Anderson v Earthquake Commission
[2017] NZHC 505
•20 March 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2016-409-001012 [2017] NZHC 505
BETWEEN KAREN MARIE ANDERSON
Plaintiff
AND
THE EARTHQUAKE COMMISSION (DISCONTINUED)
First Defendant
TOWER INSURANCE LIMITED Second Defendant
BRUCE VERRY TRADING AS
B VERRY PROJECT MANAGEMENT Third Defendant
Hearing: 16 March 2017 Appearances:
N Hamid for Plaintiff
No Appearance for Second or Third DefendantJudgment:
20 March 2017
JUDGMENT OF GENDALL J
Introduction
[1] The plaintiff Karen Marie Anderson (Ms Anderson) seeks judgment by way of formal proof pursuant to r 15.9 High Court Rules with respect to her claim against the third defendant, Bruce Verry (Mr Verry) relating to defective and incomplete building work on Ms Anderson’s house. Ms Anderson is the owner of a property at
17 Leyden Street, Phillipstown, Christchurch. The house on the property is a 1960’s
single storey timber framed house with brick veneer cladding and a concrete tile roof on a concrete perimeter and pile foundation (the house).
ANDERSON v THE EARTHQUAKE COMMISSION [2017] NZHC 505 [20 March 2017]
[2] Following the Christchurch earthquake sequence, the house on Ms Anderson’s property was significantly damaged. As a result, she made a claim with the first defendant, the Earthquake Commission (EQC), and her insurer the second defendant, Tower Insurance Limited (Tower). The present proceeding was commenced against these parties and also against Mr Verry, the builder she engaged with respect to what are now seen as defective and incomplete repairs on the house.
[3] As to the history of this matter the plaintiff’s statement of claim here was filed on 14 October 2016. In short, the proceedings against the first defendant EQC have been discontinued as EQC made a cap payment to the plaintiff of $131,597 and Ms Anderson filled out an opt-out form in relation to the Canterbury Home Repair programme earlier, which effectively limited her right to claim further amounts from EQC.
[4] Prior to this present litigation, Tower’s position was that repairs to Ms Anderson’s house could be completed for less than EQC’s statutory cap liability. This is not accepted now by Ms Anderson. Tower remains a party to the present proceeding.
[5] Mr Verry also remains a party to this proceeding.
Procedural history
[6] The plaintiff filed this proceeding, as I have noted, on 14 October 2016. The statement of claim, notice of proceeding, affidavit in support and related documents were served on Mr Verry on 21 November 2016. An affidavit of service of Brian Hugh Ware dated 14 March 2017 confirming this has been filed.
[7] A statement of defence from Mr Verry was due to be filed by sometime in January 2017. Mr Verry has not filed any statement of defence, nor has he taken any formal action of any kind to oppose this proceeding against him.
[8] Detailed affidavits have been filed in this proceeding in support of Ms Anderson’s position by herself (dated 14 March 2017), and from Charlotte Teresa Gavin an office manager from the chambers of Ms Anderson’s
lawyer (dated 14 March 2017), and from Nigel Patrick Norman Williams, an experienced builder and licensed building practitioner (also dated 14 March 2017). From the first two of those affidavits in particular, the following matters are confirmed:
(a) Around 16 January 2017, the Court and counsel for Ms Anderson were made aware of a communication a Christchurch barrister, Mr Andrew McKenzie, had made indicating that he was in discussions with Mr Verry to represent him in this matter and regarding legal aid issues.
(b) On 24 January 2017 Ms Hamid, counsel for Ms Anderson, emailed
Mr McKenzie to ascertain whether he was indeed acting for Mr Verry.
(c) On 8 February 2017 Ms Hamid emailed Mr McKenzie again, noting that Mr Verry’s statement of defence was overdue and asking that, if he was not acting for Mr Verry, could he provide Mr Verry’s contact details.
(d)On 9 February 2017 Mr McKenzie emailed Ms Hamid confirming that he was not acting for Mr Verry, he would be advising the Court of this and releasing Mr Verry’s contact details. It seems, however, that those contact details were not made available.
(e) Ms Hamid then responded by email to Mr McKenzie and asked him that he advise Mr Verry about the first case management conference that was to be held for this proceeding in person on 10 February 2017.
(f) Mr Verry did not appear at that 10 February 2017 first case management conference.
(g) In addition, no other contact of any kind has been made by Mr Verry.
[9] As I have noted, Ms Anderson now seeks judgment by default in this proceeding but only against Mr Verry in this proceeding pursuant to r 15.9 of the
High Court Rules. In terms of r 15.9(4) on a formal proof application such as this a plaintiff is required to file affidavit evidence to establish the pleaded causes of action against the defendant in question to the Court’s satisfaction. The onus is on the plaintiff to convince the Court that judgment should be entered against a defendant.
Background facts and plaintiff ’s claim
[10] From the affidavit evidence before this Court, it is clear that once Ms Anderson had made her insurance claims with EQC and Tower and an EQC scope of works had been completed on 28 August 2013 with repairs deemed to be lower than EQC’s cap, she contacted Mr Verry, a builder who was known to her through friends, to carry out repairs to the house. The repairs were to be undertaken according to EQC and Tower’s scope of works with a number of additions which Ms Anderson was to pay for personally. These additions were:
(a) Installing new LED lighting in the house;
(b)Demolishing the garage (which had been damaged by squatters) and rebuilding it along with a sleepout; and
(c) New kitchen joinery.
[11] Ms Anderson confirms in her affidavit evidence that on 10 March 2014 she and Mr Verry entered into a fixed price building contract first, to complete the earthquake repairs based on the scope prepared by EQC and secondly, to rebuild the garage and sleepout. This contract which was one made orally was at a fixed price of $182,597. Ms Anderson deposes that because of her social connection with Mr Verry she was satisfied with this simply being an oral contract. Mr Verry likewise, it seems, was comfortable with this. Mr Verry then apparently went further and assisted Ms Anderson in applying for and accessing loans from her bank (the ANZ Bank) to contribute towards the cost of the repairs.
[12] Ms Anderson has deposed that these repairs included the following: (a) Replacing the flooring of the house;
(c) Removing and replacing foundation piles; (d) Replacing the deck;
(e) Re-aligning roof tiles;
(f) Re-pointing the ridge capping;
(g) Replacing 90 series brick veneer defects;
(h) Remediating the interior of the house as necessary;
(i) Removing and replacing fibre cement sheets in the garage; (j) Replacing the garage door lock;
(k) Adjusting the garage doors; and
(l) Supplying new kitchen joinery.
[13] Under the contract Ms Anderson agreed to pay the total contract sum in instalments. She confirms that as she was invoiced for work said to be completed by Mr Verry, she did make the payments required promptly. Copies of invoices that she paid are annexed to her affidavit.
[14] Ms Anderson deposes that, despite her paying the contract price payments requested in terms of the invoices she received (which amounted to $156,093.79), Mr Verry did not complete the work he was contracted to do (and had simply walked off the job without completing it), nor did he carry out the work he had done in a proper and professional manner.
[15] According to Ms Anderson, Mr Verry had told her as the contract progressed that the total amount she had paid him under the contract was not even enough to
cover the cost of the building materials required. He then went on to assure her that the building materials required apparently were purchased and were being stored at a friend’s house. But, in early 2015 when Ms Anderson checked this with the third parties Mr Verry had mentioned, it was confirmed that this was not the case.
[16] Despite her requests to Mr Verry on numerous occasions that he produce invoices for the materials he had obtained, Ms Anderson says these were never provided.
[17] Ms Anderson deposes that around December 2014 Mr Verry stopped working on the house. Since then he has done no substantial work to it. In addition, she says that to release the EQC money and to obtain the mortgage loan from the ANZ Bank, Mr Verry was required to be supervised by a licensed building practitioner. Her evidence is that Mr Verry told both her and the ANZ Bank that he was being supervised by a Mr Graham Bennett, a licensed building practitioner. It seems this was not the case however.
[18] After Mr Verry had stopped work on the house, Ms Anderson deposes that she contacted Mr Bennett and discovered that Mr Bennett had no knowledge either that he was supervising Mr Verry or of the work that was supposed to be done on her property.
[19] In her affidavit Ms Anderson deposes to a substantial number of repairs to the house that were not completed by Mr Verry or that were improperly or inadequately done. A number of scheduled repairs she says were not undertaken at all, these being:
(a) Grinding and epoxy repairing the cracks to the foundation; (b) Removing and replacing all the foundation piles;
(c) Replacing the roofing with Zincalume corrugated iron roof; (d) Replacing all of the 90 series brick veneer; and
[20] In addition, of the repairs that were completed, Ms Anderson deposes that a number were either only partially completed or the work done was defective and inadequate. These included the following:
a.Only two piles were replaced in the floor (this has not been verified as it is said the manhole has since been covered);
b.The original manhole has been removed and a new manhole was cut in the dining room and subsequently covered by carpet eliminating subfloor access. This area now slumps noticeably;
c. The plastering was of a quality of poor workmanship;
d.Some of the painting was completed by an apprentice who damaged the windows which now jam;
e. The majority of the windows are misaligned;
f. The replaced bricks are now popping out;
g. There is a finger gap width between the cladding and lounge window;
h.The (asbestos) debris from the garage demolition was not properly disposed of;
i. The kitchen joinery has only been partially installed;
i. the splashback is incomplete;
ii. sealant has not been applied;
iii. the oven has not been affixed and falls out of place when the oven door is opened.
iv. no fire-resistant backing has been installed;
j. The new wiring does not have any compliance documentation;
k. Insulation was applied directly over new LED lights rather than leaving gaps for them.
[21] Subsequently Ms Anderson engaged Mr Williams, as an experienced independent builder (with over 35 years’ experience) and licensed building practitioner. His brief was to examine the repairs undertaken by Mr Verry, to provide a scope for incomplete or defective works, and to provide a costing for the repair
work to properly reinstate the house as should have occurred under the original contract with Mr Verry.
[22] Generally, Mr Williams has confirmed the matters noted at paras [19] and [20] above as requiring work. He has also noted quite critically that Mr Verry throughout had a complete absence of any documentation here in breach of normal requirements. Further, Mr Verry, it seems, did not deal with any possible contamination issues for the property nor did he obtain any specialist engineering advance where consultation was required for the structural engineering design elements of some of the work to be undertaken here. In addition, he has produced a costed scope of works to assist in determining quantum here. Mr Williams’ uncontested evidence is that the cost of carrying out all this work would be
$219,954.82.
[23] On top of what Ms Anderson says is the direct loss caused by Mr Verry’s major breaches of the building contract (including defective workmanship issues and his refusal to complete the agreed work on the house and garage), Ms Anderson and her family were required to move out of the house. This has caused her further financial loss, she says, because she has now has exhausted her temporary accommodation allowance under her insurance contract of $25,000. This results from the fact that the original repairs to the house were not completed within the expected timeframe. She seeks reimbursement of this amount from Mr Verry as well, on the basis that she and her family will need to move out of the house again for a similar period to have the work properly completed this time.
[24] Lastly, Ms Anderson seeks a contribution from Mr Verry towards her legal costs in this proceeding. This is sought on a category 2B basis. Details are provided in counsel’s submissions. The claim amounts to $10,251.50 and represents approximately two thirds of total costs on this proceeding to date.
[25] In summary, Ms Anderson requests here that the Court grant her judgment by formal proof against Mr Verry as follows:
(a) Judgment for the cost to carry out the repair and reinstatement work on the house and garage required to put them into the position they would have been in had Mr Verry properly carried out his obligations under the contract - $219,954.82.
(b)Judgment of $25,000 for consequential loss representing what was in effect the wasted accommodation supplement.
(c) A contribution towards her costs calculated on a category 2B basis of
$10,151.50.
[26] Generally, on all of this, Ms Anderson notes that the circumstances which brought her to bringing this aspect of the present proceeding against Mr Verry are highly unfortunate and regrettable. She said she trusted Mr Verry, a man she knew socially and considered as a friend, to carry out the necessary work on her family home (her major asset) only to find that he was not worthy of the trust she had placed in him. As a result, Ms Anderson and her family are still living in a house which remains badly damaged, leaving them both in a state of significant distress and in a financially vulnerable position.
My decision
[27] Originally in her pleadings in this proceeding Ms Anderson advanced one cause of action against Mr Verry. This was in breach of contract. It alleged that Mr Verry had breached his oral building contract with Ms Anderson first, by failing to complete a significant number of repairs and work under the contract and secondly, as to that work which was undertaken, doing so to a defective standard involving poor workmanship, such that all work failed to be completed in a professional and proper manner and now requires full remediation.
[28] These pleaded claims are verified in Ms Anderson’s affidavit and confirmed in the supporting affidavit of Mr Williams. In particular, Mr Williams in his evidence goes to some lengths to outline first, the defective and incomplete repairs and work undertaken by Mr Verry here and secondly, the significant cost required to
rectify and complete anticipated repairs to place the house back into the condition it should have been in if the contract had been fulfilled.
[29] That said, and given that none of this evidence before the Court is in any way contested, I find that there has been a breach of contract on the part of Mr Verry here on the basis outlined by Ms Anderson in her pleadings and in all the evidence which is before the Court.
[30] I find, too, that the uncontested cost to remedy this breach of contract on the part of Mr Verry (as outlined in the expert evidence of Mr Williams in particular) is his quantum figure of $219,954.82. There is, in my view, a direct causative link between the conduct of Mr Verry here and this loss suffered by Ms Anderson.
[31] In addition, I find that Ms Anderson’s claim for the $25,000 consequential loss, relating to what was in effect her wasted accommodation supplement paid to her under her insurance contract is justified here. What is clear is that Ms Anderson and her family will need to move out of the house again for a similar period of time for the new repairs and work to be undertaken. Her inability to use this effectively wasted $25,000 insurance accommodation supplement now is a clear loss directly attributable to the breach of contract by Mr Verry.
[32] Finally, I find that the uncontested claim for a contribution towards Ms Anderson’s legal costs of $10,151.50 as noted at para [25](c) above is reasonable and should be met as a direct cost to her in being required to bring this proceeding. The quantum of this costs amount obviously is not questioned, and as I see it, is generally appropriate here.
Result
[33] For all the reasons I have outlined above, Ms Anderson’s claim against Mr Verry by way of formal proof under r 15.9 High Court Rules succeeds. She is therefore entitled to judgment which I now enter against Mr Verry as follows:
(a) In relation to the claim for repairs and additional work to the house and garage a total of $219,954.82.
(b) In relation to the consequential loss representing what was in effect
Ms Anderson’s wasted accommodation supplement, the sum of
$25,000.
(c) In relation to a contribution towards Ms Anderson’s costs on this
proceeding calculated on a category 2B basis the sum of $10,151.50.
[34] If any reasonable disbursements here are claimed in addition to the costs award noted above, then these are also awarded to Ms Anderson as approved by the Registrar of this Court.
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Gendall J
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