third defendant Building Insurers Guarantee Corporation stands in the shoes of HIH as the home owners warranty insurer. 2The strata schemes were registered in 1999. Defects were discovered, in both strata plans, in 2004 and 2005. On 13 April 2008, the residential strata plan commenced proceedings. The commercial strata plan commenced (separate) proceedings on 3 November 2008, and an order was made consolidating the proceedings on 20 November 2008. 3On 4 December 2009, after a number of defaults by the plaintiffs in serving their evidence, the court by consent made an order that they file all of their expert reports in relation to liability by 8 January 2010, and that "no evidence in relation to the issue of liability filed or served by the plaintiffs after 4:00pm on 8 January 2010 will be admitted into evidence in the proceedings nor relied upon by the plaintiffs without leave of the court". Before 8 January 2010, the plaintiffs served 26 reports in chief in relation to liability. A mediation was conducted in or about March 2011, but was unsuccessful. Until May 2011, the plaintiffs were commonly represented, but since May 2011 the commercial strata plan has been separately advised and represented (although no order has yet been made permitting that course). 4The plaintiffs now seek "deconsolidation", so that they may be separately represented; leave to amend (in the case of the commercial strata plan) so as to abandon claims for breaches of statutory warranties (which are not available to it); and leave to adduce further evidence, notwithstanding the directions previously made. Deconsolidation 5(NSW) Uniform Civil Procedure Rules, 2005, r 6.22, provides that if the court considers that the joinder of parties or causes of action in any proceedings may embarrass, inconvenience or delay the conduct of the proceedings, the court may order separate trials or may make such other order as it thinks fit. 6There are undoubtedly many aspects of the claims of the residential corporation and the commercial corporation that are similar. They pertain to building work done on the same building - and to a substantial extent the same work (such as installation of lintels in the facade, and the choice and construction of windows) - by the same builders. There will undoubtedly be an extensive overlap in the evidence. It is not open to doubt that the two claims involve common questions, and arise out of the same transactions, for the purposes of UCPR, r 28.5, and for the purposes of UCPR, r 6.19. There is no doubt that joinder under r 6.19 would have been authorised, and that consolidation under r 28.5 was available. 7The first basis upon which deconsolidation is supported is that, while the residential corporation's case depends to a substantial extent on its character as the owners corporation of a residential scheme, as it claims relief in respect of alleged breaches of the statutory warranties given by Home Building Act, Part 2C, such claims are not available to the strata corporation which therefore (unlike the residential corporation) has no claim against the Insurers Guarantee Corporation at all. However, such differences as have emerged between the cases of the residential corporation and the commercial corporation do not have the consequence that it can no longer be said that their claims involve common questions, and arise out of the same transactions, or that it is inappropriate that they be heard together. These matters do not of themselves warrant revisiting the question of consolidation. 8However, plaintiffs must be represented by the same solicitor [ Herbert v Badgery (1893) 14 LR (NSW) Eq 321; Lewis v Daily Telegraph Limited (No 2) [1964] 2 QB 601], although this usual requirement of common representation may be dispensed with in an appropriate case [ Riebolge & Hambros Australia Ltd v Hynd Andary Pty Ltd (1994) 176 LSJS 172; Fox v Olsen [1999] SASC 411, [19]; Carnie v Esanda Finance Corporation Limited (1996) 38 NSWLR 465, 470]. 9The commercial strata plan has lost confidence in the solicitor who formerly advised and acted for it, and wishes to be separately represented. In circumstances where the plaintiffs are disagreed as to who should be instructed, great practical difficulty occasions insisting upon common representation. To force the commercial strata plan to proceed represented by lawyers other than of its own choice would be a serious injustice. 10Had consideration been given to this possibility at the time of the consolidation order, the court would more likely have made the much more usual order, that the proceedings be heard together and that evidence in one be evidence in the other. Such an order is usually preferable to formal consolidation, because it avoids this very problem (as well as other procedural complexities that can arise from consolidation). 11The defendants oppose deconsolidation for the purpose of permitting separate representation, pointing to the observations of Pearson LJ in Lewis v Daily Telegraph Limited (No 2) (at 620-1): How would the opening speech (or speeches) be made? Would it be right that the plaintiffs should have as against the defendants the advantage of two opening speeches instead of one? Then, in the conduct of the case, if there were two plaintiffs separately represented, would each plaintiff be allowed to cross-examine the other plaintiff's witnesses and have the advantage of being able ... to put leading questions to a witness who would be substantially on the same side? Again, when the defendants' witnesses were called, would it be right that both plaintiffs, separately represented, should be allowed to cross-examine those witnesses? The same problem would arise in respect of the final speeches at the end of the case. Would separately represented plaintiffs be allowed to have two speeches? 12In my view, this significantly overstates the difficulties, at least nowadays. It is, of course, commonplace for defendants to be separately represented, with the consequence that each has a separate right to cross-examine and address (albeit subject to control by the court, at least in respect of cross-examination where the defendants are in the same interest). There is no particular difficulty in separately represented plaintiffs having similar rights. But for the consolidation order, each plaintiff in separate proceedings would have had an opening, been entitled to cross-examine, and to address in closing. The fact that the proceedings might be heard together does not detract from that, and does not involve any additional prejudice to the defendants. Moreover, (NSW) Evidence Act, 1995, now gives ample powers to the court to control cross-examination by a "friendly" party: see Evidence Act , s 26, s 42. 13Insofar as it may be necessary to justify reconsidering an earlier interlocutory order, including one made by consent, the commercial strata plan's loss of confidence in the common solicitors is a sufficient change of circumstance to justify that course. 14In my view, the order for consolidation should be set aside, and in lieu thereof the court should order that the proceedings be heard together and that evidence in one be evidence in the other. This will then permit the plaintiffs to be separately represented. As a consequence, the second plaintiff should be permitted to amend its List Statement to omit the statutory warranty claims, and to discontinue against the third defendant. Leave to serve additional evidence 15After several defaults in filing its liability evidence in compliance with directions of the court, a direction was made by consent on 4 December 2009 that the plaintiffs file their liability evidence by 9 January 2010, upon terms that any liability evidence not so filed could only be relied upon with the leave of the court. The plaintiffs served 26 liability reports by 9 January 2010. On 2 September 2010, the plaintiffs' solicitor confirmed by email that there would be no further liability evidence. On 26 October 2010, the plaintiffs' quantum evidence was served. Thereafter, the parties attempted mediation, without success. On 27 May 2011, directions were made for the service of the defendants' liability and quantum evidence; their liability evidence was served by 10 June 2011, and their quantum evidence by 15 July 2011. 16The present motions were filed on 9 September 2011. It is clear enough that their trigger was concern, on the part of the solicitors now advising the commercial strata plan, as to the admissibility of the extant reports, both as to liability and as to quantum. The residential strata plan's solicitor does not share the same concerns, at least in respect of most of the liability reports. 17The quantum reports are, it is at least seriously arguable, deficient. In essence, they are quotes for rectification work, rather than the type of quantity surveyor's report one might anticipate, and I am comfortably satisfied that concern as to their adequacy and admissibility is justified. Moreover, no such "guillotine" order as that of 4 December 2009 (in respect of liability evidence) applies to quantum evidence. 18The "concerns" about admissibility of the liability evidence are less manifest. In essence, they pertain to the sufficiency of disclosure of the experts reasoning, such as to comply with the dictates of Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705. It is, I think, reasonably well known that practices vary from judge to judge so far as whether and to what extent lack of sufficient explicit reasoning may operate as a bar to admissibility or may merely affect the weight of the evidence. 19I have not found it necessary to resolve in detail the arguments over the potential objections to the various affidavits. It may be that the liability reports, or at least some of them, would survive objection, if objection were taken, and be admitted. However, it is significant that, while counsel on both sides gave close attention in argument to the various reports for the purpose of establishing (in the case of the plaintiffs) that there were at least arguably available objections, and (in the case of the defendants) that the areas of supplementation proposed were not necessary, the defendants did not eschew objection to the reports on Makita v Sprowles grounds at the trial; rather, they said that they had not yet formed a concluded opinion as to whether, and if so to what extent, such objections might in due course be taken. And although the evidentiary shortcomings in respect of the liability evidence may seem largely matters more likely to go to weight than admissibility, a party should ordinarily be allowed an opportunity to advance its case to best advantage, unaffected by criticisms of the quality of its evidence. So far as can be allowed - consistently with avoiding prejudice to other parties, and subject to considerations of time, cost, and proportionality - parties should be permitted to adduce all relevant and admissible evidence they wish to have the court consider. In those circumstances the court should take into account, as I do, the reasonable desire expressed by competent counsel and solicitors for the commercial strata plan (which were not, in the case of the commercial strata plan, challenged by cross-examination) to have the evidence put in better form before the trial - even though the evidence of the residential strata plan's solicitor Mr McCallum, when cross-examined, did not establish any bona fide concern on his part as to the inadequacy of the liability evidence previously served. 20Typically, the court will make directions for the notification of objections in advance of the trial, and afford an opportunity for supplementary "curing" evidence to be adduced. Or it may be that, if such objections are taken at the trial, leave to supplement might (as is not uncommon) be given at the trial. It is manifestly more desirable that if there is to be such supplementation it be undertaken now, well in advance of any trial, than on the eve of the trial. Such a course is indeed more just to the defendants, in apprising them of the evidence they will have to meet. 21Evidence emerged that the commercial strata plan's relevant officer was aware, as long as October 2010, that there were potential difficulties with the admissibility of some of the evidence, yet did nothing about it for nigh on a year. However, the parties proceeded to mediation in early 2011, and it is understandable, and indeed reasonable, that rather than attending to cure any evidentiary defects at that stage, they focussed instead on the mediation and potential resolution of their dispute. The delay since the mediation failed, in about April, and the filing of the application, though unexplained, is not momentous. The plaintiffs offered to provide and serve their proposed supplementary evidence before making the present application, but it was the defendants' preference that the motions be dealt with first, on the basis of a precis of the proposed evidence. Although there was no indication in the evidence of the timeframe in which the further evidence would be served, in the course of argument the plaintiffs indicated that they expected it would take until the end of January 2012. 22Although I take into account that the guillotine order was made by consent, and after several defaults, I also take into account that it does not apply to the quantum evidence, that even in respect of liability evidence it allowed the possibility that leave might be given, that the matter has not yet been set down for trial, and that there has been no preparation for trial on the part of the defendants - who have not yet given consideration to what objections they might or might not take. 23Although the matter is otherwise close to ready for hearing, the only prejudice to the defendants that may be occasioned by granting the leave sought will be delay in a hearing. In circumstances where they are not out of pocket in respect of moneys in the meantime, and they are substantial commercial entities, this is less weighty a consideration than might otherwise be the case. 24The statutory command under (NSW) Civil Procedure Act, 2005, s 56, to facilitate the "just, quick and cheap" resolution of proceedings gives primacy to their just resolution. That ordinarily involves the parties being permitted to adduce such relevant admissible evidence as they wish. No guillotine order applies to the quantum evidence. If the plaintiffs wish to ensure that their liability evidence is in better form so as to withstand objection and criticism at trial, and that can be attained without prejudice to the defendants, it is in the interest of justice that such a course be permitted. There is no apparent prejudice to the defendants from that course. It is also desirable from the perspective of the efficiency of the hearing that these matters be attended to before the hearing is fixed, let alone before it commences. Accordingly, in my view, the plaintiffs should be given leave to supplement the evidence so far served. Given the manner in which the application was conducted, this is not intended to authorise an expansion of the plaintiffs' cases, but the remediation of potential defects in their evidence served so far. 25The plaintiffs required a considerable indulgence to obtain this relief and must pay the costs of the application, notwithstanding that it was opposed; in the circumstances, the opposition was not unreasonable. 26My orders are: 1. Set aside the order made in proceedings 55100/08 on 20 November 2008 to the effect that those proceedings be consolidated with proceedings 555034/08. 2. In lieu thereof, order that proceedings 55100/08 and proceedings 555034/08 be heard together, and that evidence in one be evidence in the other. 3. Order pursuant to UCPR r 12.1 that the second plaintiff have leave to discontinue its claims against the third defendant. 4. Grant leave to the second plaintiff to file an amended List Statement in the form of Annexure A to the second plaintiff's Notice of Motion filed 9 September 2011. 5. Grant leave to the plaintiffs to serve supplementary affidavits and expert reports in chief on issues of liability and quantum, in respect of the matters described in the affidavit of Mr Andrews sworn 9 September 2011, provided that such affidavits and reports be served by 31 January 2012, and subject to all just exceptions and objections including any objection that the further evidence so served is outside the scope of the plaintiffs' pleaded case. Counsel addressed as to costs 27It is uncontroversial that the second plaintiff/applicant must pay the costs thrown away by the amendment. As I have said, that the plaintiffs required a considerable indulgence to obtain leave to serve further evidence after the guillotine order had expired and opposition to their application was not unreasonable. Ordinarily, when plaintiffs require an indulgence from the court and the granting of that indulgence is not unreasonably opposed, the plaintiffs must pay the costs. That is typical, for example, of applications to set aside default judgments - and other procedures which relieve plaintiffs of the consequences of their defaults, in the overall interests of justice - and that is akin to what has happened here. I remain of the view that the plaintiffs must pay the defendants' costs of the application. 28It seems to me that the second plaintiff never had a triable case against the third defendant, and in those circumstances it is appropriate that the costs order, which will necessarily follow upon the discontinuance of the proceedings, should be that the second plaintiff pay the third defendant's costs of the proceedings on the indemnity basis. 29So far as the application for a special costs order by the second plaintiff against its former solicitor is concerned, that will be adjourned to a date to be fixed. 30My further orders are: 6. That the plaintiffs pay the defendants' costs of the motion filed on 9 September 2011. 7. That the second plaintiff pay the third defendant's costs of the proceedings on the indemnity basis. 8. That the second plaintiff pay the defendants' costs occasioned or thrown away by the amendment of the List Statement. 9. Adjourn the second plaintiff's application for a costs order under Civil Procedure Act s 99 to 6 December 2011 at 9.30 before me. 10. Direct that the second plaintiff serve any evidence on which it proposes to rely on the s 99 application by 16 November 2011. 11. Direct that respondent solicitor serve any evidence in reply by 30 November 2011. 12. Direct that the second plaintiff lodge with my Associate and serve on respondent solicitor an outline of its submissions by 2 December and that the respondent solicitor lodge with my Associate and serve on the second plaintiff an outline of its submissions by 5 December 2011. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 November 2011