Bligh v Earthquake Commission
[2018] NZHC 2102
•16 August 2018
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2013-409-001333 [2018] NZHC 2102
BETWEEN DEREK RICKY BLIGH
Plaintiff
AND
EARTHQUAKE COMMISSION
First Defendant
AND
IAG NEW ZEALAND LIMITED
Second Defendant
Hearing: 19 February – 6 March 2018 Appearances:
R J Lynn and E J Flaszynski for the Plaintiff
N S Wood and J W Upson for the First Defendant
P M Smith and S J Connolly for the Second DefendantJudgment:
16 August 2018
JUDGMENT OF NATION J
BLIGH v EARTHQUAKE COMMISSION & IAG [2018] NZHC 2102 [16 August 2018]
Introduction 1
The legal context 13
The IAG policy 13
Earthquake Commission cover 16
Burden of proof 31
Assessing credibility 39
Mr Bligh 51
Mr Jerome Larason 90
Mr Peter de Boer 97
Ms Dawn Clark 100
Mr Peter Smith and Mr Mark Kearney 106
Mr Malcolm Clark 139
The claimed damage as particularised 150
New cracking and exacerbation of existing cracking generally to all brick walls
151
Exacerbation to the vertical cracking on the first floor brickwork walls 151
Horizontal displacement of external brick at north western corner 151
Dislodgement of brick on south western outer face of the first floor 151
Separation of the outer bricks from the inner bricks including at the edges of the brick work around window openings on the external walls 151
Loosening of window frames with relation to the surrounding brickwork 151
(i)The south wall 184
(ii)The east wall 188
(iii)The west wall 192
(iv)The north wall 193
(v)Loose bricks on top of the walls 199
Cracking of external plaster surface 220
Cracking to external plaster at windows on the southern face of the first floor 220 Minor horizontal cracking to the ground floor 228
Exacerbation of the cracking and minor spalling below the window on the south western inner face of the external wall of the ground floor 228
Exacerbation of the cracking and minor spalling above the window in the south western corner. 228
Damage to the reinforced concrete columns and lintel above the new front door
240
Horizontal cracking through sections of the new bond beam 244
Minor cracking between bond beam and existing walls 244
Cracking to the foundation slab 247
Possible formation of voids under the foundation slab 247
Separation of sheet joins and damage to finish around doors and windows 264
Cracking in internal plaster 266
Cracking in the corners of internal walls on the first floor 268
Separation and damage to the finish of the first floor tongue and groove walls 268 Damage to the plaster in the tongue and groove section of the first floor ceiling
268
Separation of skirting boards and hallway from walls on the first floor 268
Tongue and groove boards in first floor hallway have separated leaving gaps and creating draughts 268
Cosmetic damage to the house including patches of paint coming adrift in master bedroom. 268
Loose fixings in the roof 298
Leaks to the roof above the master bedroom and above the flue of the log fire 298
Split roof rafter 298
Floor in extension hallway bouncy, indicating failure of sub floor elements 315
Minor damage at sheet joints and door trims to extension 315
Cosmetic damage to the extension including to the sleep out above cellar 315
Nails popped in the gib walls 315
Cracks in paint and plaster seal at joints of panels 315
Cracking to asbestos panels in the extension 315
Leak to the cellar 326
Damage to external paths 342
Settlement of the eastern portion of the garage slab as well as cracking with horizontal and vertical displacement in this area 361
Undulation of garage roof sheeting 361
Water marks at discrete intervals on the roof purlins 361
Racking of door at western end of northern face of garage, latch vertically offset
from strike plate 361
Garage door now catches on the foundations at the western end 361
Some exacerbation to slab cracking and undulations, as well as cracking to the
foundation beam at the western end and very minor undermining of the foundation at the eastern end 361
The western end of the garage wall has moved out of vertical 361
The lock and catch to the door on the north face of the garage towards the western end no longer align 361
Bargeboard at both the western and eastern end of the garage have fallen off. 361
(i)Slab cracking 361
(ii)The roof 374
(iii)The tilt door 394
(iv)Changes to the western end of the garage 404
Unknown damage to the bore 419
Summary of conclusions 424
Introduction
[1] Mr Bligh owns a residential property at 29 Waddington Road, Waddington. It is in an area affected by the Darfield earthquake, the first major earthquake in the Canterbury earthquake sequence, which occurred at 4.35 am on 4 September 2010.
[2] The house is two storey. Mr Bligh describes it as Georgian style. Below is a street view image of the property taken in July 2012, after the earthquake.
[3] The ground floor of the house was built in the 1860s. The ground floor walls of the house are made of unreinforced concrete. The first floor was added around 1897. Beams of hardwood were placed on top of the concrete walls. On top of those beams, the walls were double brick.
[4] To the rear of the house is a timber-framed structure (the annexe). It includes a shower and a toilet, a laundry and a sleepout, situated over a cellar which was formerly a well. Separated from the house is a large out-building I refer to as the garage but it is more in the nature of a large shed.
[5] Mr Bligh purchased the house in April 1985. He planned to make various alterations and had made some significant progress in this regard. Around 1988, in accordance with detailed engineering designs, the wooden beam above the concrete walls was replaced with a reinforced concrete beam. The ground floor was removed and replaced with a reinforced concrete slab, with deeper concrete beams next to the foundations and at intervals across the floor. The roof was replaced. In the late 1980s, Mr Bligh chipped the plaster off the exterior of the first floor walls on the east, north and some of the west side of the house. Substantial new windows and doors were installed on the ground floor. All the downstairs interior walls were removed, as was the ground floor ceiling.
[6] Unfortunately, because of illness and a series of unanticipated life events, there was little progress with the planned improvements after the early 1990s. In 1991, all internal walls on the ground floor had been removed with only odd posts in places to prop up the first floor. Exposed electrical wiring hung down from posts and the floor above. Mr Bligh continued to live in the home with the interior in a substantially altered but incomplete state.
[7] In these proceedings, Mr Bligh claims that the first floor walls and other parts of the house, the annexe and the garage suffered major structural damage in the Darfield earthquake. He claims the cost of repairing that damage will be in excess of
$950,000.
[8] Mr Bligh had insured the property with State (now IAG) and, through that policy, was covered by the Earthquake Commission Act 1993 (the EQC Act).
[9] EQC had various experts inspect the building for earthquake damage. Initially, assessors thought there was earthquake damage. An experienced builder employed by EQC, Mr Malcolm Clark, inspected the property on 8 December 2010. An engineer, Mr Peter Smith, carried out a detailed inspection on 23 December 2010. Another engineer, Mr Graeme Robinson, reviewed various reports and inspected the property himself on 12 January 2011. It was their advice to EQC that the buildings had not suffered any material damage as a result of the Darfield earthquake.
[10] Under the house insurance policy, IAG would be liable to repair Mr Bligh’s home only if it suffered material damage as a result of the Darfield earthquake and the cost of repairing that damage would be in excess of the EQC cap of $115,000 including GST. IAG supports the position taken by EQC over whether there was material damage to the home. It says there was no damage and, if there was any, it would not have cost more than the EQC cap to repair, so IAG has no liability to Mr Bligh under its policy.
[11] Mr Bligh is adamant that the experts engaged by EQC were wrong in the opinions they came to.
[12] Mr Bligh’s opinion, the evidence in his support from a structural engineer Mr Mark Kearney, and the opinions of other witnesses for the parties were the subject of detailed examination when these proceedings were heard earlier this year.
The legal context
The IAG policy
[13] Under the IAG policy, Mr Bligh was covered for sudden accidental loss to the home that happened during the period of cover. There is no dispute the house, annexe, garage and water tank were insured under the IAG policy. “Accidental” was defined in the policy to mean “unexpected and unintended by you”. “Loss” was defined to mean “physical loss or physical damage”.
[14]Under the policy, IAG agreed with Mr Bligh:
If you have a loss that is covered by this policy and you repair or rebuild the home, we’ll pay: cost of repairing or rebuilding the home to a condition as similar as possible to when it was new, using current materials and methods.
[15] Losses were covered by IAG only to the extent they were not covered by EQC, and then only if EQC had not declined the claim.
Earthquake Commission cover
[16] EQC accept that, because Mr Bligh had a “contract on fire insurance” with IAG in respect of a “residential building”, his building was deemed to be insured under the EQC Act against “natural disaster damage” for its “replacement value”.1 The limit on EQC’s liability for the costs payable by an insured replacing or reinstating the property was $115,000 inclusive of GST.2 If a property suffers natural disaster damage during the period for which it is insured under the EQC Act, EQC must settle any claim to the extent to which it is liable under the EQC Act. At EQC’s option, EQC may settle by payment, replacement or reinstatement under s 29(2) EQC Act or by a combination of payment and replacement or reinstatement.3
[17] In relation to property, “natural disaster damage” is defined as meaning “any physical loss or damage to the property occurring as the direct result of a natural disaster”.4 In O’Loughlin v Tower Insurance Ltd, Asher J considered, in the context of the insurance of a house from loss or damage from accident, the word “physical” meant loss or damage to the materials and structures that constituted the body of the house.5 It does not include purely economic loss.
[18] In Earthquake Commission v Insurance Council of New Zealand, the Full Court of the High Court, considered that, for there to be “natural disaster damage” to residential land for the purposes of the EQC Act, there needed to be a physical change or loss to the body of the land that had occurred, or was imminent, as a direct result of the earthquakes, and which affected the use or amenity of the land.6
[19] In Krall v Earthquake Commission, the Court of Appeal considered whether there was “natural disaster damage” to a house where the threat of rockfall and other hazards caused by the earthquake had led to a local council prohibiting persons from approaching or entering the house.7 The Court of Appeal held that the loss flowing from the insured person’s inability to use the house in these circumstances was not
1 Earthquake Commission Act 1993, s 18.
2 Earthquake Commission Act 1993 ss 18(1)(c), 29(3).
3 Earthquake Commission Act 1993 Sch 3, cl 9(1)(a).
4 Earthquake Commission Act 1993 s 2(1)(a).
5 O’Loughlin v Tower Insurance Ltd [2013] NZHC 670 at [43].
6 Earthquake Commission v Insurance Council of New Zealand Inc [2014] NZHC 3138 at [70].
7 Krall v Earthquake Commission [2015] NZCA 13.
“natural disaster damage”. The Court of Appeal held that, in the case of a house, there had to be “physical” loss or damage to the structure and materials of the house.8 They held that “damage” had to be harm done to something that impairs its value or usefulness.9
[20] In Sadat v Tower Insurance Ltd, a claim was made that there was further cracking to foundations already in a damaged, inadequate state. The Court held the plaintiffs had been unable to prove:10
… that any such further damage made a material difference to the structural integrity of the foundations as a whole, or that the work required to remedy that damage was any different than what would have been required to remedy all the problems.
[21]In He v Earthquake Commission, Dunningham J held:11
An insurer should not be required to repair or reinstate something to its condition when new when, observed objectively, there has been no discernible change to the value, amenity or utility of the insured property caused by the natural disaster.
[22]In insurance generally, the damage claimed must be more than de minimis. In
Arrow International Ltd v QBE Insurance (International) Ltd, McKenzie J said:12
Each case must be examined on its own facts to determine when an alteration to the physical state has occurred to an extent which is more than de minimis so that the point has been reached where physical damage has happened.
[23] Mr Lynn, for Mr Bligh, referred to Blanchard J’s judgment for the Court of Appeal in Bayley v Manukau City Council.13 There, the Court was concerned with the tests under ss 93 and 94 Resource Management Act 1993 (RMA) as to whether the activity for which consent was sought would have any effect on the environment which was more than minor and would adversely affect any person. In discussing the different tests, Blanchard J said the relevant authority must first determine whether the impact of an adverse effect on the environment was more than minor. If so, that
8 Krall v Earthquake Commission, above n 7, at [35].
9 Krall v Earthquake Commission, above n 7, at [37].
10 Sadat v Tower Insurance Ltd [2017] NZHC 1550 at [255].
11 He v Earthquake Commission [2017] NZHC 2136 at [67].
12 Arrow International Ltd v QBE Insurance (International) Ltd [2009] 3 NZLR 650 (HC) at [82].
13 Bayley v Manukau City Council [1999] 2 NZLR 568.
adverse effect could be disregarded only if it was “de minimis”. He held that an adverse effect on a person could be disregarded as de minimis only if it is so trifling that the law should regard it as of no consequence. That was a more stringent test than whether the adverse effect is minor.
[24] Mr Lynn also submitted that damage should not necessarily be considered de minimis simply because the repairs required to remedy the damage caused by the insured event (the earthquake) would be no different than what had been required to remedy pre-existing defects. He gave the example of damage which produced an unsightly crack in the middle of the glass in a window, where the frame of the window was already infested with borer so that it had already required replacement. He similarly referred to the situation where there was a widening to a pre-existing crack in the floor which did not materially change the structural integrity of the concrete floor such as it was before that additional damage.
[25] I accept Mr Lynn’s submission to the extent he argued there can be material damage even when the costs or work required to repair the damage suffered in the earthquake is no different from what that work or costs would have been before the earthquake. That, however, is a matter to be considered along with other relevant facts in the particular circumstances of the case. In both instances he referred to, there would have been material damage in terms of the test which is to be applied. With the window example, there was a reduction in both the functional and aesthetic value of the window. With the example of the widening of a crack on an unpainted concrete floor, there could be a change to the aesthetic value of the floor. Whether the work required to remedy the damage would be the same as required to remedy pre-existing problems, can thus be, as Mr Wood submitted, a measure of whether the de minimis threshold is met. However, it is not necessarily “the measure”.
[26] The cases I have referred to and the examples Mr Lynn gave illustrate that, for there to be cover, the damage must be such that it affects the use or amenity of the building. For elements of the building that have a structural or functional purpose, the damage has to affect that structural or functional purpose. Similarly, for elements of
the building that have an aesthetic purpose, for example, wall linings such as wallpaper, the damage must affect that aesthetic purpose.14
[27] My conclusion, that the damage has to be such that it affects the use or amenity of the building, parallels the judgment of the Full Court where it found that, with a claim concerning land, the damage had to affect the use or amenity of the land.15
[28] Mr Bligh’s claim is that nearly all the damage his building suffered was of a structural nature. His view is that the building requires repairs to restore the building’s structural integrity, not just to restore the aesthetic value of what was there before the earthquake.
[29]I accordingly accept the submission of Mr Wood for EQC that:
In summary, the task for the Court is therefore to identify the particular physical change, alteration or disturbance (if any) that occurred to the structure or materials of Mr Bligh’s house (and garage) as the direct result of the 4 September 2010 earthquake and how (if at all) any such physical change materially affected the structural integrity or performance of the house for the worse.
[30] There are aspects of the claim that relate to aesthetic and non-structural aspects of the house and garage although, because of the state the interior of the home was in before the earthquake, the aesthetic value of what was there previously was limited. As to those aspects of the house and garage, I must determine whether, having regard to the state of the house and garage before the earthquake, there has been damage that has materially altered the aesthetic value of what was there before the earthquake.
Burden of proof
[31] There is no dispute that Mr Bligh has the burden of proving, on the balance of probabilities, the facts that are material to his claim. He thus has the burden of proving there was damage caused by the earthquake and what is required to remedy that damage.
14 Parkin v Vero Insurance New Zealand Ltd [2015] NZHC 1675 at [20].
15 Earthquake Commission v Insurance Council of New Zealand Inc [2014] NZHC 3138, [2015] 3 NZLR 381.
[32] Because he bears the burden of proof, EQC and IAG do not have to prove the truth of an alternative case as to what might have caused the damage. Even where they do offer an alternative explanation:16
It is thus open to the Court to conclude that the cause of the damage, even on a balance of probabilities, remains in doubt.
In that situation, the insured will have failed to discharge his burden of proof.17
[33] In his opening submissions and citing comments made by the Court of Appeal in Jarden, Mr Lynn suggested that, if Mr Bligh established a credible prima facie evidential foundation for his allegations, the burden would effectively shift to the defendants.
[34] I accept, however, that the evidential burden will shift only if there is credible evidence supporting Mr Bligh’s allegations to the extent required to meet the burden of proof which is on him. Ultimately, whether that burden has been satisfied must be considered having regard to all the evidence that has been presented, including the evidence for the defendants. Mr Bligh will fail to have met the burden of proof which he has if, when considering all the evidence, I hold he has not proved the particular material allegation on the balance of probabilities.
[35] The burden of proof is particularly important in this case. It was suggested to Mr Smith in cross-examination that there was various damage he had observed, the cause of which he could not be certain. He acknowledged that was the case. Mr Smith was somewhat uncertain as to what could have caused the cracking he observed at mortar joints above some windows in the interior and on the exterior of the east wall. He could not exclude the possibility for existing cracks to have widened or extended as a result of the earthquake, for there to have been cracking to the mortar joints in the east wall passage, possible lateral movement of a timber lintel in the west window on the south wall and possible movement of a top row of bricks on the first floor walls. He referred to a possibility that a garage pedestrian door had dropped because of an earthquake.
16 Jarden v Lumley General Insurance (NZ) Ltd [2015] NZHC 1427 citing Rhesa Shipping SA v Edmunds [1985] 1 WLR 948.
17 Jarden v Lumley General Insurance (NZ) Ltd at [90] – [91].
[36] While Mr Smith thus acknowledged that, in certain respects, he could not exclude the possibility of earthquake damage, it was his opinion, based on what he said was a careful examination of the damage with due regard to the historical alterations to the house and other evidence available to him, that there was no earthquake damage. By bringing the claim, Mr Bligh has had the burden of proving, on the balance of probabilities, that the conclusion Mr Smith came to was wrong.
[37] It also needs to be said that my assessment of the evidence and my ultimate decision as to whether Mr Bligh has discharged the onus of proof must be made independently and objectively, neither influenced by feelings of sympathy or prejudice. That is particularly significant in this case where Mr Bligh has faced a struggle to bring his claim to court and is seriously ill.18 Some might also think there could be prejudice against EQC as a state funded insurer, or against IAG as a major insurance company who had agreed to insure Mr Bligh’s property. Mr Bligh and both EQC and IAG have, however, put their respective cases before the Court.
[38] My duty is to make my decision objectively and independently on the evidence presented. Thousands of people in Canterbury have resolved claims with EQC and their insurers on the basis of what the parties have accepted was earthquake damage. On many occasions, settlement has been achieved without too much difficulty. On other occasions, reaching agreement has been far from easy. Here, because of all that remains in dispute, it is for me to decide what has been proved.
Assessing credibility
[39] In assessing the credibility of witnesses and the utility of expert witness opinions, I have been assisted by evidence as to the state of the buildings both before and after the Darfield earthquake which, in significant ways, is independent of the witnesses.
[40] In 1988 Mr Bligh applied for a building permit for renovations to his home, including replacement of an original wooden beam. With the plans, was a letter from
18 Judgment was given for EQC and IAG by Clark J in Bligh v Earthquake Commission [2016] NZHC 2619. The circumstances in which that happened are set out in the judgment of Associate Judge Matthews setting aside that judgment: Bligh v Earthquake Commission [2017] NZHC 995.
Mr Bligh’s engineer, Mr Paul Kaye, summarising the nature of the work and why it was required. Mr Kaye has since died. Mr Kaye’s statements as to the deteriorated condition of the wooden beam are hearsay. Mr Bligh confirmed in evidence that Mr Kaye has died, making him “unavailable as a witness” for the purposes of the Evidence Act 2006.19 I consider the circumstances relating to the statements provide reasonable assurance that the statements are reliable and therefore admissible.20
[41] Just before the scheduled trial of these proceedings, in October 2016 Mr Bligh provided to EQC/IAG photographs from a family album showing the removal of the original wooden beam and its replacement with a concrete beam. These photographs provided objective information as to the state of the wooden beam at the time, the method of reconstruction and the way this might have impacted on the first floor brick walls.
[42] In 1992, Mr Bligh applied for building consent for alterations to the garage. Included in that application were designs for the erection of two steel portal frames to substantially strengthen one end of the garage and provide the support for a wide tilt door opening. There were also detailed specifications as to the foundations that were to be built at the foot of each of the portal frame supports.
[43] In 2007, an engineer, Mr Grant Wilkinson, was employed by Mr Bligh with respect to the next stage of proposed renovations. He took a large number of photographs of the home (the 2007 photographs).
[44] Mr Wilkinson inspected the house on the instructions of assessors for IAG on 28 September 2010, and again on the instructions of Mr Bligh on 13 January 2011. A number of the photographs he took on both occasions have been produced as evidence.
[45] Post-earthquake photographs of relevant parts of the house and the garage taken by Mr Bligh and other witnesses have also been produced.
19 Evidence Act 2006, s 16(2)(a).
20 Evidence Act 2006, s 18. The statements were included in formal building plans submitted for a building permit by a professional engineer.
[46] I have thus been able to assess the evidence of witnesses, regarding both the pre-earthquake state of the house and claimed earthquake damage, against pre and post-earthquake photographs and records. My task in this regard was assisted by the comprehensive way in which all counsel directed the various witnesses to the earlier documentary information and the photographs. The parties were well served by counsel, whose familiarity with the evidence and photographic records demonstrated a comprehensive grasp of what was at issue, in all its considerable detail.
[47] I have had to make an assessment as to the credibility of certain witnesses, particularly the lay witnesses. The most important of these was Mr Bligh.
[48] Mr Bligh’s credibility is especially important because he asks the Court to accept his evidence that the damage he is claiming for became apparent only after the Darfield earthquake and that the earthquake was of such a nature and magnitude that it was more likely than not to have caused the damage he described.
[49] Issues of credibility must involve an assessment of a witness’s honesty in the evidence they have given. If a witness has been shown to have been dishonest, their evidence in respect of a matter where they have been dishonest will be put to one side. Dishonesty may also reduce the weight or value of other evidence the witness has given because it may detract from the reliability of that evidence. Nevertheless, just because a witness has been dishonest as to one aspect of his evidence, does not mean that all his evidence should be regarded as having been given dishonestly.
[50] Just as honesty is important, so too is reliability, because an honest witness can nevertheless be mistaken. That is particularly material in this case.
Mr Bligh
[51] Mr Smith said that, in his experience, it is common for people who are living in a house not to be aware of or concerned about what, from a living point of view, might have been to them inconsequential defects in a home prior to an earthquake. That accords with common human experience. I also accept that, after an earthquake, whether they continue to live in their home or not, people may not have had the
opportunity, time, inclination or expertise to identify, in all its detail, damage which may have resulted from the earthquake.
[52] It is for that reason I exercise some caution in weighing in the balance whether Mr Bligh referred to particular damage when his home was inspected for damage either by people acting on his behalf or for IAG or EQC at different times. Mr Bligh has however discussed the damage with various experts and others he engaged as these proceedings have progressed. In both his evidence before me and in his correspondence and communication with others over the years he has pursued his claim, he has demonstrated an intense awareness of the detail of what he claims was earthquake damage, and what others have to say about it. In certain respects, the consistency of his claims is relevant to an assessment of his credibility.
[53] With the delay between the Darfield earthquake and the finalisation of that evidence, there is the potential for his opinions to be based on reconstruction or supposition, but not necessarily so. The potential for that is somewhat greater because Mr Bligh’s memory has been affected by his health problems.
[54] Mr Bligh’s serious ill-health dates back to at least 2006. In June 2011, a neurologist said he was suffering from a moderately severe degree of Parkinson’s disease and his memory then was “not so good”. He suffered a heart attack in 2006. He was diagnosed with serious forms of cancer in 2012 and 2013.
[55] Nevertheless, I accept it has been mainly Mr Bligh’s short-term memory that has been affected. Having lived in his home for decades before the earthquake and being involved in the reconstruction of various parts of the home, with plans to do a lot more, it could be expected that his memory of the general nature of his home before the earthquake would be firm and have remained clear. It is in relation to the detail that there is greater potential for unreliability. That potential must be greater when Mr Bligh was, for years, tolerant of living in an old house, the interior of which had been significantly dismantled and refurbishment had come to a standstill.
[56] The demeanour of witnesses in giving their evidence has been of little importance, as is often the case. Mr Bligh, because of his Parkinson’s disease, speaks
very quietly and there were some instances when what he said was not clear to the Court transcribers. Although frail, Mr Bligh was firm and steadfast in his opinions. He demonstrated an understanding of the questions that were asked of him and the potential significance of them. When there was the potential for an inference adverse to him to be drawn from the evidence he had given, he was quick to proffer an explanation to counter that. He rarely demonstrated the intense anger and frustration that was evident in his exchanges from time to time, over a number of years, with EQC staff, included as they were in the bundle of documents before the Court. He was respectful to the Court and to counsel.
[57] So, my assessment as to Mr Bligh’s credibility must be made with a careful consideration of what he said in evidence as against all the evidence that has been presented to me.
[58] Mr Wood for EQC did seek, somewhat tentatively, to put before Mr Bligh findings made by a Judge in 1981 that he had made dishonest statements when he was investigated for a potential theft and when giving evidence on the matter.21 I allowed the cross-examination provisionally. The conclusions I have reached as to Mr Bligh’s credibility are however based squarely on what he has said as to his present claim, both as it progressed and in his evidence before me. That being the case and given how long ago Mr Bligh was involved in the case referred to, I determined evidence as to that case not to be substantially helpful in assessing Mr Bligh’s credibility. I thus disregard it as inadmissible.22
[59] Mr Smith identified damage to the first floor brick walls after the earthquake. He attributed the likely cause of that damage as being a drop in the first floor brickwork, either as a result of rot in the wooden beam that had separated the two floors before the installation of the concrete bond beam, damage to the brickwork with the installation of that concrete bond beam, or through the removal of exterior plaster in the 1980s.
21 Bligh v Police CA104/81, 16 September 1981.
22 Evidence Act 2006, s 37.
[60] Given the significance of the wooden beams as a potential explanation for the damage that was observed after the earthquake, Mr Bligh’s evidence as to the state of the wooden beam before the installation of the concrete beams was of importance.
[61] Mr Smith explained that, if the wood had been rotten, the deterioration in the wood was likely to be more marked on the exterior side of the wood where it was exposed to the elements. He said, if this had been the state of the wood, the outer side of bricks would have likely sunk relative to the inner wall of bricks. He said the dropping of bricks in this way would logically explain the vertical cracks that appeared in parts of the exterior brickwork. It also explained why, at the point of one of those cracks, the exterior wall had sunk vertically in relation to a steel dowel that protruded to the exterior from the inner wall of bricks.
[62] In giving oral evidence further to his brief, Mr Kearney was asked hypothetically what could have been the result of the timber rotting or decaying. He said the beam had been placed there to provide support for the brick wall. If the timber had deteriorated, it would have crushed/compressed and it would have been quite possible for the brickwork, either both layers or one layer, to vertically settle.
[63] Mr Kearney also accepted that, if the timber beam had deteriorated and caused differential settlements, that could have caused cracking in the plaster before the earthquakes.
[64] In his evidence as briefed, Mr Bligh said he was able to observe the condition of the original wooden bond beam before it was replaced. He said it had borer damage in some places but was not decayed. He said he had not observed any pre-existing damage to the walls before the beam was replaced. Mr Bligh rejected Mr Smith’s opinion that the timber had deteriorated and had been defective. He sought to justify his answer, not by relying on his observation as to what he had seen of the timber beam before the earthquake, but by interpreting photographs showing parts of the beam at the time it was replaced. Mr Bligh said that he could see by the photographs that the builders had been using chisels and chainsaws to remove the wood. He said that, had it been rotten, they would have simply pulled it out with their hands.
[65] Mr Bligh’s evidence as to the wood not having been rotten was significant because of its potential to have undermined Mr Smith’s opinion that the cracks in the brick wall he observed after the earthquake had existed prior to the earthquake and had likely been caused by deterioration in the wood beam. It was also important because the expert engineer called to give evidence for Mr Bligh, Mr Kearney, rejected Mr Smith’s opinion that the brickwork could have moved due to deterioration of the timber support. Mr Kearney said he had reviewed photos and said the timber did not appear to be overly deteriorated. He said the timber he observed from the photos looked like it was able to provide support.
[66] Mr Kearney enlarged on this by commenting on photographs taken of the beam at the time it was replaced. He said:
The existing timber beam was difficult to move and required a great deal of chiselling out. The photos do not show a deteriorated rotted timber but rather a dry timber that has not rotted or deteriorated in any significant fashion. This timber cannot be said to have rotted, compressed and caused the replacement seen in the cladding brickwork.
[67] Mr Kearney accepted that the main reason he disagreed with Mr Smith’s explanation was that he did not accept the timber had deteriorated. He said this was based on his interpretation of the photographs but also the descriptions from the owner as to how difficult it was to chisel the wood out, including through the use of a chainsaw. He did not accept that the photographs showed deteriorated timber as Mr Smith said they did.
[68] Mr Kearney and Mr Bligh were then confronted with the information that Mr Bligh’s previous engineer, Mr Kaye, had sent to the Malvern County Council in 1988 when seeking approval for the strengthening, alterations and renovations of Mr Bligh’s house. On the plans, the engineer wrote “the exterior walls are tied to membranes, new concrete band is to replace timber (rotten) band”. Mr Kearney also accepted that, in a letter to the City Council dated 30 March 1988, Mr Kaye had indicated the replacement of the timber beam with concrete would improve the structural integrity of the building and had recorded the proposed alterations would involve the removal of “rotten timber” at first floor level.
[69] Mr Kearney accepted that seeing this did cause him to alter his opinion about whether the timber beam had deteriorated by 1988.
[70] EQC had the claim assessed by an engineer, Mr Robinson, who inspected the property on 12 January 2011.
[71] Mr Bligh did not deny telling EQC’s reviewing engineer, Mr Robinson, in January 2011 that “the concrete band replaced rotten timber beams that originally ran around the perimeter at first floor joist level”. This was as recorded by Mr Robinson at the time.
[72] Despite all of this, before me, Mr Bligh still would not accept the beam had been rotten. In sticking to his opinion, he relied not on observations he had made but on the supposition that, if the beam was rotten, then the floor joists would be rotten as well because they were a much softer wood than the Australian hardwood beam. When Mr Bligh was directly confronted with Mr Kaye’s statement that the concrete band was to replace rotten timber, Mr Bligh said that Mr Kaye might have thought the band was rotten but would not have known for sure because he was not able to check as it was encased in plaster. He asserted that Mr Kaye’s description was a guess based on the age of the house.
[73] All of this illustrates how, on a fundamentally important issue, Mr Bligh’s evidence as to the state of a particular and important part of the building pre- earthquake was, at best, unreliable. Mr Bligh was unwilling to accept what I find was the reality of the situation and instead resorted to adopting a contrived explanation to suit his case.
[74] Following a first detailed inspection of the property on 23 December 2010 and a further inspection after proceedings had issued on 26 November 2014, Mr Smith’s opinion was that the cracking he observed in the brickwork could not be attributed to the Darfield earthquake. At the time he formed that opinion, he knew the brickwork had been constructed over timber directly on top of the unreinforced concrete walls below.
[75] Mr Smith’s initial view, that it was likely the timber beam had significantly deteriorated so as to require its removal and replacement with a concrete band, was later confirmed by the plans of the engineer, Mr Kaye, to the Council at the time the work was to be done. It was also confirmed by photographs.
[76] In a minute of 29 October 2013, Wylie J made directions for tailored discovery, specifically referring to the need to provide pre-earthquake photographs of Mr Bligh’s house and documents such as building plans and correspondence with the local authority in relation to the house. Mr Bligh’s affidavit of documents of 10 February 2014 disclosed only Mr Wilkinson’s pre and post-earthquake photographs. The relevant photographs showing the timber beam being replaced were not provided until October 2016. When asked for an explanation for the late disclosure, Mr Bligh’s then lawyers, by memorandum, said Mr Bligh had received the photographs electronically from relatives in Ireland about two weeks earlier.
[77] Under cross-examination, Mr Bligh accepted that what his counsel had said must have recorded what he had told his previous lawyers. It was established, through cross-examination, that Mr Bligh must have had the photographs at least by March 2016 because one of the photographs had been reproduced in a report from Mr Johnstone prepared in March 2016. Mr Johnstone was associated with Canterbury Earthquake Services/Claims Resolution Services and was assisting with Mr Bligh’s claim. Mr Bligh accepted under cross-examination that he thus must have had the photographs earlier than he had told his previous lawyers. He explained this by saying that perhaps he had forgotten about them and then rediscovered them.
[78] What happened in this regard was unsatisfactory and does reflect negatively on Mr Bligh’s reliability as a witness. What happened over discovery does not however establish that Mr Bligh deliberately concealed these photographs. Mr Johnstone prepared a brief of evidence for the trial of these proceedings that was scheduled to begin on 31 October 2016. Mr Johnstone and Canterbury Earthquake Services were closely associated with Mr Shand, the lawyer who was then acting for Mr Bligh. Mr Bligh could have reasonably assumed that the photographs he made available to Mr Johnstone would come to the notice of his solicitor and thus the other parties.
[79] For the reasons explained by Mr Smith and from my own observation of the photographs, I accept that they show there had been a significant decay within the timber beam. That is also consistent with Mr Kaye’s description of the beam as “rotten”.
[80] The photographs significantly affect the assessment I make as to the general credibility of Mr Bligh and the weight to be given to the opinions of Mr Kearney.
[81] Under cross-examination, Mr Bligh was reminded of what the engineer, Mr Wilkinson, had said after he had inspected the house on 28 September 2010. Mr Wilkinson had recorded in a report “the dwelling performed remarkably well considering the size and close proximity of the magnitude 7.1 Darfield earthquake” and said “from a safety perspective the dwelling is likely to have about the same seismic strength as its strength before the earthquakes”.
[82] Mr Bligh was referred to Mr Smith’s report of December 2010 following his inspection of 23 December 2010. Mr Smith had said “a close inspection of the cracking which was present in these walls, failed to identify any cracking which didn’t pre-exist the earthquake”. He also said in his report that the structure of the building had been detrimentally affected by the alterations. Mr Smith was satisfied the Darfield earthquake had not affected the safety of the building for occupancy.
[83] Confronted with the fact two engineers had expressed an opinion that the earthquake had not affected the structural strength of the building, Mr Bligh was first asked whether he accepted that had been the opinion of the two engineers. He had difficulty answering that precise question but said he did not accept the correctness of their opinion. His reason, as he put it, was “I don’t believe it, it was the magnitude of the earthquake, it’s impossible for there not to be some damage.” In that context, he referred to seeing a model on YouTube of how a brick house, which he considered was like his, would vibrate during an earthquake, all the bricks coming apart and then going back together.
[84] After this exchange, he was confronted with the opinion of the further EQC engineer, Mr Robinson, in his report of 24 January 2011. Specifically, Mr Robinson’s conclusion was put to Mr Bligh:
I concur fully with Peter Smith’s opinion that the building is structurally undamaged as a result of the Darfield earthquake and is no less safe to occupy than prior to the earthquake although the building safety has been affected by the removal of the ground floor walls and support to the first floor.
[85]At this point, Mr Bligh became agitated. His response to this was:
Of course he would because it [sic] seven and a half years now and he is still trying to get out of the claim, spend millions of dollars on lawyers, the EQC and insurance company, there’s thousands of people out there suffering, suffering like no one knows, people committing suicide because of what you do.
[86] It is of significance to me that, confronted with these opinions, at several points in his evidence Mr Bligh had an explanation for rejecting the engineers’ opinions but, at those points, that rejection was based not on what he had seen or observed of the actual damage but on a belief. It is because of the intensity of that belief that there is a greater potential for his assertions as to whether damage was caused by the earthquake to have been based on supposition rather than an accurate memory of what he had observed before the earthquake and what he observed afterwards.
[87] As will be apparent in my subsequent consideration of Mr Bligh’s claims and as to particular damage, there have been clear instances where he has not demonstrated the consistency I would have expected from a reliable and credible witness. For instance, I refer to his claim in respect of damage to the walls of the cellar in the annexe and his claims in respect of damage to the garage roof.
[88] There have been numerous instances where he has made firm assertions either about alleged earthquake damage or the state of his home before the earthquake and it has been clearly established that what he was saying was not true. In this regard, I refer to his evidence as to whether before the earthquake there could have been a quadrant on top of a skirting board in one of the upstairs bedrooms obscuring a pre- existing gap between the skirting board and the wall, his evidence that the crack on a path on the western side of the house was caused by the earthquake, and his firm
evidence that there was no cracking of the concrete floor of the house before the earthquake.
[89] As to each of the matters I have just discussed, Mr Bligh’s credibility as a witness has been severely dented. There are other instances, which I will refer to, where his assertions as to damage having been caused by the earthquake has been undermined by the evidence of other witnesses or conclusions I have drawn from the photographic evidence presented to me and discussed by the various witnesses. It is for that reason that Mr Bligh has not been able to prove his case to the required standard simply on the basis that he says the damage he claims for only appeared after the earthquake and therefore must have been caused by the earthquake.
Mr Jerome Larason
[90] The evidence for Mr Bligh from his witnesses, Mr Larason and Mr Peter de Boer, was of little assistance to his case.
[91] Mr Larason said he is a friend of Mr Bligh. His primary contact with him was in picking him up and dropping him off before Freemasons meetings in Oxford. He shared with Mr Bligh an interest in restoring historic brick homes. He recalled a particular visit in the late 1990s when he had gone into the main living area of the house, had been seated on a couch opposite a log burner and had looked at French doors which Mr Bligh had recently installed. His evidence was that the work around the window had been done to a high standard. He also said he was particularly impressed with the bond beam strengthening work at the top of the wall and “how visually pristine the old concrete was at that time”. He described the building as being “in fine shape” when he first saw it.
[92] Mr Larason said he was shocked by what he described as “the heavily cracked concrete floor” after the earthquake. He suggested Mr Smith’s opinion as to cracking of the first floor brickwork pre-dating the earthquakes was inconsistent with what he saw of how “sound, tight, and free of noticeable cracking” window arches on the north and south facing walls of the house were when he saw the house before the earthquake.
[93] I do not consider Mr Larason’s observations of the house were made with the sort of attention to detail to justify his opinions being given much weight. His observations of the work around the replacement French doors appeared to have been based on the view he had from the couch and not from any close-up scrutiny. Although he had commented on the state of the concrete associated with the new beam, when asked to look at some close-up photographs of certain areas associated with the beam, he was unable to identify what the photographs were of.
[94] Apart from the one occasion when Mr Larason said he had sat on the couch in the living area, it appeared that, in picking up and dropping off Mr Bligh, he had simply driven to the property and walked to the house. If he had entered the house on such occasions, it was only briefly. He had not noticed a crack above one of the window archways which Mr Bligh accepted was there before the earthquake. Although he said he had not observed any cracks on the living area floor when he had been there, the state of the floor was not a matter of particular interest to him. He commented that, at the time of the visit, there was more furniture in the room than there was later, when Mr Bligh’s partner was no longer living there.
[95] Even if Mr Larason’s impression of the building overall was that it was tidy with no obvious problems, that was inconsistent with the state of the building when Mr Wilkinson took the 2007 photographs.
[96] Mr Larason’s evidence thus did not assist Mr Bligh in proving what the general condition of the house was before the first major Canterbury earthquake in September 2010 or what the structural integrity of the house, particularly the first floor brick walls, was before that earthquake.
Mr Peter de Boer
[97] Mr de Boer said he had been a friend of Mr Bligh for approximately 11 years and, since 2010, had maintained regular contact and visited the property. He said he had visited the house before and after the earthquake but described those visits as being of a social nature. He said he had visited the property on “several occasions” before the earthquakes. He said the building had been in a “state of renovation”. The only feature of the building which he commented on with any specificity was cracking to
the floor. He said he had not seen that before the earthquake and thought he would have if it had been there.
[98] Mr de Boer gave evidence as to the way Mr Bligh spoke of what he wanted to achieve with the building and his pride in what he was doing, but that has to be of little relevance to me in determining just what the state of the building was before the September 2010 earthquake.
[99] Mr Kearney and Mr Smith agreed that the cracks radiating out from where there had been a fireplace were shrinkage type cracks. They would have been apparent soon after the concrete slab was formed in the late 1980s or early 1990s. It is thus clear that at least some of the cracking was there well before the 2010 earthquake. It is not necessarily cracking that someone would be expected to have noticed on a social visit.
Ms Dawn Clark
[100] Mr Bligh’s close friend and former partner, Ms Clark, was also called as a witness for him. She had been asleep in an upstairs bedroom of the house in the early hours of the morning when the earthquake occurred. She described how frightening the earthquake was. She was aware plaster had fallen from the ceiling onto the bed. The pair went outside and sheltering in a car for the early hours of the morning after the earthquake, then went to check a house that Ms Clark owned at Glentunnel. They returned to Mr Bligh’s property later that day.
[101] Mr Bligh ended up staying at Ms Clark’s property from September 2010 until early 2014. Ms Clark had visited Mr Bligh’s property from time to time since the earthquake but had never gone upstairs again because she felt unsafe there. She said that, when she returned to the property on the day of the earthquake, she was traumatised.
[102] She had never made a close inspection of Mr Bligh’s home to see what damage it had suffered as a result of the earthquake. She did, however, identify two specific items of damage which she noticed after the earthquake. The first was what she said was a gap between the side of the window frame upstairs and the wall lining. She was
however clear that she had never looked at that specific area before the earthquake and thus could not say whether there had been a gap in that area before the earthquake.
[103] Ms Clark also said that, after the earthquake, she noticed for the first time the cracking on the ground floor slab. The cracking she referred to included both the longitudinal cracks and the cracks spreading out from the concrete base where the fireplace had been. I accept that Ms Clark could not recall seeing any cracks on the ground floor slab before the earthquake but this has to be of little weight to me in determining whether such cracks were there before the earthquake.
[104] Given the evidence of the engineers, at least some of the cracks would have been apparent within a year or two after the slab was laid in the early 1990s. With the changes that had occurred in the downstairs area and the larger quantity of furniture in the room at the time, that hair-line cracking would not have been of significance to Ms Clark as a visitor to the home. At least some of the longitudinal cracking in the kitchen area would have been hidden by vinyl floor coverings remaining as late as 2007. The coverings are apparent in photographs taken by Mr Wilkinson.
[105] Ms Clark’s evidence thus does not assist Mr Bligh in proving there was structural damage to his home in the earthquake but her evidence as to plaster falling from the ceiling onto the bed was consistent with what had been some plaster fill from cracks in the tongue and groove above the bed being displaced as a result of the earthquake.
Mr Peter Smith and Mr Mark Kearney
[106] Of crucial importance in this case is the evidence given by the parties’ structural engineering expert witnesses, Mr Kearney for Mr Bligh and Mr Smith for EQC and IAG. Both are experienced civil engineers who have had extensive involvement in assessing damage caused to buildings by the Canterbury earthquakes and the repair strategies required to deal with such damage. Both presented their evidence in a balanced way, appropriate for experts whose role is to assist the Court. However, I give greater weight to the opinions expressed by Mr Smith.
[107] Mr Smith was eminently qualified to assist the Court with the expert evidence he gave. He has had nearly 50 years’ experience as a structural engineer with experience over decades of carrying out earthquake damage assessment of domestic buildings for EQC. His expertise is obviously recognised by his peers. He gave expert structural engineering advice to the Canterbury Earthquakes Royal Commission. When he gave evidence, he was then President of the New Zealand Society for Earthquake Engineering Incorporated. He had worked with MBIE and other technical groups on the securing of unreinforced masonry facades.
[108] Through cross-examination, it was suggested that, because of his extensive association with EQC in giving expert evidence, Mr Smith might have a bias towards discounting damage as earthquake damage. I do not accept that his independence as an expert would be compromised on that basis. I can take judicial notice of the fact that, on many occasions, EQC has been engaged in litigation where they have ultimately accepted liability for damage that has been the subject of dispute. Importantly however, I am satisfied that, when Mr Smith was first assigned to inspect Mr Bligh’s property, he approached his task with an open mind and carried out a thorough and detailed inspection. He was balanced, measured and careful in the opinions he expressed. An illustration of this was his acknowledgement that he could not discount the possibility that the Darfield earthquake had caused some of the damage in the particular ways put to him by Mr Lynn. Those opinions were also thoroughly tested by counsel against the photographs that showed the actual damage he was commenting on in ways that enabled me to assess the weight I should give to his opinions. His opinions were of real assistance to me.
[109] Mr Smith had a significant advantage in assessing the nature of the damage in that he first inspected the property on 23 December 2010 and was able to examine the outside of it. That examination included climbing up a ladder and examining cracks to the brickwork with a magnifying glass. He was thus better able to assess the age of those cracks, relative to the Darfield earthquake, than Mr Kearney was. It was the sort of examination which Mr Wilkinson had, in his reports, indicated would be necessary but which Mr Wilkinson himself did not make.
[110] Mr Smith carried out further detailed examinations on 29 January 2014, 26 November 2014 and 23 November 2017.
[111] On 29 January 2014, Mr Smith inspected the house and garage. Mr Bligh and two representatives from the litigation funder, Canterbury Earthquake Services, Messrs Johnstone and Betts, were present, as was a quantity surveyor, Günther Hanne, appointed by EQC. On 26 November 2014, Mr Smith inspected the property with an engineer, Mr Pavol Csiba, acting as an expert for Mr Bligh in the proceedings that were then before the Court. These inspections were for the purpose of the experts producing a joint report for the Court, which they completed on 22 October 2015, highlighting areas of agreement and disagreement.
[112] In making his inspection at that time, Mr Smith must have had his attention drawn to those features of the damage which both engineers then considered significant and features of that damage which might have been consistent with either pre-earthquake or earthquake damage. Mr Kearney was not involved in that process.
[113] Mr Kearney inspected the property on 31 October 2016, the morning of the first scheduled trial of these proceedings. Employees of his firm had previously photographed and inspected the property on 5 October 2016. There remains uncertainty as to whether Mr Kearney was at the property at all on that occasion. In his brief of evidence served on 14 October 2016, prepared for the first scheduled trial, he summarised what he said was “the damage caused by the Canterbury earthquake sequence that I could observe, or discern from other reports, or as advised by the owner”.
[114] In his evidence, Mr Smith said the opinions he was expressing were based on his inspections, reports he had referred to and other specified material. He indicated that the material he had considered did not include what he had been told about the damage by Mr Bligh.
[115] In his evidence for this trial, Mr Kearney said the conclusion he had reached as to the damage caused by the Canterbury earthquake sequence was based in part on what he had been “advised by the owner”. In all the circumstances of this case and
the findings I have made about Mr Bligh’s credibility, to the extent Mr Kearney relied on or was influenced by Mr Bligh’s beliefs, the foundation for Mr Kearney’s opinions was questionable.
[116] The way in which this has affected the weight to be given to the engineers’ opinions is illustrated through the way I have had to consider their opinions as to whether decay in the wooden beam around the building could have caused damage to the first story brickwork. Mr Kearney accepted, in cross-examination, that his view as to the extent of the deterioration had been influenced to some extent by what Mr Bligh had told him about the state of the wooden beam.
[434] The memoranda are to be no longer than 10 pages but associated with them and outside that page number is to be a chronology, to the extent it is relied upon, and a bundle of any documents that are being referred to, to the extent those documents are not already in the bundles which are before the Court.
Solicitors:
GCA Lawyers, Christchurch Chapman Tripp, Wellington Duncan Cotterill, Auckland.
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