The Owners - Strata Plan No 74602 v Brookfield Australia Investments Ltd

The water leak complaint documents

1. The question of water ingress at Beau Monde was a central issue during the hearing. The bulk of the expert concurrent evidence was directed to this question. The major claim, in dollar terms, made by the Owners Corporation concerns this issue. The Owners Corporation contends that the building's facade leaks, that there is a systemic problem associated with the facade and that it should be replaced at a cost of some $14.8 million.
2. The facade expert called by James was Mr David Hunton. In his report of 26 February 2015, Mr Hunton referred to five emails (with dates ranging from 1 July 2005 to 9 February 2009) and commented: "Water leakages had been recorded since completion of the project in March 2005, though the correspondence listed in the previous paragraph is the totality of the correspondence recording this (that I have been provided with) prior to the commencement of this case".
3. Nonetheless, the only correspondence tendered by the Owners Corporation during the hearing dealing with complaints of water leaks was a small bundle of emails passing between the Owners Corporation and Brookfield, which together comprised Exhibit Z and were tendered at the conclusion of the last day of evidence.
4. Since July 2014, Brookfield sought access to documents recording complaints by lot owners at Beau Monde concerning the facade. Thus, in July 2014, it served a subpoena on the Owners Corporation's strata manager. Shortly thereafter, it sought disclosure of such documents from the Owners Corporation itself.
5. The Owners Corporation resisted such disclosure, arguing that "exceptional circumstances" had not been shown for the purposes of Practice Note SC Eq 11.
6. The matter was debated before Hammerschlag J on 8 August 2014.
7. His Honour was not inclined to order disclosure at that time. The matter was ultimately resolved upon the basis of Mr Corsaro agreeing that, on a without admissions basis, correspondence in relation to complaints of leaks in relation to four nominated units would be provided.
8. However, during argument, his Honour said: "But if this building is as bad as you say it is, it's going to have to be part of your evidentiary landscape that you're going to have to say, 'It leaked on the night of whatever, and Mr Smith complained'. You're going to have to produce this material at some point."
9. Thereafter, in response to a request by Brookfield's solicitors for information regarding the location of water leaks (particularly following a major storm event in October 2014) the Owners Corporation's solicitors said that "any issues arising from recent weather conditions will be dealt with in our evidence in reply".
10. Ultimately, in June 2015, the Owners Corporation served affidavits sworn by Mr Michael Gwodz and Mr Vasilios Moisidis in which those witnesses gave lay observational evidence of water leaks. During the hearing, I heard argument as to whether that evidence was in reply, or was, rather, evidence in chief and thus caught by a guillotine order made by Hammerschlag J on 6 December 2013. Ultimately, I allowed the bulk of the evidence for reasons I gave in my judgment of 11 August 2015: The Owners - Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1144.
11. Thereafter, both Mr Gwodz and Mr Moisidis were cross-examined concerning their observations of water leaks.
12. In their closing submissions, both Brookfield and James drew attention to the fact that the Owners Corporation had not adduced any evidence from any occupier of Beau Monde concerning water ingress into any apartment at Beau Monde. Evidently, this application was prompted by those submissions.
13. Leaving aside the probative value of much of the material now sought to be tendered (I will return to this), evidence of actual complaints made by residents of Beau Monde about water ingress was of potential relevance to the Owners Corporation's case. That must have been obvious to the Owners Corporation, and those advising it.
14. In its submissions in support of its application to reopen, the Owners Corporation stated that the material supports its "core contention that the facade leaks". If that is so, it is extraordinary that this material was not deployed by the Owners Corporation during the hearing.
15. And yet, the Owners Corporation did not, in support of its motion, adduce one word of explanation from its legal advisors as to why the material was not tendered, why it was not referred to in the Owners Corporation's expert evidence, why it was not tendered during the hearing or otherwise deployed by the Owners Corporation during the trial (for example, in the extensive concurrent evidence given by the parties' expert witnesses, over many days, on the question of the facade and its alleged shortcomings). As I have said, Mr Thomas said that, had I allowed the adjournment by reason of Mr Corsaro's absence, the Owners Corporation's solicitor would swear an affidavit. I infer that this affidavit would have sought to provide some such explanation.
16. I was not prepared to adjourn the matter to accommodate Mr Corsaro's position, so this question did not, in terms, arise. However, I would not have granted an adjournment on this basis alone, had one been sought. Such explanation as has been given on behalf of the Owners Corporation for its belated application to adduce this evidence was given by Mr Andreone. The Owners Corporation advanced Mr Andreone as the witness explaining what had occurred; he swore three affidavits in support of the application (one as recently as the business day before the hearing of the application). Brookfield and James had prepared their response to the Owners Corporation's application on this basis. I would not, in those circumstances, have been prepared to allow the matter to be delayed further.
17. Mr Andreone's evidence concerning "Complaints by Residents" was as follows: "4. In April 2014, in the course of preparing my first affidavit, I reviewed documents in the possession of the Plaintiff relating to reported and recorded instances of water entry to units and common property areas. In so doing, I reviewed, among other things, records kept by the Beau Monde building manager between 2005 and April 2014. 5. In carrying out that review, I directed my attention primarily to email correspondence between the Plaintiff and Brookfield. I did not, however, review internal emails (i.e. email exchanges between the occupants of the building and the Plaintiff) which, as I subsequently discovered, recorded complaints about water ingress into individual units. This was an oversight on my part. These emails were contained on computer hard drives which, to the best of my knowledge, information and belief, were provided to the Plaintiff in or about 2010 by BMAUS Pty Ltd trading as Building Management Australia (the Plaintiff's former caretaker and building manager) and held separately by the Plaintiff's current building manager (Champion Australia Co Pty Limited). 6. In 2015, during the course of the trial, I had occasion to review the correspondence contained on those two hard drives and further material provided to me by the Plaintiff's building manager (which had not been previously provided to me). I did this during the course of preparing a response to a notice to produce issued by the First Defendant to the Plaintiff on 12 June 2015 requiring the production of all documents held by the Plaintiff relating to any reported leaks at Beau Monde during the period 21 March 2005 to 12 June 2015. I was asked to carry out that review by Mr Kabraji. 7. As a result of that review, I identified correspondence and other records of reports from residents in Beau Monde (in addition to the correspondence comprising Exhibit Z in the proceedings) in which complaints were made to the Plaintiff in connection with reported leaks. Exhibited hereto and marked 'FA-1' are copies of that correspondence and those records. For the sake of convenient reference, I have colour highlighted the relevant sections of that correspondence to identify the relevant date, unit and complaint. 8. I am informed by the Plaintiff's solicitors that that correspondence (not colour highlighted) was included in the material produced in response to the notice to produce referred to in paragraph 6. 9. During the course of the trial, I assisted the Plaintiff's solicitors by preparing a bundle of materials that was to be used in the cross-examination of [two named witnesses who were, ultimately, not called]. That material was subsequently tendered as Exhibit Z. The bundle did not include the internal correspondence and records which are in exhibit 'FA-1'. 10. I have read Brookfield's submissions and, in particular, the assertion at paragraph 32 that the Plaintiff has not served any affidavit evidence from any owner or occupant of any complaint, loss or damage occurring at any time over the last 10 years by reference to water ingress through window assemblies and/or facade. I turned my mind to the internal correspondence and records which are contained in exhibit 'FA-1' and, after discussions with Mr Kabraji, formed the view that it was relevant. 11. I attach a schedule, prepared under my oversight, which provides a brief overview of the material found in exhibit 'FA-1'. That schedule is exhibit 'FA-2'."
18. I fail to see that this evidence provides any explanation for the Owners Corporation's failure to tender this material during the trial.
19. Mr Andreone says that by an "oversight" on his part, he did not "review" the material during his 2014 "review" of the documents in the Owners Corporation's possession concerning "water entry to units and common property areas".
20. However, Mr Andreone says that he did "review" the material "in 2015, during the course of the trial" together with "further material provided to me by the [Owners Corporation's] building manager (which had not been previously provided to me)". Mr Andreone said he carried out this exercise when preparing the Owners Corporation's response to a notice to produce issued by Brookfield to the Owners Corporation on 12 June 2015, shortly before the commencement of the hearing. Mr Andreone deposed that those documents were produced to Brookfield (and I assume James) in response to Brookfield's notice to produce. According to Mr Andreone's evidence, it was only when faced with Brookfield's and James's submissions that the Owners Corporation had not served any evidence from owners or occupiers complaining about water leaks that he "turned [his] mind" to the documents and "formed the view" they were relevant.
21. The matter was taken further during cross-examination on 9 November 2015.
22. In that evidence, Mr Andreone agreed that he had seen Mr Hunton's observations set out at [18] above. However, he stated that he did not "understand it to be particularly relevant to [Mr Hunton's] opinion or his theory of the nature of the defects in the building" and did not ask either of the Owners Corporation's experts (Mr Peter Lalas and Mr Nicholas Joannides) whether they thought such information might be relevant.
23. In response to questions from Mr Miller SC, who appeared for James, Mr Andreone said: "Q. So is the position then this, at the time Mr Lalas came to reply to Mr Hunton's report he was aware and you were aware not only of the fact that in paragraph 64 [Mr Hunton] had identified those five numbered emails with the totality of the complaints but that Mr Lalas to your knowledge had also been aware of a raft of other complaints that he hadn't referred to in his reports, correct? A. That Mr Lalas was aware, yes, I was aware of that. Q. That was a fact, wasn't it? A. Yes, true."
24. In his affidavit of 28 October 2015, Mr Andreone said: "3. On or around 23 October 2015, during the course of these preparations, I had a conversation with Mr Eddie Kabraji (the Executive Committee's representative) in words to the following effect: [Mr Kabraji]: I have found some further emails from owners and tenants complaining of leaks in their apartments. [Mr Andreone]: Can you please send them to me. [Mr Kabraji]: Sure. 4. Over the next 5 days, Mr Kabraji provided me with a series of emails that he considered to be relevant. On 26 October 2015, Mr Kabraji and I had a further conversation in these terms: [Mr Andreone]: Where exactly do the emails come from? [Mr Kabraji]: They are mostly from email archives of [the Owners Corporation's] records and cover the period after BMAUS was terminated and Champion was engaged as the building manager. A few are more recent."
25. There is no explanation before me as to where Mr Kabraji (who has not given any evidence in these proceedings) found the "further emails" and why they were not located earlier.
26. In Australian Securities and Investments Commission v Rich [2006] NSWSC 826, Austin J listed a number of factors potentially relevant to consideration of whether to permit a reopening: "(a) the nature of the proceeding; (b) whether the occasion for calling the further evidence ought reasonably to have been foreseen; (c) the consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce on the matters in question; (d) the extent to which the plaintiff has embarked upon calling evidence on the issue in question in its case in chief; (e) the importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case; (f) the degree of relevance and probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time; (g) the prejudice to the defendant in terms of delay in the completion of the proceeding and the consequential costs; (h) the public interest in the timely conclusion of litigation; (i) what explanation is offered by the plaintiff for not having called the evidence in chief." (at [18])
27. Although these factors provide useful guidance, ultimately the relevant discretion must be exercised having regard to all the circumstances of the case (see Taouk v Louis (No. 1) [2014] NSWSC 656 per Darke J at [11]).
28. In my opinion, this is a case where consideration of each of the factors identified by Austin J compels the conclusion that the Owners Corporation should not be given leave to reopen.
29. As to the nature of the proceedings, as I have said, and as Mr Jackson observed in his affidavit, the primary issue (both in terms of quantum and hearing time) was the state of the facade; in particular, whether water ingress through or adjacent to facade window, door and curtain wall elements was ad hoc and confined in number, and therefore readily repairable, or wide spread throughout the building and a result of systemic design or installation defects. The documents now sought to be tendered are said to be directed to that issue.
30. The evidence sought to be tendered thus goes to a central, if not the central, issue in the proceedings.
31. If it was not otherwise obvious, the Owners Corporation was on notice from July and August 2014, both from the defendants and from the Court, of the importance of leak history evidence.
32. The Owners Corporation has not only embarked on calling its evidence in chief on that question, but that evidence has now concluded. Brookfield and James no doubt made forensic decisions as to cross-examination (especially during the concurrent evidence sessions) on the basis that the Owners Corporation had, by then, adduced all the evidence upon which it proposed to rely concerning the defects said to exist in the facade.
33. No adequate explanation was offered for not having called this evidence in chief. I find Mr Andreone's "explanation" (such as it is) entirely inadequate. No explanation at all was offered by those whose responsibility it was to decide what evidence should be adduced on behalf of the Owners Corporation; its legal advisors. If such evidence was available, it should have been adduced in support of the notice of motion in the usual way. As I have set out above, I would not have been prepared to adjourn the hearing of the notice of motion to allow a belated attempt to adduce such evidence.
34. Further, the defendants will be prejudiced if the material is now permitted.
35. Mr Thomas submitted that the 450 pages of material was "of the same type" as that found in Exhibit Z. I do not agree. Exhibit Z contains communications between the Owners Corporation and Brookfield. What is now sought to be adduced is evidence of complaints and communications from individual lot owners themselves.
36. The solicitors for Brookfield and James, Messrs Confos and Jackson, have sworn affidavits setting out the steps they believe they would have to take to deal with this material, were it to be admitted at this stage.
37. Based on that evidence, and my understanding of the issues in the proceedings and knowledge of how the case was conducted by Brookfield and James before me, it seems very likely that, were I to allow the Owners Corporation leave to reopen and tender this material, each of Brookfield and James would have to: 1. review the material; 2. determine whether to object to its admissibility (much of it appears to be hearsay, to lack specificity and to have been created after these proceedings were commenced); 3. brief their experts with the material; 4. arrange for their experts to revisit Beau Monde to ascertain whether their existing reports require amendment or expansion to deal with the new material; 5. determine whether to seek to adduce further expert evidence in relation to the material; and 6. determine whether to seek to have the hearing reconvened and to have the further material considered by the experts who gave concurrent evidence before me on the question of water ingress and in relation to the facade itself.
38. In that regard, Mr Thomas submitted that I should accommodate the Owners Corporation's position by requiring Brookfield and James to take an "interim step" of arranging for the material to be reviewed by the defendants (and, presumably, their experts) in order that the defendants could ascertain whether "this material is in fact prejudicial beyond repair to the defendants case". In that regard, Mr Thomas said that he understood that costs would "fall where they do" (by which I understood him to mean that the Owners Corporation would have to bear such costs).
39. I am not prepared to take this step.
40. The prejudice that Brookfield and James would suffer if I were to grant the Owners Corporation leave to reopen is that they would have to consider this material at all.
41. It appears to me that there is a serious possibility that Brookfield's and James's consideration of the material would lead them to conclude that further investigation is required, with the distinct possibility of the need to reconvene the hearing. If that were to occur, the matter would have to be adjourned to next year, as I do not presently have any time available to hear this matter this year.
42. That would involve allocating further court time, at the expense of other litigants, to a case that has already occupied almost a month of hearing time.
43. Finally, there are serious questions as to the probative value of much of the evidence sought to be adduced. Some of the material comprises direct evidence of complaints made by identified unit owners of specified leaks. However, as I have indicated, much of it is hearsay and at a high level of generality.
44. Included in the material are a large number of pro forma documents entitled "Protocol - Defects Claim Management - Report Form". The document appears to be a template prepared by or on behalf of the Owners Corporation to enable lot owners to record details of "defects". The document was plainly prepared for the purpose of these proceedings; it contains provision for "Date notified to [Owners Corporation] Solicitor" and "Signed by [Owners Corporation] Solicitor" and "Date Solicitor notified Insurer". Some forms are completed with the note "reported to strata and legal". Such material is unlikely to be admissible as a business record of the Owners Corporation (s 69(3) of the Evidence Act 1995 (NSW)).
45. Overall, it is, in my opinion, simply too late to allow the Owners Corporation to tender this material.

The photographs

1. During the hearing, Mr Corsaro referred to a memory stick said to contain the photographs taken by Mr McKinnon. He foreshadowed providing a "bundle of photographs" and said "we're probably going to use them during the course of the concurrent evidence".
2. That did not happen. The Owners Corporation offered no explanation for this.
3. In his affidavit of 6 October 2015, Mr Andreone said this about the photographs: "13. During the course of the trial, I became aware that the defendants were raising issues about the quality of the photographs taken by Messrs Gwodz and Moisidis upon which the Plaintiff relies to show water ingress through window assemblies. Subsequently, on 16 September 2015, I was instructed by Mr Kabraji to review all of the photographs taken by Mr McKinnon during the course of his engagement. To that end, I was provided by the Plaintiff's solicitors with a USB which contained copies of photographs which I was informed were taken by Mr McKinnon between 18 August 2014 and 1 April 2015. 14. In undertaking that review, I identified photographs taken by Mr McKinnon on the same day as those taken by either Messrs Moisidis or Gwodz and which appeared to me to be photographs of the same building elements as shown in photographs taken by either Messrs Moisidis or Gwodz and included in their affidavits each sworn on 4 June 2015. 15. Exhibited hereto and marked 'FA-3' is a schedule which I have prepared which: (a) identifies, by unit number, photographs taken by either Messrs Moisidis or Gwodz and which are in evidence (cross referencing that photograph to the relevant affidavit and court book reference); (b) identifies, as best as I can, the photograph taken by Mr McKinnon of the same building element on the same day as the photograph taken by either Messrs Moisidis or Gwodz. Those photographs are also attached to the schedule; and (c) cross-references, as best as I can, what is shown in those photographs to the relevant observation of either Messrs Moisidis or Gwodz as set out in their abovementioned affidavits."
4. Mr Andreone offered no explanation as to why this process was not undertaken during the hearing; in particular, before Messrs Gwodz and Moisidis were called and cross-examined.
5. The Owners Corporation submits that "the photographs do not consist of new material" but are "no more than clearer and better versions of photographs taken by Messrs Gwodz and Moisidis". But that is not a reason to allow this material to be tendered now. It is a reason not to do so. Messrs Gwodz and Moisidis have come and gone from the witness box. Their evidence was tested on the basis of the photographs they took. It is not fair to Brookfield and James to allow the Owners Corporation to seek to improve upon evidence that may well have been relevant to the manner in which those witnesses were cross-examined.

Conclusion

1. I am not prepared to allow the Owners Corporation to reopen its case.
2. Its amended notice of motion of 9 November 2015 is dismissed with costs.
3. If the Owners Corporation is disadvantaged by this state of affairs, it is a consequence of the manner in which the case has been conducted on its behalf.

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: 12 November 2015