Solicitors:
Colin Biggers & Paisley (Plaintiff)
Norton Rose Fulbright (First, Second and Third Defendants)
Moray & Agnew (Fourth Defendant)
File Number(s): SC 2012/76192
[2]
EX TEMPORE Judgment (REVISED)
These proceedings are set down for hearing before me for three weeks commencing Monday of last week, 3 August 2015. This is the sixth day of the hearing.
The proceedings concern a residential development known as "Beau Monde" in North Sydney. In that building, the 9th to 36th levels comprise 241 strata apartments. In those apartments, there are some 1,040 window units, made from extruded aluminium.
The plaintiff is the relevant owners corporation and the registered proprietor of the common property. The first defendant is the builder of the property pursuant to a design and construct contract with the original owner. The fourth defendant is the subcontractor of the first defendant that designed and constructed the facade of the building, including those window units.
The plaintiff makes a number of claims against the first defendant, the most substantial of which concerns the facade. The plaintiff's claim against the fourth defendant is only in respect of the facade. The substantial issue concerning the facade is water ingress.
On 6 December 2013 (by which date, over a period of about 12 months, a number of orders had been made by various judges of the Court directing that the plaintiff serve its lay evidence) Hammerschlag J ordered:
"The time for the plaintiff to serve all evidence in relation to the facade is extended to 19th April 2014. Evidence not served in accordance with this direction may not be relied on".
The parties referred to this order as the "Guillotine Order".
The plaintiff ultimately served its evidence-in-chief by the date referred to in the Guillotine Order.
That evidence included three reports prepared by an engineer, Mr Nicholas Joannides.
Mr Joannides's first report is dated 3 April 2013. It is some 1900 pages long and takes up four volumes of the court book. In the report, Mr Joannides recorded his observations of matters relevant to the complaints the plaintiff makes, principally as to water ingress. He did so on an apartment by apartment basis based on his visual inspection of 220 of the 241 apartments in the building. That inspection took place over some 30 days. Mr Joannides's analysis includes many photographs. Mr Joannides's evidence is the plaintiff's expert observation evidence.
In the report, Mr Joannides said:
"There are a number of building defects identified that are repetitive in individual units. These defects have a common underlying cause that may not manifest themselves at present but will later manifest as a result of the underlying common cause and are considered a defect deemed to apply to all individual units in the building.
…
The defective facade pre-cast wall and glazing jointing is considered to be systemic throughout all building facades. The facade wall joints are not functioning as a fully draining pressure equalised system and are allowing water ingress into the units."
In his second report of 19 June 2013, Mr Joannides gave details of rectifications works he contended were necessary in respect of each of the apartments.
In his third report, dated 11 April 2014, Mr Joannides said he inspected a further three apartments. Thus, the total number of apartments Mr Joannides inspected was 223 out of the 241 in the building.
Mr Joannides's conclusion was that something in the order of 37 window units showed extensive or excessive water ingress and approximately 55 other window units showed "minor swelling" possibly caused by water ingress.
The plaintiff's evidence-in-chief also included a report dated 16 April 2014 by Mr Peter Lalas. Mr Lalas is also an engineer. Mr Lalas opined, relevantly, that the windows, doors and curtain walls of the building (in effect, the facade) did not have the requisite performance rating. Mr Lalas opined that this was a systemic problem throughout the building.
In response, the first to third defendants adduced evidence from Mr Peter Karsai, also an engineer and a specialist cladding consultant. In his report of 26 February 2015, Mr Karsai also gave expert observational evidence. Mr Karsai's conclusion was that of the 1,040 window units in the building, 30 have "major moisture related damage" and 45 have "minor moisture related damage to the MDF sill". Mr Karsai that he did "not agree that the window assemblies are inappropriate or have a systemic defect that requires replacement".
The first to third defendants also adduced evidence from Mr Tim Womack, a facade engineer. In his report of 26 February 2015, Mr Womack gave evidence of a particular glazing assembly which is installed in the studio apartments in the building and is known as the "W10" assembly. In relation to that particular assembly, Mr Womack opined that there was no evidence of water ingress in over 75 per cent of the studio apartments and that there was no inherent or systemic defect in that kind of window unit.
The fourth defendant's expert, Mr David Hunton, also a structural engineer, produced a report dated 26 February 2015. Mr Hunton conducted what Mr Miller SC, who appears with Mr Purdy for the fourth defendant, described as a "paper review" of Mr Joannides's reports. Based on that review, Mr Hunton came to conclusions very similar to those of Mr Karsai, albeit without himself having seen Mr Karsai's report.
Mr Joannides's evidence-in-reply is in his report of 22 May 2015. His final position was that there are 35 window units with extensive or excessive water ingress and 54 window units with minor swelling possibly caused by water ingress.
For completeness, I should record that on 9 August 2015 (that is, last Sunday) Messrs Joannides, Karsai and Hunton produced a joint report in which they state, amongst other things, that of the 973 window assemblies that they have each been able to inspect (this excludes for some reason the apartments on levels 35 and 36) there are 42 window units which "exhibit water ingress and/or related damage through the window assembly" and 72 assemblies which "exhibit minor moisture related damage".
On 4 June 2015, the plaintiff served affidavits by Mr Bill Moisidis (a structural engineer) and Mr Michael Gwodz (a facade designer) setting out their observations, based on inspections made between June and September 2014, of the condition of some 127 apartments not previously identified by either Mr Joannides or Mr Karsai as suffering water ingress. Although both Mr Gwodz and Mr Moisidis have professional qualifications (and swore affidavits served as evidence-in-chief prior to the date in the Guillotine Order), the evidence given in their 4 June 2015 affidavits does not to purport to be, and could not be, expert observational evidence. The evidence is, on its face, and is tendered as, lay observational evidence.
The critical passages in the affidavits for the purpose of these reasons are pars 6 to 13 of Mr Gwodz's affidavit and pars 5 to 24 of Mr Moisidis's affidavit. Those paragraphs set out the result of the witnesses' inspections of the relevant apartments between June and September 2014. The defendants contend that this material is evidence-in-chief, produced well after the date referred to in the Guillotine Order, and is not receivable without leave.
Mr Gwodz and Mr Moisidis also give evidence of observations of apartments and window units they inspected along with the defendants' experts, and of units inspected following a major storm event last October 2014. The defendants do not object to that material.
Each witness also gives evidence of their observations following a major storm event in April 2015. I will refer to that evidence below.
Following service of those affidavits, and I infer as a result of it, on 19 June 2015 orders were made the effect of which was to grant the defendants access to 99 of the 127 units for the purpose of observation. Mr Karsai has inspected most of those 99 apartments. Mr Hunton inspected 83 of those apartments. Neither expert has served a report dealing with those inspections.
The matter for consideration is thus whether the evidence of Mr Gwodz and Mr Moisidis as to their June to September 2014 inspections, and also their inspections following the April 2015 storm event, is evidence-in-chief and therefore caught by the Guillotine Order, or is, rather, evidence-in-reply.
There is no dispute before me that the material is relevant.
The difficulty I see with the evidence is that it is lay observational evidence that goes beyond that proffered in chief on behalf of the plaintiff by Mr Joannides. Mr Gwodz gives evidence of inspecting something in the order of 50 apartments. Mr Moisidis gives evidence of having made some 200 inspections. There appears to be some duplication in Mr Moisidis's affidavit in that he has inspected some apartments more than once. Overall, however, it appears that between them, the two witnesses have inspected all or almost all of the apartments. Both give detailed evidence of their observations in the apartments they inspected, including as to alleged water staining, swollen sill boards, damp patches, salt residue, corrosion water marks and the like. Very often their observations are different from those made by Mr Joannides. On many occasions, the observations of Mr Gwodz and Mr Moisidis are directed to different areas in the particular apartments and sometimes to different window units in the apartment.
That is not surprising. Mr Francesco Andreone, who is a consultant engaged by the plaintiff in relation to these proceedings, explained that both Mr Gwodz and Mr Moisidis were retained by the plaintiff in April 2014 (just before the cut-off date of the Guillotine Order) to reinspect the apartments because of an apprehension that Mr Joannides had not identified all the indicia of failure to which Mr Lalas directed attention.
Thus, in evidence-in-chief adduced on the plaintiff's application to have leave to rely upon on the affidavit evidence, Mr Andreone said:
"A. Well, that occurred in April 2014 and it occurred after Mr Lalas prepared his report I think around the middle of April 2014. I recall having some discussions with Mr Kabraji after that report was finalised where he asked me if I had read it, which I said I had, and I asked him if he had read it and he said he had, and he expressed the view that Mr Lalas has identified a whole range, a large range of causes of failures in the facade system that Mr Joannides had not.
…
Q. Was there some decision made, to your knowledge, and conveyed to you by way of instructions to require Mr Moisidis and Mr Gwodz to revisit areas which had been inspected?
A. Yes.
Q. When did you receive those instructions?
A. In those discussions in April 2014 Mr Kabraji said to me, 'I think it would be a good idea for Mr Moisidis and Mr Gwodz' - he called them Bill and Mike - 'to go and look at all the apartments again,' and I said to him, 'I think that's also a good idea,' and my, I believed that they were appropriate to do so because they had accompanied Mr Lalas and assisted Mr Lalas in the period of 2013/2014 with his testing.
Q. Was any consideration given in those discussions between you and Mr Kabraji as to why it was a good thing or might be a good thing to have Mr Moisidis and Mr Gwodz revisit areas which Mr Joannides had inspected?
A. Yes, the reason Mr Kabraji gave me was because he thought - he said words to the effect, 'I'm not sure that Mr Joannides looked for the same things that Mr Lalas has identified,' and I formed the same view."
During cross-examination by Mr Ashhurst SC, who appears with Mr Hicks for the first to third defendants, Mr Andreone agreed that he commissioned Mr Gwodz and Mr Moisidis to assemble this evidence "to try and bolster the observation evidence you already had from Mr Joannides".
It is clear that this evidence cannot be said to be in reply to any evidence adduced by the fourth defendant. Mr Hunton responded only to Mr Joannides's report. This was ultimately accepted by Mr Corsaro SC, who appears with Mr Thomas and Mr Fagir for the plaintiff.
Nor do I think that this evidence can be said to be in reply to that of the first to third defendants. Mr Corsaro submitted that the evidence is adduced to rebut the denial by Mr Karsai and Mr Womack of a systemic problem with the windows. But the plaintiff's case in chief is that there is a systemic problem. What this evidence seeks to do is to supplement Mr Joannides's expert observational evidence with lay observational evidence which goes to the very same issue. And this lay evidence is not directed to any observation that Mr Karsai or Mr Womack made about any particular window unit. As Mr Ashhurst put it in his submissions, the position is no different, in substance, to that which would obtain had the plaintiff sought to adduce further evidence from Mr Joannides himself to supplement his extensive observations in chief.
For those reasons, my conclusion is that this evidence is in chief and can only be deployed by the plaintiff with leave.
No leave was sought when the evidence was served. Leave was not sought until during submissions, and then only inferentially.
As to whether leave should be given, the first question is whether any explanation is offered for the service of the evidence beyond the date in the Guillotine Order; indeed, some 13 months beyond that date. Mr Andreone swore an affidavit and was called to give evidence about that matter. I see nothing in Mr Andreone's evidence that could amount to an adequate explanation for what has occurred.
Mr Andreone suggested in cross-examination that he only became aware of the result of Mr Gwodz's and Mr Moisidis's inspections in about March 2015. But the critical inspections were concluded in September 2014, many months before the defendants' reply evidence was served. And yet no application was made for leave to adduce any evidence in that time. Indeed no application for leave has been made until now.
The next question is whether the defendants will be prejudiced if the evidence is permitted.
By reason of the orders of 19 June 2015 to which I have referred, the defendants' experts have been given access to a large number of the units inspected by Mr Gwodz and Mr Moisidis.
In those circumstances, subject to what I say in the next paragraph, neither Mr Ashhurst nor Mr Miller suggested that the defendants were unable to deal with the evidence.
However, as I have mentioned, both Mr Gwodz and Mr Moisidis gave evidence of inspections during or immediately after a major storm event which occurred in Sydney on about 20 April 2015. That evidence is at par 15 of Mr Gwodz's affidavit and pars 32 and 33 of Mr Moisidis's affidavit.
Mr Ashhurst submitted that the first to third defendants would be prejudiced if that evidence was allowed because, until the service of Mr Gwodz's and Moisidis's affidavits, those defendants were not aware that it was alleged that window units, beyond those identified by Mr Joannides, suffered from water ingress at all, and in particular by reason of the April storm event. Mr Ashhurst submitted that had his clients been aware of these alleged facts, they would have arranged or tried to arrange for Mr Karsai to attend at some time during the storm event or immediately thereafter. I accept that submission.
Although Mr Miller, for the fourth defendant, did not contend that the fourth defendant was in precisely the same position (as Mr Hunton lives in Melbourne and may not have been able to attend on short notice), the fourth defendant would have benefited as much from Mr Karsai's opportunity to inspect during or after the storm event as the first to third defendants. Thus, the prejudice that it would suffer is, as a practical matter, much the same as the first to third defendants would suffer, were Mr Gwodz's and Mr Moisidis's evidence of the April 2015 inspections allowed. For those reasons, to the extent that those witnesses give evidence that, during or immediately after the April 2015 storm event there was water ingress in windows beyond those identified by Mr Joannides, I will not grant the plaintiff leave to rely upon that evidence.
Otherwise, I propose to grant the plaintiff leave to rely on the material, notwithstanding the Guillotine Order. It is regrettable that the evidence was served so late in the day. However, as I have said, the evidence is plainly relevant and my conclusion is that, apart from the evidence concerning the April storm event, the defendants can meet it. In those circumstances, it would, in my opinion, cause injustice to the plaintiff to deny it the right to have this evidence before the Court.
I therefore propose to allow the paragraphs to which I have referred at [21] subject to any other proper objections as to the form of those paragraphs. I invite the parties to confer and agree as to the precise order that should now be made.
I order that the plaintiff pay the defendants' costs thrown away by the late service of Mr Gwodz's and Mr Moisidis's affidavits. Those costs are to include, but are not necessarily limited to, the costs of yesterday which was spent entirely on this question.
[3]
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Decision last updated: 13 August 2015