In a puzzling result, Dunningham J in Moore v IAG New Zealand Ltd  NZHC 1549 decided that the earthquakes of 4 September 2010, 22 February 2011 and 13 June 2011 had the same cause and were one event for the purposes of the IAG policy. The effect was that Mr Moore could only recover the total sum insured of $2,500,000 plus gst once notwithstanding there was damage in each event and remediation was in excess of $4M. This is yet another insurer favourable judgment out of the High Court in Christchurch.
In Myall v Tower Insurance Ltd  NZHC 528 the High Court (Dunningham J) considered whether an insured should account for interest to the insurer on a partial claim payment; whether Tower must pay the full replacement value in cash now and any interest payable on the full replacement value fixed by the Court. Myall insured his house at 81 Ainsley Terrace, Christchurch for a floor area of 650m2. The house was damaged beyond repair in the earthquakes. It turned out the house was actually 799m2. After hearings in the High Court and Court of Appeal the full replacement value was fixed/agreed to be $5,273,021.71. Tower made interim payments of $1,359,000 in January 2012 and $1,612,644.12 in April 2013. It asked the Court to order Myall to account for interest of $431,138.71 on the part payments when/if Tower ultimately paid full replacement value. The Court declined to order interest as the policy did not provide for it and Tower did not specify it before it made the payments. Mr Myall said that because Tower had elected to cash settle it was liable to pay now even though Mr Myall has not replaced the house. The Court disagreed and said that the election was made under the policy which required the insured to reinstate, or replace, the house before payment. The Court did not consider the argument that any replacement house had to be in NZ. It did not award interest on the full replacement value. The judgment also records that Mr Myall is to pay Tower $32,000 for costs on the first High Court hearing.
In the puzzling decision of Hood v EQC & anor  NZHC 349 the High Court (Dunningham J) decided that Ms Hood who had been entirely successful with her claim by moving EQC from a repair cost of $10,729 to one of $438,292.63 through Court proceedings could only recover 50% of her costs because theoretically the insurer, IAG, was also around and Ms Hood should have recovered the balance of the costs from it. This was in circumstances where once EQC paid the cap the insurer immediately agreed to pay the rebuild cost claimed and IAG had for months said that wanted to settle out based on a rebuild. I do not understand how a person can be entirely successful, but not recover 100% of the recoverable costs. No rights of appeal of the judgment as it was review of a decision of Matthews AJ who also thought that 50% was appropriate.
The application of the 6 year limitation period under the Limitation Act(s) to claims arising out of the Canterbury earthquakes has resulted in differing positions by insurers and EQC as to how they will respond to claims. Some take the view that the 6 year period starts on the date of the property damage; whereas others say that it is not until there is a denial of liability or purported settlement. In Globe Church Incorporated v Allianz Australia Insurance Ltd & anor  NSWCA 27 the New South Wales Court of Appeal by a 3:2 margin said that the cause of action accrued on the damage to the property. This was supposedly consistent with the UK position. The Court expressly identified that there could be circumstances where liability had a pre-condition. It is arguable that in relation to an insurer it is a pre-condition that EQC meet its liability.
The High Court (Davidson J) decision in Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd & anor  NZHC 277 considered whether cracks to a concrete slab were “damage” under a material damage policy; what was required to remediate the cracks, and what the insurers were liable for when repairing insured earthquake damage also affected undamaged property. The buildings at issue were Rydges and the adjoining carpark. Each was damaged, but not destroyed in the February 2011 earthquake. The policy required restoration of the damaged portion of the property to a condition substantially the same as, but not better or more extensive than, its condition when new. There was agreement that there were pre-earthquake slab cracks and slab sagging. The insurers accepted that exterior cracks of .3mm and interior cracks of .4mm were damage. Insurers said that the insured had to prove damage crack by crack. This required proof that the earthquake caused the crack and the crack involved physical change to the extent that it impaired capacity with engineering consequences compared with its pre-earthquake condition. The Court decided that the policy required assessment of portions of the property- not crack by crack. So experts had to look at portions of the property ie. there may be parts with multiple cracks of lesser width. This required engineering judgment. The Court said that repair of each crack in the top horizontal concrete element required epoxy injection over the full length of the crack. Standard industry practice is to repair cracks of widths .2mm and above. Pre-existing cracks suffered loss of strength as a result of being worked during cyclic loading. A degree of loss of aggregate interlock was probable and the cumulative effect may constitute impairment so as to be damage.
In Bruce & ors v IAG New Zealand Ltd  3444 the High Court (Mallon J) decided that IAG had not complied with its obligations to reinstate the earthquake damaged house to “as when new”. So it is liable to pay the costs of reinstating the house and/or loss in value of the house by reason of certain defects. Quantum is to be determined at a later hearing. IAG originally spent about $1.4M to rebuild the foundation, but post work the floor level differential was 46mm and there were 8 areas with slopes of more than .5%. The Court confirmed that where an insurer elects to repair that the policy becomes a repair contract and the insurer is liable in damages. The standard of repair was to be an equal condition as it was when it was built in 2006. The owners claimed general damages for distress, inconvenience and mental anguish caused by IAG’s conduct. IAG said that general damages are not available in New Zealand for breach of an insurance obligation. The Court found that the Bruces’ were entitled to general damages that were to be quantified at a later hearing.
In Strathboss Kiwifruit Ltd & anor v Attorney General  NZHC 62 the High Court (Mallon J) considered an application for costs by Strathboss and Seeka subsequent to a hearing that found MAF/MPI was negligent in relation to PSA that affected kiwifruit orchards in 2010. There is to be a separate hearing about quantum. The plaintiffs sought costs of $1,715,088 and disbursements of $900,723.64 of which $449,124.69 was for experts. The Crown said costs should not be determined pending appeals and/or any payment should be deferred pending appeals. The appeal is scheduled to be heard 11 March 2019. The fact that there was a litigation funder was not relevant. The Crown said that any costs award should be reduced by 30% because the plaintiffs failed on 2 causes of action. The Court said that it was common for a successful party to fail on some aspects of their claim and the failures did not substantially increase the Crown’s costs. Of interest the court awarded 4 days per witness statement for preparation and 1.5 days preparation for each day of trial. The plaintiffs position on costs was substantially upheld and the Court awarded costs claimed with minor adjustments.
The Court of Appeal decision in Joint Action Funding Ltd v Eichelbaum  NZCA 249 said that for a person to recover costs under the High Court Rules that person needed to have personally incurred those costs with a lawyer and been invoiced for them by that lawyer. JAFL was concerned with a claim for costs by a barrister acting for himself. Unsuccessful defendants in claims brought via litigation funders have argued since JAFL that because the legal costs are not incurred by the actual party then no costs are recoverable. Fortunately the Supreme Court in McGuire v Secretary for Justice  NZSC 116 has said that JAFL was wrongly decided.
In Fitzgerald & ors v IAG New Zealand Ltd  NZHC 3447 the High Court (Gendall J) considered whether IAG’s proposal to epoxy rubble foundation cracks and jack/pack piles/perimeter to relevel a floor with a differential of 58mm complied with its insurance policy obligation to reinstate the earthquake damaged house to a condition as similar as possible to when it was new. The Fitzgeralds own 111 Innes Road, St Albans. It is TC3. The house built in the 1920’s is 2 storey with timber frame, weatherboard cladding and metal roof built on an unreinforced rubble perimeter foundation with internal piles. After the earthquakes the floor level differential is 58mm in the house. The earthquakes also caused some cracks to the perimeter foundation. The Court decided that the policy standard of”when new” involved a comparison to the state of the house when it was built. So any foundations must provide that level of support. Gendall J decided that repairing the foundation cracks with epoxy met the policy standard and so did the proposed jacking and packing of piles and perimeter. This would not meet the standards for a newly built home, but met the insurance policy standard that required the comparison to as built in the 1920’s. The conclusions were premised on IAG being able to obtain building consents (or exemptions) and code compliance certificates for the work. If it could not do so, then IAG would be required to replace the entire foundation.
In April 2014 the Institution of Professional Engineers dismissed a complaint about Alan Reay and his involvement with the design and building of the CTV building that collapsed killing 115 people in the 22 February 2011 earthquake because Dr Reay was no longer a member of IPENZ. In a judgment 7 December 2018 in Attorney General v IPENZ & anor  NZHC 3211 the High Court (Collins J) decided that IPENZ was wrong in its interpretation of the word”member” and that member included a person that had resigned after the complaint was made. So IPENZ is now able to consider complaints about Dr Reay.
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