Body Corporate 328564 v Vero Insurance New Zealand Ltd
[2022] NZHC 2716
•19 October 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2019-409-000100
[2022] NZHC 2716
BETWEEN BODY CORPORATE 328564
Plaintiff
AND
VERO INSURANCE NEW ZEALAND LTD
Defendant
Hearing: 26 April, 28 – 29 April, 2 – 6 May, 9 May and 24 – 25 May 2022, with supplementary submissions filed on 27 September 2022 Appearances:
S P Rennie, J E Bayley and S A Foss for Plaintiff P J L Hunt and L Hui for Defendant
Judgment:
19 October 2022
JUDGMENT OF DOOGUE J
This judgment was delivered by me on 19 October 2022 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
BODY CORPORATE 328564 v VERO INSURANCE NEW ZEALAND LTD [2022] NZHC 2716 [19 October 2022]
PART I – INTRODUCTORY MATTERS
Introduction [1]
Scope of this judgment [7]
The plaintiff’s claim [8]
Vero’s defence [17]
PRELIMINARY ISSUES
Declaratory relief [19]
Amendment of the pleadings [24]
Partial adjournment [25]
Breach of policy issues [34]
Site Visit [40]
FACTUAL BACKGROUND
Site location [41]
Apartment building overview [43]
Other buildings on the site [54]
Seismic force resisting systems [61]
Elements of the buildings on site
Apartment building [68]
Pool house [79]
Geotechnical characteristics of the site [80]
PART II – THE LAW
Burden of proof [84]
What constitutes damage? [85]
What does “when new” mean? [90]
PART III – DAMAGE AND REMEDIATION
Expert reports and conferrals [100]
Experts’ evidence [117]
Movement of the buildings during the CES [124]
Epoxy [142]
High-level literature review [143]
The Hamburger Report
Conclusions [144]
Limitations [151]
BMC Report
Conclusions [153]
Limitations [159]
WSP Report
Conclusions [164]
Limitations [172]
Major themes/considerations [173]
The effects of epoxy injection on the residual stiffness of the structure [178]
Whether the strength of a reinforced concrete element can be restored by epoxy injection [189]
The extent to which epoxy is fire resistant 44
The scale of the proposed use of epoxy injection [202]
Applicability of findings by the Court in other cases [206]
Regulatory environment [214]
Summary of the Court’s approach to the use of epoxy injection [224]
Damage to the apartment building elements [225]
Agreed damage and remediation [226]
Building elements in contention [229]
BFSS
Description [230]
Soil/Substrate [239]
Pile heads [245]
Plaintiff ’s position [246]
Vero’s position [247]
Discussion [248]
Basement slab
Plaintiff ’s case [274]
Vero’s case [276]
Cracking – general remarks [281]
Corrosion of steel reinforcing – general remarks [289]
Cracking to the concrete sections of the basement floor slab
Volume and extent of the cracking [292]
Contamination [298]
Will the proposed method of remediation of the basement slab meet the “when new” standard? [310]
Aesthetics of the proposed repair to the basement slab [315]
Accelerated corrosion in the steel reinforcing in the basement slab ground beams
[318]
Water ingress through the gap between the cold joints of the basement floor slab
[324]
Diamond dowels [337]
Shear keys [343]
Summary of damage to the BFSS above the substrate [345]
Should the basement floor slab be demolished and replaced in order to meet the policy standard? [346]
Basement superstructure
Basement precast concrete walls [348]
Cracking in the moment-resisting frames, namely columns and beams that support the basement superstructure [358]
Plaintiff ’s case [360]
Vero’s case [364]
Discussion [372]
Unispan floor planks and structural topping [380]
Ground-floor slab [393]
Ground-floor beams [408]
Apartment building superstructure
Concrete slab on the first and second floors [420]
First and second-floor north balconies [425]
Third-floor balconies [430]
Third-floor housing units [435]
Internal suspended timber floors (third level) [440]
Masonry block walls [450]
Windows and joinery [451]
Stairs and landings [452]
Internal damage [457]
Pool house and gym [459]
Summary — apartment building superstructure [468]
Summary of findings
Pile heads [469]
The basement slab [470]
The basement superstructure [472]
Unispan floor planks and structural topping [473]
Ground-floor slab [474]
Ground-floor beams [475]
Apartment building superstructure [476]
Relief sought [477]
Orders [480]
APPENDIX A
Glossary of terms
APPENDIX B – Beca Crack Mapping APPENDIX C – The Experts
Plaintiff’s experts Vero’s experts
PART I – INTRODUCTORY MATTERS
Introduction
[1] These proceedings concern earthquake damage caused by the Canterbury Earthquake Sequence (CES) to the Madison Apartments and related buildings at a property situated at 400 Durham Street North, Christchurch (the buildings).
[2] The buildings were constructed circa 2003 and consist of two significant structures: an apartment building which comprises 40 residential units over four storeys with a basement car park (the apartment building) and a detached building comprising a pool house and gym. Also on the site are various sheds and ancillary structures.
[3] The defendant, Vero Insurance New Zealand Ltd (Vero), insured the buildings. Vero accepts it has an obligation to fix the damage caused by the CES in terms of its insurance policy.
[4] The issues in this proceeding are the extent of the damage to the buildings and what the necessary reinstatement scheme is to meet the “when new” standard required under Vero’s policy.
[5] The plaintiff, Body Corporate 328564, contends the necessary reinstatement scheme requires significant partial demolition and reconstruction of the buildings. Vero contends the reinstatement scheme can largely, but not exclusively, be achieved by using the remediation method of epoxy injection.
[6] The plaintiff also seeks the adjournment of part of the claim that relates to pile damage. (I note that pile damage was not pleaded in the statement of claim).
Scope of this judgment
[7] The findings in this judgment cannot, and will not, resolve all matters as between the parties. That is for four primary reasons:
(a)the parties have signalled they do not at this stage seek rulings in relation to some of the outstanding issues between them;
(b)the parties have only belatedly (on 27 September 2022) completed the necessary exercise of distilling the agreements that have been reached by their experts into the form necessary for the making of declarations;
(c)it is accepted that whilst the experts may have reached a preliminary view of the efficacy of a particular remediation method further testing may be needed to confirm that, and should the efficacy of a particular remediation method not be confirmed alternative remediation methods will be necessary; and
(d)the implications of such findings as can be made by the Court will need to be considered by the parties on a holistic basis (that is, on a whole of building basis) before any final and comprehensive method of remediation can be established.
The plaintiff’s claim
[8] The plaintiff made a claim under Vero’s policy for damage to the buildings caused by the CES, which was accepted by Vero.
[9] The insurance policy contained a general indemnity clause for damage to the insured property during the period of insurance. However, there was an exclusion clause which expressly excluded cover for damage caused by an earthquake. Cover is brought back in under the policy through an extension clause. This extension clause relevantly provides:
We [the insurer] will pay the cost of reinstatement in the event of any insured property to which this extension applies suffering earthquake damage or volcanic eruption or hydrothermal activity damage during the period of insurance.
[10] “Reinstatement” is then defined for two different instances, where the property is destroyed and where the property is damaged. Both parties accept the relevant definition is the one pertaining to where the property is damaged. In such a case,
“reinstatement” is defined as requiring the 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.” The interpretation of this definition is discussed in more detail below at [90]–[99].
[11] Under the policy Vero agreed to indemnify the plaintiff for such damage by payment or, at Vero’s option, by repair or replacement (Vero has not exercised the option).
[12] The plaintiff claims that, under the policy, Vero also promised to settle all valid claims fairly and promptly.
[13] The statement of claim records that during 2017 the plaintiff instructed Beca Ltd (Beca) to prepare a reinstatement methodology for the damage caused to the buildings by the CES. Beca provided a written report dated 10 November 2017. The statement of claim also records that, during 2018, Vero instructed Batchelar McDougall Consulting Structural and Civil Engineers Ltd (BMC) to provide them with a Detailed Seismic Assessment, which BMC provided in a report dated 20 March 2018.
[14] The plaintiff and Vero agreed the experts should confer and agree or disagree on the extent of the damage caused by the CES and on an appropriate reinstatement methodology.
[15] Beca and BMC completed a Joint Engineers Report (JER) on 5 September 2018, in which the experts documented both their agreements and disagreements as to the nature and extent of the damage and what they considered to be the competing methodologies for repair in respect of each building element.
[16] The plaintiff claims that to repair the damage to the “when new” standard in the policy the repair must follow the Beca repair methodology set out in the JER. The plaintiff says the BMC repair methodology in the JER does not repair the buildings to the “when new” standard in the policy for the following reasons:
(a)the repair is not based on a holistic understanding of how the building elements would perform over the whole life of the buildings and during an earthquake;
(b)it incorporates epoxy injection, which will not restore the strength, stiffness and ductility of the buildings; and
(c)does not address the damage to the reinforcing steel caused by earthquakes, water ingress and corrosion.
Vero’s defence
[17]Vero denies the nature and extent of the damage claimed by the plaintiff.
[18] Further, it denies that the BMC methodology contained in the JER would not restore the building to a “when new” standard.
PRELIMINARY ISSUES
Declaratory relief
[19] Both parties have approached this case on the basis that declaratory relief is required.
[20] The plaintiff says it cannot make any commercial decision, much less commence any reinstatement, until it is definitively known what amounts will be paid under the policy.
[21] The JER records agreement between the parties’ experts concerning the appropriate method of remediation of damage in relation to only some elements of the buildings.
[22] I am satisfied there is a genuine dispute between the parties concerning what the appropriate method of remediation should be for the remaining damaged elements (including significant structural elements). Declaratory relief is apposite in these circumstances.
[23] After the hearing I requested the parties confer and file a memorandum recording in declaratory form the agreements that have been reached between the experts. The agreements are set out at [226]–[229] where I start to consider the extent of the damage caused to the buildings by the CES.
Amendment of the pleadings
[24] As I have already said above at [6], the plaintiff did not plead pile damage in its statement of claim. The experts have dedicated extensive time to this issue and undertaken much analysis by way of modelling. Pile damage was the subject of significant evidence. I do not discern that Vero opposes an amendment to the pleadings to address this deficit. However, were it to, I consider it would be very difficult in these circumstances for it to successfully claim it has suffered any prejudice, particularly when that matter may be addressed by costs.
Partial adjournment
[25] In reliance on r 11.2(d) of the High Court Rules 2016 (the Rules), the plaintiff sought a partial adjournment before any final and comprehensive declaration of reinstatement is made. This was for the purposes of further forensic testing and expert conferral being undertaken to establish the true extent of the damage to the piles (specifically, the pile heads) in the apartment building’s foundation. Vero opposed such a course, saying the Court should deal with the case on the existing evidence tendered by the parties. It said the Court should find that the plaintiff has had every opportunity to prove their case in respect of these elements and has failed to do so.
[26]Rule 11.2 states:
11.2Types of judgment
A judgment may—
(a)be interim; or
(b)be final; or
(c)deal with any question or issue; or
(d)order any accounts, inquiries, acts, or steps that the court considers necessary.
[27] In interpreting the words “acts, or steps that the court considers necessary”, regard should be had to r 1.2, which provides that the objective of the Rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application. This rule is the governing yardstick by which all the Rules are to be interpreted — the subsequent Rules are subordinate to the need to promote the objective of a just determination of any proceeding.1
[28] A purposive construction of r 11.2(d) suggests the words “any … acts, or steps that the court considers necessary” should be interpreted broadly to include the provision of any further information the Court views as necessary to secure the just, speedy and inexpensive determination of the proceeding.
[29] I have only been referred to one case where the Court, in direct reliance on r 11.2(d), ordered the parties to file further evidence after the conclusion of a hearing because it lacked sufficient information to make a ruling on the matter.2
[30] Nevertheless, it is axiomatic that the Court has an inherent jurisdiction to control its own procedure,3 subject of course to the express wording and application of the Rules.4 The powers conferred by the Rules are in addition to and not in substitution of the powers arising out of the inherent jurisdiction of the Court.5
[31] I note there are cases where, relying on the Court’s inherent jurisdiction, leave was reserved to the parties to file further evidence.6
[32] In summary, I am satisfied the Court has the power to adopt the course proposed by the plaintiff if it is just to do so.
1 Body Corporate 366567 v Auckland Council [2017] NZHC 1520, (2017) 23 PRNZ 569 at [4], endorsing Andrew Beck (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR1.2.01]. See also Schmidt v Bank of New Zealand Ltd [1991] 2 NZLR 60 (HC) at 63.
2 Morgan v Morgan HC Wellington CRI-2008-485-2494, 26 June 2009 at [27]-[28].
3 Merisant Co Inc v Flujo Sanguineo Holdings Pty Ltd [2018] NZCA 390, (2018) 24 PRNZ 480 at [18].
4 Jones v New Zealand Bloodstock Finance & Leasing Ltd [2021] NZHC 1228 at [69]-[70], citing Robert Jones Investments Ltd v Gardner (1994) 7 PRNZ 567 (HC) at 570; and Prestige Motors Ltd v My Trustee Company (Nikolas and Petra) Ltd [2021] NZHC 895 at [50].
5 Stylo Medical Services Ltd v Hum Hospitality Ltd [2014] NZHC 2723 at [19].
6 For example Myall v Tower Insurance Ltd [2017] NZHC 251 at [106]; Ginivan v Southern Response Earthquake Services Ltd [2018] NZHC 2403 at [40]-[42] and [45].
[33] I shall deal with the issue of whether or not to grant the partial adjournment sought at [246]–[273] below when I review the expert evidence in respect of the relevant building elements.
Breach of policy issues
[34]The plaintiff says Vero is, and remains, in breach of the policy because:
(a)Vero has not indemnified the plaintiff in accordance with the policy; and
(b)Vero has not settled the plaintiff’s claim under the policy fairly or promptly.
[35] The plaintiff has received in excess of $5,000,000 from the Earthquake Commission (EQC) apportioned across multiple events.
[36] Vero has not made any indemnity payment to the plaintiff other than for EQC-exempt aspects of the cover (in the sum of $500,000) made on 7 October 2015. At trial, Vero denied this was strategic and asserted an indemnity payment had not been calculated because it had not been requested by the plaintiff. Vero agreed that the policy did not provide for the necessity of a request from the insured before such payment is made.
[37] In correspondence exchanged during the trial, Vero has said that now a specific request has been made by the plaintiff this will be assessed and a payment offered. This process is ongoing and there is therefore no utility in dealing with the matters set out at [34] as part of this judgment.
[38] In any event, the parties did not ask the Court to determine the alleged breaches of the policy in this judgment.
[39] Leave is reserved to the plaintiff to apply further in respect of any entitlement under the policy and/or for any breach of the policy.
Site Visit
[40] I attended the site on the first day of the hearing. The site visit was useful in confirming the quality and accuracy of the extensive photographic evidence before the Court.
FACTUAL BACKGROUND
Site location
[41] The site is located at 400 Durham Street North, Christchurch Central. The site has one street frontage (Durham Street North) to the west. All other boundaries are with adjacent private sites.
[42] The site is located approximately 135 m south of Bealey Avenue, which bounds the north edge of the Christchurch central business district.
Apartment building overview
[43] The apartment building comprises 40 self-contained residential units across four storeys.
[44] The building incorporates a basement car park, which contains approximately 80 car-parking spaces. The primary access to the basement car park is via a concrete ramp from Durham Street.
[45] Including the basement, the building is five storeys high and is approximately 72 m long and 28 m wide, giving a footprint of approximately 2000 to 2,100 m2 at basement level.
[46] The building’s upper floor plans are each approximately 1,000 m2, with the exception of the units on the third (top) floor. The overall floor area of the building is approximately 5,650 m2. The ground-floor units incorporate external courtyard areas which extend over the footprint of the basement (the basement being wider than the main building above).
[47] The building’s structural system comprises masonry block walls and precast concrete frames, supporting concrete floor spans cast over Unispan precast floor units at ground, first-floor and second-floor levels and lightweight timber flooring at the third-floor level.
[48] Additional masonry walls enclose three sides of the stairwells which access the upper-level units.
[49] Interior and exterior walls within each unit are typically of standard timber frame and construction with GIB interior wall and ceiling linings, and HardieFlex exterior cladding with solid plaster overcoat. All construction above third-floor level is so comprised. The roof of the building is clad in long-run steel sheeting.
[50] The apartment building sits over a basement carpark formed with precast concrete wall panels tied into an approximately 420 to 480 mm thick concrete foundation slab.
[51] As the basement is wider than the rest of the above apartment building in the north-south direction, a podium slab is utilised at ground-floor level to span between the edges of the apartment building and the basement walls. This podium slab includes a separate waterproofing membrane and architectural topping slab to provide waterproofing to the basement roof.
[52] The basement access ramp, slab and walls are supported on concrete ground/foundation beams which are, in turn, supported by cast-in-situ concrete piles.
[53] These piles are typically founded approximately 11.5 m below ground level (8 m below the basement slab) and vary from 600 mm to 900 mm in diameter.
Other buildings on the site
[54] There is a detached pool house and gym structure located in the north-east corner of the site.
[55] The roof of the pool house comprises glazing panels and lightweight insulated panels supported by steel roof beams.
[56]The roof of the gym is profiled steel on timber roof framing.
[57] The walls of the pool house, including the wall between the pool house and the gym, are predominately 190 mm thick reinforced masonry. The remaining walls of the gym are timber framed with GIB internal linings and HardieFlex exterior cladding with plaster overcoat.
[58]The floor slab of the gym is 150 mm thick mesh reinforced concrete.
[59]The swimming pool is founded on driven steel piles.
[60] There is also a small entrance structure on the north side of the site near the Durham Street boundary. The structure has masonry walls with a glazed roof and contains the fire panel and tenancy intercom system.
Seismic force resisting systems
[61] In order to discuss the damage to the apartment building it is first necessary to understand some general structural elements empirical in buildings generally and how these work during seismic activity. The figure below (provided by the National Earthquake Hazards Reduction Program in the United States) identifies structural components typically found in a building:
[62] Building structures generally comprise a three-dimensional framework of structural elements configured to support gravity and lateral loads. The seismic force resisting system is commonly conceived to broadly comprise:
(a)vertical elements;
(b)horizontal elements; and
(c)the foundation.
[63] The vertical elements in a building extend between the foundation and the elevated levels, providing a continuous load path to transmit gravity and seismic forces from the upper levels to the foundation.
[64] The term “continuous load path” is used as an abbreviation to describe the structural condition whereby a building can only be designed to resist earthquakes if it is considered as a whole; that is, decisions made about the design of one aspect of a structure impact upon the demands placed on other aspects. Thus, in checking the ability of an existing building to resist earthquakes the checks must be made holistically.
[65] The vertical elements of the structure can comprise either walls, frames (either moment frames or braced frames) or both, as is the case in these buildings. Frames consist of vertical members (described as columns) and horizontal members (described as beams). The junctions of the beams and the columns are referred to as beam-column joints.
[66] Horizontal diaphragms, typically concrete floors, span between these vertical elements by linking them together so the building behaves as a single body and typically also act as floors.
[67] The moment-resisting frame is the combination of structural components within the building that transfer lateral loading (horizontal or sideways loads, such as those generated by earthquake shaking) from the upper levels of the building into the building foundations, thereby resisting lateral forces.
Elements of the buildings on site
Apartment building
[68] The foundation system comprises a reinforced concrete foundation slab (420 to 480 mm thick) in the basement spanning between deep reinforced concrete beams (typically 700 to 800 mm deep). There are concrete piles supporting the concrete beams or isolated slab thickenings.
[69] The basement contains reinforced concrete columns and precast concrete walls.
[70]The seismic load resisting system comprises:
(a)the reinforced concrete columns and beams (along with stairwell masonry walls) in the longitudinal (east-west) direction;
(b)the reinforced masonry block walls in the transverse (north-south) direction; and
(c)GIB-lined timber-framed walls to the top storey in both orthogonal directions.
[71] Loads generated by seismic actions on each of the floorplans are first transferred to the main lateral load resisting elements (namely, the moment-resisting frames) by diaphragm action of the floor structures.
[72] In the longitudinal direction, the primary moment-resisting frames are the precast concrete frames on Gridlines C and F of the building’s design gridline layout.
[73] At ground-floor level, lateral loads are transferred from the above systems to the precast basement concrete walls through the ground-floor podium slab. These walls then act to transfer lateral loads into the foundation and thence into the ground. Some additional lateral load resistance is provided by the precast concrete frames on Gridlines C and F, which pass through the podium slab and are founded in the basement slab level.
[74] Transfer of lateral loads between the basement structure and the ground occurs through:
(a)passive pressure of the soil acting against the basement walls;
(b)shear resistance of the piles;
(c)passive pressure of the soil acting against the foundation beams (if the soils below the foundation settle this mechanism may be reduced); and
(d)shear friction between the underside of the basement slab and the soil below (if the soils below the foundation settle this mechanism may be eliminated).
[75] The building incorporates six stair cores which provide access to the units above the ground floor. The stair cores comprise precast concrete flights with stepped in-situ landings enclosed in reinforced blockwork walls.
[76] There are also two staircases between the basement carpark and the ground-floor external courtyards. These are also constructed of in-situ concrete and are reinforced with mesh in the bottom.
[77] Balconies to the third storey consist of a concrete cantilever slab with mesh in the top, supported on a reinforced concrete edge beam. Balconies to the first and second storeys consist of a metal deck concrete slab.
[78] The basement access ramp is of reinforced concrete construction comprising a 400 mm thick ramp slab, 600-by-800-mm-deep ground beams supported on 600 mm-diameter bored piles and 200 mm thick precast concrete side panels. The slab incorporates Diamond Dowel (diamond dowel) shear plates at key junctions.7 The slab is constrained by being connected to the ramp side walls with starter bars (that is, connecting reinforcing bars) from the ramp walls. The ramp walls are therefore integrally connected to the basement.
Pool house
[79]The single-storey pool house comprises concrete masonry block and timber.
Geotechnical characteristics of the site
[80] The soil profile consists of loose silty sand which becomes soft silt at approximately 2.5 m depth. The sandier soils above 2.5 to 3 m depth have moderate liquefaction potential. At about 10.5 m depth, there is a dense sand and gravel layer. The sandier soils between 6 and 10 m depth have a moderate to high liquefaction susceptibility.
[81] The water table, which fluctuates with rainfall, has been measured at 0.7 m depth (from surrounding ground level rather than basement floor level). The water table is high for this area, where a depth of 1.2 to 1.5 m is more typical.
7 Diamond Dowels are a trademarked construction joint.
[82] There is some mounding (that is, a localised rise) of the water table to the east side of the property (perhaps from a water source such as a spring or upwelling from the underlying artesian layer).
[83] Given that the water table is considerably higher than the depth of the basement excavation, sheet pile cutoff walls (that is, a type of retaining wall to keep groundwater out of excavation areas) and a dewatering well were used when the basement was originally constructed.
PART II – THE LAW
Burden of proof
[84] The plaintiff acknowledges that as it is making claims under an insurance policy it has the burden of proving on the balance of probabilities every material fact of its causes of action, that is every material fact relating to (a) the actual damage caused to the buildings by the CES and (b) what is required to remedy the damage.8
What constitutes damage?
[85]Cover under the insurance policy is triggered by earthquake damage.
[86] The case law indicates that damage requires “a physical alteration or change, not necessarily permanent or irreparable, which impairs the value or usefulness of the thing said to be damaged”.9 The impairment to the property must be material in the sense that it can be described as more than de minimis.10
[87] For there to be cover, the damage must affect the use or amenity of the building.11
8 As applied in recent earthquake cases — Body Corporate 335089 v Vero Insurance New Zealand Ltd [2020] NZHC 2353 [Salisbury] at [55]; Jarden v Lumley General Insurance (NZ) Ltd [2015] NZHC 1427, (2015) 18 ANZ Insurance Cases 62-077 at [47]–[54]; He v Earthquake Commission [2017] NZHC 2136 at [55]; and O’Loughlin v Tower Insurance Ltd [2013] NZHC 670, [2013] 3 NZLR 275 at [146]. See also David Kelly and Michael Ball Kelly & Ball: Principles of Insurance Law (online ed, LexisNexis) at [8.0190.1] and [8.0190.5].
9 Parkin v Vero Insurance New Zealand Ltd [2015] NZHC 1675 at [36], citing Ranicar v Frigmobile Pty Ltd (1983) 2 ANZ Insurance Cases 60-525 (TASSC) at 60-525.
10 Salisbury, above n 8, at [57].
11 Bligh v Earthquake Commission [2018] NZHC 2102 at [26].
[88] Moreover, “[p]re-existing damage is not a barrier to a claim for earthquake damage”.12
[89] Where the element in question has a structural purpose, the damage has to affect that structural purpose. For elements that have an aesthetic purpose, the damage must affect that aesthetic purpose.13
What does “when new” mean?
[90] The insurance policy requires Vero to pay the cost of reinstatement of any insured property which suffers earthquake damage during the period of insurance. “Reinstatement” is relevantly defined in the policy as:
… the 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.
[91] The standard of reinstatement contained in the policy is substantially similar to that contained in the applicable Vero policy considered in Parkin v Vero Insurance New Zealand Ltd.14
[92]The “when new” standard was considered in Parkin, where the Court stated:
[115] The fundamental obligation on Vero under the policy is to pay for the cost to rebuild, replace or repair the damage. The upper limit of the measure of indemnity is “when new”; Vero is not obliged to make good beyond that standard. On its face, this standard would appear absolute, however, that interpretation is tempered by the immediate context and the broader factual matrix in which the insurance policy is required to be applied.
[93] An identical definition of “reinstatement” was considered by this Court in He v Earthquake Commission.15 The definition is also the same as one part of the definition of “replacement value” in the Earthquake Commission Act 1993.16 Similar
12 He v Earthquake Commission, above n 8, at [67].
13 Bligh v Earthquake Commission, above n 11, at [26].
14 Parkin v Vero Insurance New Zealand Ltd, above n 9, at [105]. The policy in that case was that the insurer had to rebuild or repair the damaged portion of the home “to a standard or specification no more extensive, nor better than its condition when new”.
15 He v Earthquake Commission, above n 8, at [42], affirmed in He v Earthquake Commission [2019] NZCA 373.
16 Earthquake Commission Act 1993, s 2 definition of “replacement value”, para (b).
(but not identical) standards have been considered by this Court in a number of other cases.17
[94] The distinction between “as new” and “when new” standards is important. The distinction was considered both in this Court and in the Court of Appeal in East v Medical Assurance Society of New Zealand Ltd.18 East establishes that “as new”, when used in relation to the rebuilt or restored condition of a building, involves a quality standard, not a temporal standard. “When new”, on the other hand, imports a temporal standard contemplating a restoration to the condition of the building when built (in this case in 2003).19
[95] In Parkin, Mander J considered a similar “when new” policy to the present policy.20 He reviewed authorities in relation to the standard, applying those to the facts in Parkin.
[96] Subsequently, in Fitzgerald v IAG New Zealand Ltd, Gendall J extensively referred to and applied Parkin (and other authorities) in interpreting the “when new” standard.21
[97] The “when new” standard, based on the authorities, gives rise to a number of considerations:
(a)What is required in respect of each element differs in accordance with its purpose.
(b)Where an item only has a functional purpose, the policy requires a repair that restores the component to how it functioned when new.
17 Bligh v Earthquake Commission, above n 11, at [14]; Bruce v IAG New Zealand Ltd [2018] NZHC 3444 at [16]; Fitzgerald v IAG New Zealand Ltd [2018] NZHC 3447 at [14]; and Salisbury, above n 8, at [33]-[34].
18 East v Medical Assurance Society of New Zealand [2014] NZHC 3399 at [103]–[104], affirmed in Medical Assurance Society of New Zealand v East [2015] NZCA 250, (2015) 18 ANZ Insurance Cases 62-074 at [38].
19 See also Turvey Trustee Ltd v Southern Response Earthquake Services Ltd [2012] NZHC 3344, (2013) 17 ANZ Insurance Cases 61-965 at [17]; and Parkin v Vero Insurance New Zealand Ltd, above n 9, at [117]–[121].
20 Parkin v Vero Insurance New Zealand Ltd, above n 9, at [105]–[116].
21 Fitzgerald v IAG New Zealand Ltd, above n 17, at [18]-[29].
Where a component also has, or only has, an aesthetic purpose, the original aesthetic quality of the component must (also) be restored.22
(c)The restoration is not required to be to the same level as modern standards but rather to the same level as the original standard (subject to the fact that current equivalent building materials and techniques are to be used).23
(d)Vero’s obligation under the policy is not to provide an identical replica but to render the fact of the earthquake damage immaterial.24
[98] The policy standard does not require Vero to take into consideration the impact of repairs on the resale value of the properties in the building. For example, in Parkin the Court found that the use of packers to repair the foundation was sufficient to return the property to a “when new” standard, even though packers would be considered unacceptable in a new build. It did so on the basis that:
(a)the repair was sufficient to restore the structural integrity of the floor structure; and
(b)the foundation system did not have an aesthetic purpose.25
[99]Mander J held:
[144] … There was no real estate valuation evidence given regarding the possible impact on the value or attractiveness of the property resulting from adopting a repair methodology involving packing the foundation, as opposed to replacing the pile. The piles themselves have no aesthetic quality. As I have observed earlier in this judgment, the fact the house experienced the Christchurch earthquakes cannot be hidden from the Christchurch real estate market. The concern of any prospective purchaser, however, will be whether the repair to the lower level foundations has restored the structural integrity of the house. The expert evidence is that Vero’s remedial strategy will achieve this.
22 Parkin v Vero Insurance New Zealand Ltd, above n 9, at [120]-[121]; Salisbury, above n 8, at [71].
23 Salisbury, above n 8, at [71].
24 Parkin v Vero Insurance New Zealand Ltd, above n 9, at [117]; Fitzgerald v IAG New Zealand Ltd, above n 17, at [29].
25 Parkin v Vero Insurance New Zealand Ltd, above n 9, at [142]–[144].
PART III – DAMAGE AND REMEDIATION
Expert reports and conferrals
[100] The evidence in this case is entirely expert evidence. There has been a plethora of experts engaged in providing reports to the parties for approximately 10 years.
[101] Suffice to say, there have been comprehensive efforts applied to identifying and quantifying the damage done to the buildings on the site and identifying how the damage might best be remediated having regard to Vero’s obligations as insurer. I have no doubt that in the main the experts have been highly diligent and genuine in their efforts to establish the objective truth of the damage to the buildings as best they are able having regard to the inaccessibility of some of the building elements.
[102] In late 2015, the plaintiff requested an engineering assessment of the damage to the buildings from Structex Ltd, a firm of consultant structural engineers in Christchurch. Structex reported in April 2016 and concluded that the level of damage to the primary load resisting systems appeared to be “very low”. They also concluded that there was no apparent structural damage in the most likely affected elements such as the beam-column joints.
[103] In August 2016 the plaintiff received a report from another firm of consultant structural engineers, Quoin Structural Consultants Ltd, which the plaintiff had also asked to review the buildings. Quoin likewise concluded there were no apparent critical structural weaknesses in the buildings.
[104] In 2017, the plaintiff engaged Beca to undertake a damage assessment and prepare a reinstatement methodology for the damage caused to the buildings on the site. Beca produced a report dated 10 November 2017. The lead expert for that report was Mr Govind. It was this report that formed the basis of the plaintiff’s claim against Vero.
[105] Beca also undertook a fire safety review of the apartment building. The report is dated 1 February 2018. The lead expert again was Mr Govind.
[106] The first report relied upon by Vero was a geotechnical report commissioned from Geotechnical Consulting Ltd (Geotech) dated 30 January 2018. Its author was Mr McCahon. This report is relied upon by Vero to establish that there was limited settlement of the apartment building and that the pile capacities of that building were not exceeded by the CES forces.
[107] In September 2017, Vero commissioned BMC to undertake a detailed seismic assessment of the property. BMC produced a report dated 20 March 2018. The report was prepared by Messrs Batchelar, Marriott and Hobbs. It was this report that formed the basis of Vero’s defence to the claim.
[108] There were expert conferrals concerning the two reports between Beca and BMC on 11 June, 17 July, 6 August and 5 September 2018. At those conferrals Messrs Govind and Chen represented Beca and Messrs Batchelar and Hobbs represented BMC. The subsequent JER was signed by them on 5 September 2018.
[109] BMC undertook a structural assessment of the pool house and provided a report to Vero dated 11 September 2018. The report was prepared by Mr Hobbs.
[110] A fifth expert conferral occurred on 21 August 2019. This time Messrs Batchelar, Hobbs and Bull attended for Vero and Messrs Govind and Chen attended for Beca. Their updated JER is dated 27 August 2019.
[111] A further expert conferral took place on 5 October 2020. The attendees at this session were Messrs Govind and Chen from Beca and Ms Stanway from WSP New Zealand Ltd (WSP) for the plaintiff, and Mr Hobbs from BMC, Mr Bull from Holmes Consulting LP and Dr Brooke from Compusoft Engineering Ltd for Vero. Dr Brooke had been retained because of his expertise in structural engineering as it relates to reinforced concrete structures.
[112] Following that conferral and subsequent judicial settlement conferences in June and December 2020, the plaintiff engaged WSP to carry out an assessment of the piled foundations of the apartment building to determine if they had been damaged by the CES. This was the first time this issue had been specifically raised in these
proceedings. WSP provided a report to the plaintiff dated 12 February 2021 wherein it concluded that “pile actions during the 22 February 2011 earthquake would have exceeded the pile capacities”.
[113] In response, Vero marshalled its experts Messrs McCahon, Brooke, Bull and Hobbs who met on 19 March 2021 to discuss the 12 February 2021 WSP report and overall performance of the piled foundations. They concluded, on the basis of their analysis and conferral, that any damage to the piles was minor and there were no indications that the ongoing performance of the piled foundations had been materially altered by the 12 February 2011 earthquake.
[114] WSP responded by issuing an updated pile damage report dated 4 May 2021. WSP concluded:
The expected damage to the piles would result in a reduced lateral capacity of the piles, variable reduction of foundation stiffness across the footprint of the building, producing increased deformations of the superstructure, a less reliable foundation system to resist lateral loads and an increased vulnerability of the building as a whole to increased damage during future liquefaction causing seismic events.
[115] An expert conferral also occurred on 23 November 2021 between, among others, Ms Stanway and Mr Keepa for the plaintiff, and Messrs McCahon and Bull and Dr van Ballegooy for Vero (with Messrs Govind and Chen observing). The experts produced a joint expert geotechnical conferral report of the same date, with discussion largely relating to the appropriate methodology for analysis of the pile damage and agreed next steps. Of note is that the relevant experts at the time agreed no physical investigation of the pile damage was warranted in the circumstances.
[116] A further conferral of experts (Ms Stanway and Mr Keepa for the plaintiff, and Messrs McCahon and Bull and Dr van Ballegooy for Vero) took place on 25 March and 8 April 2022, only shortly before the hearing. Messrs Govind and Chen again attended as observers. The experts produced a joint expert conferral report dated 8 April 2022. They could not conclude all necessary discussions before the hearing, and instead filed additional memoranda of their individual positions on which they were cross-examined at the hearing.
Experts’ evidence
[117] At Appendix C to this judgment I have set out a precis of the qualifications of those experts who gave evidence at the hearing. It will be evident that some of them are leaders in their fields in New Zealand and internationally.
[118] It is axiomatic that the best evidence of damage is observable damage, whether that is visual or the result of forensic investigation by testing. It is accepted that there will be cases where, because of accessibility or cost, the experts cannot observe or test for damage. In those cases, modelling and analysis have appropriate functions.
[119] In this case there were clear examples where either the plaintiff or its experts elected not to inspect or investigate damage to the necessary extent. This has created an unnecessary level of reliance on modelling which has proven in some instances to be both inaccurate and unreliable.
[120] Although I accept “a good expert will not adopt a fixed position, and will reflect on all the evidence as it comes to hand”,26 in this case the scale of the concessions that have been made by the plaintiff’s experts alerts the Court to the need to be very cautious concerning their evidence.
[121] Another unsatisfactory aspect of the plaintiff’s experts’ case is that at the end of the hearing the three witnesses for the plaintiff could not agree on the appropriate repair methodology for the building foundation soil system (BFSS) of the apartment building.
[122] I also note that there are remarkable consistencies between the findings of the Structex and Quoin reports commissioned by the plaintiff and the evidence of the Vero experts. In this respect, it is notable that the plaintiff does not rely on the Structex or Quoin reports, preferring to rely on the opinions of Messrs Govind and Keepa and Ms Stanway.
26 Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd [2019] NZHC 277 [Emmons] at [56].
[123] The preponderance of the evidence is that these buildings have withstood the CES very well. The preponderance of evidence also casts Mr Govind’s opinion, in particular, as something of an outlier.
Movement of the buildings during the CES
[124] In order to set the scene for my assessment of the extent of the damage done to each element of the buildings, I shall review the evidence concerning the relative movement of the buildings during the CES. That is helpful for understanding the effect of the CES on the buildings and the level of damage caused by it.
[125] Following the November 2021 joint expert conferral, Ms Stanway and Dr van Ballegooy conducted a joint inspection of the buildings and subsequently made a number of agreed observations relevant for the purposes of assessing the amount of movement undergone by the building during the CES which formed an appendix to the April 2022 joint expert conferral report. Their modelling indicated that the piles would yield with 10 mm of movement in the non-liquefied state and with 50 mm of movement in the liquefied state.
[126] Based on those observations, Vero’s experts said there was only 10 mm of displacement. The plaintiff’s experts gave the figure of 40 mm. Mr Keepa appeared to revise that figure to 10 to 30 mm during his evidence.
[127] In the April 2022 JER, Mr Keepa and Ms Stanway point to three physical observations in support of this view:
(a)30 mm of displacement at the kerb offset at the western end of the building;
(b)30 mm of displacement at the basement stairs adjacent to the pool house; and
(c)tilting of the patio wall at the western end of the building.
[128] However, Mr Keepa admitted that there were other possible explanations for the offset and that he had not actually inspected the building so was reliant on photographs.
[129] Dr van Ballegooy was familiar with the buildings and carried out a detailed inspection in order to arrive at his view. He said there is no sign on-site of damage that would be expected if the apartment building had undergone east-west displacements as large as 30 or 40 mm. For example, if the building had undergone large displacements, the basement carpark ramp would have ridden up and opened up at the base, but in fact showed no visible cracking or bulging.
[130] Similarly, Dr van Ballegooy explained that the pool house and the apartment building would have moved differently during the earthquake. He said that, given the difference in mass, if the building had been subject to 30 to 40 mm of movement, then there would have been visible scratching, pounding damage, staircase cracking and horizontal displacement evident where the pool house adjoined the pavement (which is there connected to the apartment building). Mr Bull confirmed that, if the building was moving up to 40 mm in the east-west direction, he would expect significantly larger damage to the pool house wall and the slab. None of the expected damage can be found on site.
[131] Ms Stanway and Dr van Ballegooy agreed that there was an 8 mm gap westward between the concrete pavement and the apartment building in the courtyard of Unit 1. Dr van Ballegooy advised that this was a permanent record of the maximum east-west displacement occurring during the CES as the pavement in that location is not connected to the building and would not move with it.
[132] Dr van Ballegooy was not challenged in cross-examination about his firm view that the apartment building had not moved more than 10 mm relative to the ground.
[133] Dr van Ballegooy’s view also accords with Mr Bull’s evidence that the minor cracking observed to the moment-resisting frames is consistent with the building having undergone relatively small displacements, and not having yielded (that is, permanently deformed) as a whole.
[134] BMC undertook forensic analysis of the building using the ETABS software package with the assistance of Professor Mustafa Mashal. The results of this analysis also support the proposition that the deformations undergone by the buildings were relatively modest.
[135] The BMC forensic analysis indicates that the maximum interstorey displacement during the February 2011 earthquake was 0.5 per cent drift, that is approximately 13.5 mm over the height of a storey. Professor Mashal concluded the analysis showed the building had not yielded and this conclusion was adopted by Mr Bull and Dr Brooke.
[136] Vero submitted that the overwhelming weight of the physical evidence is in favour of Vero’s experts’ view that the maximum relevant displacement of the buildings from the CES was less than 10 mm. It submitted that this is in accordance with the relatively minor observed damage to the superstructure (the visible part of a building that sits above the ground) and the foundations. Vero also submitted that this supports its experts’ view that the piles have not been damaged and that the joints have not been worked to the extent that they are damaged.
[137] The plaintiff submitted these attempts by Vero to advance some definitive figure for displacement are something of a “red herring” because a definitive figure cannot be arrived at from the evidence, and such a measure of displacement between basement box and ground was not conclusive of whether or not there was damage to the piles.
[138] I found Dr van Ballegooy to be an excellent and compelling witness. First of all, his qualifications demonstrate he is a recognised and leading expert who is well qualified to give expert evidence on building displacement and its implications. He demonstrated his expertise with clear, consistent and compelling reasons for the conclusions he reached. His evidence on these matters was to be preferred over others with lesser qualifications and less internal consistency in their evidence. This is nowhere better demonstrated than in a review of the evidence concerning pile damage at [248]–[273] below.
[139] In reliance on Dr van Ballegooy’s evidence, I find the overwhelming weight of the evidence is that these buildings performed relatively well during the CES and that the damage to the buildings is not demonstrative of major deformation of their structural elements.
[140] Even allowing for that general observation, it is nonetheless vital to look in depth at each element of the buildings and the more specific evidence in relation to the nature and extent of damage caused to each element by the CES and how that damage should be remediated, as it is not the case that all elements react the same way to the application of seismic force.
[141] Before I undertake that task, it is necessary to consider the dispute between the parties as to the efficacy of epoxy injection as a method of remediation to meet the policy standard of “when new”. The plaintiff says such literature as exists concerning this debate supports a finding that its use in this case is inappropriate and unsafe. Vero says the use of epoxy injection as a remediation method is considered appropriate and safe internationally, is mainstream and has been used on a significant scale here and overseas.
Epoxy
[142] Considerable time was devoted by both parties to debating this issue in terms of:
(a)a high-level literature review (including a challenge to Dr Brooke’s bona fides in respect of one report);
(b)discussion on the applicability of findings by the Court in other cases where the Court had to consider the efficacy or otherwise of epoxy injection as a method of repair; and
(c)discussion concerning the regulatory environment and the need to rely on engineering judgement to determine whether epoxy injection will meet the relevant policy standard.
High-level literature review
[143]Three literature reviews have been advanced in this case:
(a)a report for the Christchurch City Council by the United States firm of Simpson Gumpertz & Heger Inc entitled “Evaluation of Epoxy and FRP repair of Earthquake Damaged Concrete Structures” dated 18 November 2014, co-authored by Ronald Hamburger (the Hamburger Report);
(b)a report by BMC entitled “Epoxy Resin Injection as a Repair Strategy for Concrete” published in September 2019 and peer reviewed by Dr Brooke (the BMC Report); and
(c)a literature review by Ms Stanway entitled “Effectiveness of Epoxy Injection to Restore Earthquake Damaged Buildings: 400 Durham Street” dated 10 May 2021 (the WSP Report).
The Hamburger Report
Conclusions
[144] The Hamburger Report noted epoxy injection of cracks has been widely used as a means of repairing earthquake damage in reinforced concrete structures. The Report observed that epoxy resin materials have been available in the United States since 1927 and engineers worldwide have specified epoxy injection of cracks in earthquake-damaged structures as a repair method since the 1970s. In the United States, building regulatory agencies, with the exception of the City and County of Los Angeles, have generally accepted this technique as a repair method for damaged concrete structures.
[145] The Report determined epoxy injection repair of cracks will not generally restore a structure to a substantially as when new condition. While it is possible to repair some damaged reinforced concrete structures with epoxy and restore their pre-damaged strength, this depends on the extent and type of damage and the element type. In one case, damage may be de minimus, while the same amount of damage in
a different element may be more serious. The degree of degradation in condition will vary and should be considered on an element-by-element basis. Epoxy injection cannot be used to successfully repair certain damage including, but not limited to, crushed concrete, strain-aged reinforcement, fatigued reinforcement, fractured reinforcement, or loss of plumb due to permanent earthquake-induced drift.
[146] The Report found reinforced concrete structures repaired with epoxy injection regain their peak strength (and may attain higher strength) but have reduced stiffness and energy dissipation capacity relative to the pre-damaged construction. The stiffness degrades faster than that of the original undamaged element when subject to cyclic loading, which relates to the internal forces developed during earthquake shaking. It noted the earthquake-induced loss of bond between the concrete and reinforcing steel can be restored under ideal conditions, but this behaviour is unlikely under actual field conditions, particularly at beam-column joints where access to reinforcement is restricted. There is no reliable method of assessing the loss of bond in the field. This inability to fully restore bond is one factor associated with reduced stiffness of repaired structural elements. The Report found reductions in structural stiffness will result in:
(a) increased deflection of the structure under loading of various types, including wind, earthquake and floor-induced vibration, and (b) increased damage in future earthquakes associated with that increased deflection.
[147] Further, the authors concluded epoxy injection does not address reductions in the fatigue life of reinforcing steel that occur when reinforcing steel is cyclically strained in the inelastic range, which is a common characteristic of reinforced concrete structures that have been cracked in response to strong earthquake shaking.
[148] The Report noted that epoxy injection is generally administered to repair cracks with widths ranging from 1 to 4 mm. Many engineers believe it is not practically possible to repair cracks smaller than 1 mm. Cracks larger than 6 mm are generally regarded as evidence that significant yielding and damage to reinforcing has occurred that cannot be repaired by epoxy. However, the use of an arbitrary crack width such as 6 mm to indicate the occurrence of significant reinforcing steel damage may not by itself be reliable, as cracks tend to open and close during an earthquake,
meaning the fact post-event cracking is less than 4 mm does not necessarily assure that significant damage to reinforcing has not occurred.
[149] The authors concluded the fire resistance of reinforced concrete structures is also substantially reduced from the original construction when epoxy is utilised. Epoxy used in repair applications loses nearly all its strength and stiffness near 204 degrees Celsius and cannot be relied upon for structural strength in fire conditions. Epoxy-repaired elements, subjected to extreme temperatures, lose considerable strength and stiffness during exposure and may only regain up to 65 per cent of their pre-damaged strength and stiffness after they cool. The effective strength and stiffness loss varies, depending on the type of damage and temperature exposure.
[150] In addition to structural issues, the Report found epoxy injection affects a structure’s appearance, although these impacts can be somewhat mitigated by painting after the repairs are complete. Epoxy-injected concrete elements will not look as they did prior to damage and repair as both cracking and epoxy will be obvious when viewed closely, even when painted.
Limitations
[151] The majority of the literature reviewed in the Report relies on experimental and analytical research performed at university laboratories. The authors found no published literature relating to the repair of existing buildings and subsequent behaviour during an earthquake. They acknowledged there was relatively little documentation of the application of epoxy injection in the literature except for product data produced by epoxy suppliers. Only two research programmes considered cyclic loading regimes. Only one research programme tested a sub-assemblage representative of a moment frame. Further obvious limitations include that the papers discussed as research date from the 1970s to 1990s and are drawn from overseas jurisdictions.
[152] On the other hand, the principal author, Mr Hamburger, has undeniable eminence. He has 40 years of experience in design, construction, education, research, evaluation, investigation and repair of commercial, institutional, and industrial facilities. He is an internationally recognised expert in performance-based structural,
earthquake and blast engineering, and has played a lead role in the development of national structural engineering standards and building code provisions in the United States. Mr Hamburger also has produced more than 100 publications on the topics of building performance in earthquakes, performance-based structural and earthquake engineering. It should also be recognised that the Report was prepared in anticipation of its application in Christchurch following the CES and is specific to the policy standard of “substantially as when new”, which is essentially the same as the policy standard in this case.
BMC Report
Conclusions
[153] The authors of the BMC Report concluded that properly designed and implemented epoxy repair strategies can, and in many instances do, provide a compellingly cost-effective alternative to demolition and reconstruction of structures moderately damaged by earthquakes.
[154] BMC concludes that epoxy resin injection, when carried out using appropriate quality assurance measures, optimum method of placement, and an appropriate epoxy resin product, is an effective means of repairing reinforced concrete structural elements. Epoxy resin injection was found to reliably reinstate stiffness and durability. Strength and energy dissipation capacity were largely not influenced by the repair because they are dependent on the condition of the reinforcement, which cannot be repaired through epoxy injection.
[155] In this way, the BMC Report identified any repair strategy would require an assessment of the cause of the cracks, likely extent of damage to the structure (with consideration not limited to residual crack width but also to damage to or extent of yielding of reinforcement), selection of the best product based on the crack location and size, selection of the optimum injection method, and selection of an experienced and competent contractor. The cause of cracking and the extent of damage to the reinforcement is especially relevant because epoxy cannot alter the capacity of the reinforcement. In terms of the crack size and product used, the authors pointed to research that identified that viscosity strongly impacted the effectiveness of injection
for narrower cracks (those less than 0.3 mm), and concrete microstructure and porosity were notable factors in determining the effectiveness of repair regardless of crack width.
[156] The Report found repair using epoxy resin injection is particularly beneficial for restoring the durability of reinforced concrete elements exposed to corrosive environments. Epoxies are highly resistant to attacks from acid, alkalis and solvents, which allows for the reinstatement of protection for the reinforcement.
[157] The effectiveness of epoxy resin as a repair technique is also dependent on the bond established between the concrete and epoxy. If cracks are actively leaking, this will impede the epoxy from bonding well with the concrete, as will the presence of dust, moisture, or other foreign substances.
[158] In terms of the behaviour of epoxy-repaired reinforced concrete beams under fire conditions, the Report cited research that found the strength reduction in repaired elements is dependent largely on the presence of fire protection coatings, the thermal gradient, and type of cracks. For cracks related to flexure, for instance, stiffness decreased significantly for high temperatures where the tensile strength of the epoxy was a key load path, whereas the fire effects on the member are not significant if the reinforcement provides the tensile load path.
Limitations
[159] This Report was commissioned and funded by BMC as an internal project to evaluate the efficacy of epoxy resin as a repair technique for damaged concrete elements. There is therefore an argument that it lacks the same pedigree as the Hamburger Report.
[160] The plaintiff submitted the report ought not be relied upon because one of the reviewers was Dr Brooke and the timing of the Report was significant in that it appeared to have been produced for use in the Salisbury case.27 In fact, the plaintiff
27 Salisbury, above n 8.
mounted a trenchant attack on Dr Brooke’s integrity and bona fides which I reject outright.
[161] I consider the plaintiff’s characterisation misplaced as the Report was peer reviewed by an expert other than Dr Brooke prior to publication and it clearly widely reviews the literature by citing 15 papers which consider several different aspects of the use of epoxy in repairing earthquake damage in concrete structures, including different techniques of using epoxy, different types of epoxy, and use on different types of concrete. The Report was written with the interests of the wider industry in mind.
[162] It is notable that the Report considered more recent literature (10 papers published after 2000) in a bid to keep up with what it describes as the “the continually developing advances in epoxy technology”.
[163] In this regard, the authors deliberately refrained from commenting on earlier guidance on the efficacy of epoxy, which makes the task of reconciling this research with the Hamburger Report more difficult. In particular, the authors noted that developments in epoxy resins and repair techniques were ongoing. They said that as techniques are advanced and studied to optimise efficacy, the results generally improved. As an example, they referred to the ability for epoxy repair to restore bond between the reinforcement and concrete where earlier research and guidance from the 1980s suggested that epoxy was not effective at restoring bond, but research from 1990 using a different technique showed it was effective.
WSP Report
Conclusions
[164] Ms Stanway authored the WSP Report. She concluded that, while repair of a cracked reinforced concrete element by epoxy injection is possible, the available national and international literature does not support BMC’s view that epoxy injection of cracks will restore the buildings at 400 Durham Street to an “as when new” condition.
[165] The Report first noted that, in assessing damage after an earthquake, crack widths are residual and do not reflect the maximum crack width that has occurred during the earthquake shaking. Therefore, observation of crack widths is not, in isolation, an adequate indicator of damage to the structure.
[166] Ms Stanway considered that epoxy injection will not restore the stiffness of the building to its original condition. Research shows that there will be around 20 per cent reduction in stiffness of the damaged concrete element/assembly following the repair. This is because epoxy injection cannot reliably repair bond between reinforcing bars and the surrounding concrete and not all cracks can be injected due to practical considerations (namely, internal cracks which form in the concrete around deformed reinforcing bars cannot be accessed by crack injection unless the cracks exit at the surface to be injected). Additionally, the research shows that the stiffness of the repaired elements degrades faster than the original element when subjected to further seismic loading.
[167] Ms Stanway stated it is also important to consider the effects of a residual reduction in stiffness of the buildings, following epoxy injection of the concrete cracks, and the effect this would have on the performance of the buildings as whole with a greater likelihood of damage to structural and, in particular, non-structural elements in future earthquake events. Damage would also occur at lower magnitudes of earthquakes.
[168] A key consideration identified in the Report is that the effectiveness of epoxy repair is highly dependent on contamination in the cracks. The literature notes the older the cracks, the more likely they are to be contaminated with debris, algae and dust that may be impossible to remove and which will inhibit epoxy penetration and bonding. The Report noted there are no in situ tests available that can confirm that full adhesion of the epoxy has occurred, that bond has been fully restored to the reinforcement and that no damage has occurred to the reinforcement. Similarly, cracks which have closed due to significant axial load on the concrete elements may not have had significant build-up of dirt within the cracks, but any concrete dust that was captured in the crack during the cyclic deformations of the building will be difficult to
remove. According to the Report, this would cause significant practical limitations for effective full penetration of the crack with epoxy injection.
[169] The WSP Report further highlighted that the strength of epoxy can be significantly affected in a fire. That is, the cracks injected with epoxy will lose the strength and stiffness gains provided by the epoxy injection when subjected to temperatures in excess of 100 degrees Celsius.
[170] The Report also identified that epoxy injection of the cracks cannot repair corrosion that has occurred to the reinforcement and therefore cannot return the reinforcement to an “as when new” condition. Where cracks extend to the reinforcement, there will be ongoing corrosion deterioration of the reinforcement. The Report concluded epoxy injection cannot assist in repairing the reinforcement to an “as [when] new” condition.
[171] Finally, the Report recognised that epoxy-repaired concrete is visually unappealing and will reduce the visual amenity of the building. Concrete elements would require a coating system to reinstate the visual amenity.
Limitations
[172] The WSP Report is obviously to be treated with a degree of caution insofar as it has been prepared by WSP exclusively for the plaintiff in relation to its insurance claim. Ms Stanway is clearly of good repute, being a structural engineer who has co-authored various technical papers regarding seismic performance of buildings. The Report is also useful to the extent it attempts to reconcile the effectiveness of epoxy repair with the applicable policy standard of when new.
Major themes/considerations
[173] Having reviewed the reports, it is apparent the researchers agree on the following propositions:
(a)the efficacy of epoxy injection as a repair method is context-specific;
(b)use of the epoxy injection method is dependent on the extent and nature of the damage;
(c)the extent and nature of damage should be considered on an element- by-element basis;
(d)epoxy injection is appropriate for minor or moderate damage rather than severe or structural damage which includes crushed concrete, strain-aged, fatigued or fractured reinforcement, loss of plumb due to permanent earthquake-induced drift, and loss of bond between concrete and its reinforcement;
(e)epoxy injection cannot repair corrosion;
(f)it is not sufficient to rely solely on a particular measurement of crack width to determine whether damage to reinforcing has occurred;
(g)epoxy-repaired elements may lose strength and stiffness after being subjected to extreme temperatures, but any such reduction is dependent on the presence of fire protection coatings, the thermal gradient and type of crack damage;
(h)the presence of contamination of cracks by foreign substances may inhibit the efficacy of epoxy injection — trial testing should occur to see if the contaminants can be flushed out first and, if not, epoxy injection is contraindicated; and
(i)epoxy injection is likely to reduce the visual amenity value of a structure but may be remediated by painting or other means of cosmetic repair.
[174]The researchers differ on the following:
(a)the effects of a residual reduction in stiffness of an epoxy-repaired structure;
(b)whether the strength of a reinforced concrete element can be restored by epoxy injection; and
(c)the extent to which epoxy is fire-resistant.
[175] I accept the literature confirms that the efficacy of epoxy in the repair of earthquake-damaged buildings is still a developing field (regardless of the fact that epoxy use may be widespread). However, that fact does not in and of itself contraindicate its use.
[176] There is, however, a large measure of agreement as to the considerations to be applied when assessing the appropriateness of epoxy injection as a repair methodology as set out in [173].
[177] I shall now deal with the controversial matters set out in [174]. I also note the plaintiff submitted the sheer scale of the proposed use of epoxy injection in the buildings is another factor that suggests the remediation method is inappropriate.
The effects of epoxy injection on the residual stiffness of the structure
[178] In structural engineering the term “stiffness” refers to the rigidity of a structural element. In general terms this means the extent to which the element is able to resist deformation (that is, change in size or shape) or deflection (the degree of change in shape) under the action of an applied force, such as seismic activity, and return to its original formation. The stiffer the element, the less deformation it will undergo to resist the same loads.
[179] At [5.6] of the Hamburger Report the authors opine that “[t]he stiffness and energy dissipation capacity of a damaged structure repaired with epoxy injection of cracks cannot be fully restored”.
[180]There are two critical factors here:
(a)the appropriateness of epoxy repair when the bond between the reinforcing steel and the concrete has degraded by yielding; and
(b)the appropriateness of epoxy repair when only the concrete element of the structural elements has been damaged by cracking.
[181] There is agreement between the parties that as a result of cracking there will have been loss of stiffness in some of the reinforced concrete elements of the buildings. The loss of stiffness means that the buildings will suffer greater drift in a future earthquake.
[182] Dr Brooke acknowledged that the stiffness of elements after epoxy injection is generally lower than their stiffness prior to damage. He suggested that a 20 per cent reduction, as noted by Ms Stanway from the literature, was “a reasonable starting point”.
[183] Dr Brooke and Ms Stanway are agreed that the “occurrence of a crack reduces the stiffness of the reinforced concrete element”.
[184] It appears that for damage typified in [180(a)] repair by epoxy injection would be inappropriate. That would be because the structural function of the building element would be significantly compromised.
[185] For damage typified by [180(b)] there may be cases where any increase in displacement during future earthquakes would be confined to non-structural elements and the damage would be negligible in the sense that it would not affect the repairs required for the element. To quote Dr Brooke:
It is also noteworthy that an increased displacement would commonly not affect the outcome for an element in terms of the repairs required. For example, if imposition of relatively small displacements (0.21% drift on average) on plasterboard wall linings will cause minor damage requiring repair of the joints between the sheets. Much larger displacements (0.71% drift on average) are required to increase damage to a point where the method of repair changes to require replacement of the plasterboard sheets.
(footnote omitted)
[186] The plaintiff argues epoxy injection of cracks will not fully restore the stiffness of the buildings. Ms Stanway says that the reduction in stiffness will lead to an increase in displacement in a future earthquake event which would not occur in its
“when new” condition. Her opinion of course is founded on there having been damage of the type set out in [180(a)].
[187] Dr Brooke agreed that the repaired buildings would have a minor reduction in stiffness compared to their state “when new”. He characterised this reduction as somewhere in the range of five to 10 per cent. He also characterised the associated possible increase to displacement during a future earthquake event as insignificant and unlikely to cause additional damage. He based his opinion on there being no damage of the type set out in [180(a)].
[188] These differences will be resolved by the findings below on the nature of the damage sustained to the relevant individual building elements.
Whether the strength of a reinforced concrete element can be restored by epoxy injection
[189] This question requires consideration of the impact of cracking on the reinforced element, which in turn requires consideration of (a) the orientation of a crack and (b) the width of the crack, with cognisance taken of the presence or absence of significant axial load along the crack and how the cracked element is reinforced.
[190]Structural cracking in this building is divided into two categories:
(a)cracks that are perpendicular, or almost perpendicular, to the span of an element (that is, approximately vertical in a beam or horizontal in a wall or column); and
(b)cracks that are inclined at an angle or a diagonal.
[191] Perpendicular cracks occur due to tension forces acting along the length of a member, which are commonly a result of bending. Dr Brooke explained that perpendicular cracks in a building generally do not affect the strength of the cracked elements because longitudinal reinforcement crosses the cracks. He said the strength of this reinforcement would not degrade until the cracks were “many millimetres wide”. Allowing for the potential closure of such cracks at the conclusion of
earthquakes, cracks of many millimetres width are indicated where there is sliding along crack interfaces, spalling of concrete or buckling of reinforcement.
[192] Based on the evidence of Dr Brooke, repair by epoxy is likely contraindicated in the case of perpendicular cracks where spalling of concrete has exposed longitudinal reinforcing bars or where, in the case of prestressing tendons, the crack width indicates that the prestressing has been compromised.
[193] Inclined or diagonal cracks are often caused by shear forces. Dr Brooke has explained that it is incorrect to conflate the occurrence of a diagonal crack with the inevitable onset of “brittle failure mode”, or in other words structural failure of the concrete structural element. Failure mode would only occur where cracks’ widths reached several millimetres. Epoxy repair would be contraindicated in those circumstances.
[194] Instead, according to Dr Brooke, “occurrence of a diagonal crack simply means that the tensile strength of the concrete was exceeded by stresses perpendicular to the crack”.
[195] He explained that this possibility is anticipated by structural engineers when designing buildings. Reinforcement is positioned so that the stresses that caused the crack can redistribute and continue to be resisted.
[196] If diagonal cracks in excess of 0.2 mm width are epoxy injected, any unrepaired diagonal cracks would not materially reduce the strength of the building.
The extent to which epoxy is fire resistant
[197] The Hamburger Report concludes that epoxy resin used in repair loses nearly all its strength and stiffness near 204 degrees Celsius and cannot be relied upon for structural strength in fire conditions.
[198] Mr Govind and Ms Stanway relied on the Hamburger Report to say that the buildings as a whole would be at risk in the event of a fire as a result of epoxy injection.
[199] I prefer the evidence of Dr Brooke that although epoxy is vulnerable to damage during a fire this vulnerability would not have any material effect on the buildings. Further, he said that the epoxy-repaired buildings would not be any more vulnerable to a typical fire compared to the buildings “when new”. Finally, he opined that fire damage to epoxy would not materially increase the overall difficulty or cost of repair of the buildings if subjected to a serious fire.
[200] Vero also engaged a fire engineer, Mr Jonathan Nyman, who advised that the proposed epoxy repairs would not have any effect on the fire resistance rating performance of the buildings. Mr Nyman’s evidence was not challenged, and the plaintiff did not call evidence from a fire engineer.
[201] I therefore conclude that considerations relating to fire do not contraindicate epoxy injection as a remediation method in this case.
The scale of the proposed use of epoxy injection
[202]According to Vero’s remediation method, the application of approximately
3.3 km of epoxy would be used in the repair. The plaintiff says that none of Vero’s experts advanced any definitive example where 3.3 km of earthquake cracks have been epoxy repaired in a building comparable in nature to the Madison Apartments with comparable damage.
[203] The Court has been given no definitive evidence that any building in Christchurch (whatever its size and damage) has undergone epoxy repairs to this extent. What is therefore being proposed by Vero and BMC is unprecedented on the evidence and the extent of cracking to be epoxy repaired must increase the risks.
[204] For example, the plaintiff submitted the sheer scale and unprecedented use of epoxy contraindicates its use, having regard to:
(a)loss of overall stiffness in the building that will not be restored;
(b)the number of cores and resultant damage from the remediation method proposed;
[409] Further, the plaintiff’s experts said that moisture ingress at the top of many of the ground-floor beams indicates the steel reinforcement in the beams has been compromised.
[410] As a result, they concluded that the strength, stiffness, durability and appearance of the ground-floor beams has been altered by damage caused by the CES. They said the strength and stiffness of the beams has been reduced as a result of the cracking and the durability of the beams has been affected by the corrosion of the steel reinforcing.
[411] The plaintiff proposed that the appropriate remediation in those circumstances is the removal and replacement of the ground-floor beams.
[412] Vero’s experts agreed there is widespread cracking in the ground-floor beams but said there was in all likelihood cracking in the beams caused by natural shrinkage that existed before the CES and the CES will have exacerbated the cracks. In essence, then, Vero agreed there is damage caused by the CES that requires remediation.
[413] However, Vero said there is no evidence to support the plaintiff’s case that the strength and stiffness of the ground-floor beams has been altered by the CES nor that the durability of the ground-floor beams has been affected by water ingress into the beams, thereby causing corrosion of the steel reinforcing. Vero’s experts suggested the cracks should be repaired through epoxy injection.
[414] By way of context, I note that neither the Structex nor the Quoin reports concluded there was any structural damage to the ground-floor beams.
[415] As to the cracking, I refer to the Beca crack mapping. It shows that the cracking in the ground-floor beams is almost entirely perpendicular. I have already referred to the importance of the type and size of the cracking in terms of its effect on the strength and stiffness of a concrete member (and therefore its structural functionality) at [178]–[196]. None of the cracks are more than 1 mm wide in these beams and therefore the prestressing does not appear to be compromised.
[416] The plaintiff has not established that these beams (or the building as a whole) have yielded beyond their capacity because of the observable cracking.
[417] Mr Govind’s evidence was that water ingress appeared to be tracking through the ground-floor beams and causing “accelerated corrosion” of the steel reinforcement. Ms Stanway’s evidence was that this damage to the reinforcing could not be ruled out.
[418] As I have already found at [403(c)] that the water ingress into the basement appears to be coming through the intersections of the precast flooring elements and basement walls and beams, and not through the ground-floor beams themselves, I do not accept the experts’ evidence at [417].
[419] In summary, I find the plaintiff has not established that the ground-floor beams need to be removed and replaced. They can be remediated by epoxy injection as proposed by Vero.
Apartment building superstructure
Concrete slab on the first and second floors
[420] The parties agree there is cracking to the topside of the concrete floor of the first and second storeys in various locations of up to 1 mm wide and that there is dislevelment (of an unidentified degree).
[421] The extent of the cracking and dislevelment in these elements is not known. As far back in the life of this case as 20 April 2016 Structex recommended that “[a]n allowance should be made to lift all internal floor linings in all units to inspect the concrete topping”.
[422] In that report, Structex acknowledged that only limited floor topping inspections had been undertaken by itself, Calibre and EQC.
[423] It is evident that the Beca experts have relied on “others” as to the extent of the damage to these floors. The August 2019 JER records its position as to the proposed repair methodology:
Due to extensive cracking observed by others, locally remove cracked areas of concrete first and second floors and replace with new sections of slab with 125 kg/m3 reinforcement. We note that the cracking is likely to be typical in units that were not inspected and that the entire first and second floors may require replacement.
Refer to Beca reinstatement methodology sketches for extent.
[424] In light of this evidence, it seems clear that all the experts accept there is damage but that the extent of the damage is to be clarified by proper inspection. The extensiveness of the cracking and dislevelment and the extent of any reduction in stiffness of the elements will need to be clarified. It may be that the floors can be remediated entirely by epoxy, or alternatively that some sections may need to be reinforced or even that the floors may need entire replacement. The Court, in these circumstances, is not in a position to make the call.
First and second-floor north balconies
[425] The parties agree there is cracking to all relevant balconies. They do not agree on the extent of cracking that was caused by the CES.
[426] The August 2019 JER records Mr Govind’s opinion as to the repair methodology for the first and second-floor balconies that:
Due to cracking of balcony finishes, cracking of concrete and differential falls, remove and replace cracked first and second floor balconies including minimum 1m of back span concrete topping within the units.
[427]BMC’s remediation approach is recorded as:
Epoxy inject all cracks in the concrete and masonry elements (beams, columns, walls).
Remove and reinstate all tiles.
[428]After Quoin’s inspection of the buildings, it recorded that:
(i)The differential falls typically vary between 15-40mm, over a length of approximately 1800mm.
(ii)There is one location (unit 7) where the differential fall is 80mm. There are 0.5-0.6mm wide cracks in the internal floor topping of the unit adjacent to and typically orientated perpendicular to the direction of the fall in the balcony.
Extensively cracked and damaged balcony finishes/tiles throughout.
(iv)Cracking may extend into the concrete balcony elements. This has not been verified.
[429] I prefer Quoin’s assessment as a more forensically accurate view of this damage than that of Mr Govind but also as a more conservative approach than that of Vero’s experts.
Third-floor balconies
[430] The plaintiff’s experts said there is extensive cracking to the third-floor balconies and they should be removed and replaced in their entirety.
[431] Vero’s experts are of the view that, once all the cracks have been injected with epoxy, only the tiles should be removed and reinstated.
Following its inspection of the third-floor balconies, Quoin recorded:
The differential falls typically vary between 14-42mm, over 900mm.
Extensively cracked and damaged balcony finishes/tiles throughout.
(iii)The cracking extends into the concrete balcony elements. The primary cracks are orientated north-south and located at regular centres. The cracks are visible on both the top and underside of the balconies.
[433]Quoin’s view on remediation was as follows:
(i)Crack repairs to the concrete balconies and floor beams will be required.
(ii)Allow to remove all balcony coverings, epoxy inject cracks greater than 0.2mm in width, and reinstate coverings.
(iii)Allow to paint over all cracks less than 0.2mm in width.
[434] I rely on the Quoin assessment and am fortified in my view by the fact it appears to support the opinion of Vero’s experts.
Third-floor housing units
[435] The parties are agreed that there is wall misalignment in some of the third-floor housing units (particularly near the junction of Units 14 and 39). That view is supported by the earlier Structex and Quoin reports which opined that the remaining misalignment was within construction tolerances.
[436] The plaintiff says that the strength, stiffness, durability and appearance of these housing units have been altered and “may” have been reduced. Vero says the walls need simply to be realigned and that there has not been any damage to the structural functionality of these elements.
[437] I note that the plaintiff’s experts did not inspect all of the housing units and that their report is, in any event, phrased in conditional language.
[438] The preponderance of the expert evidence is that these walls only need realignment and not replacement (save for the walls near the junction of Units 14 and 39).
[439] Thus, I find that the walls need only be realigned, with the possible replacement of the walls at or near the junction of Units 14 and 39.
Internal suspended timber floors (third level)
[440]The internal third floor level is separated into three distinct sections:
·Units 39 and 14 to the west side;
·Units 20, 23 and 26 to the centre; and
·Unit 40 to the east side.
[441] The parties agree there is cracking to the concrete floor beam for the timber floor on the third level. The parties also agree there is dislevelment in the third floor but disagree as to the cause of the dislevelment.
[442]Mr Govind noted in his evidence:
The timber third floor levels are outside of construction tolerances prescribed by New Zealand construction standards (NZS3604: Timber-framed buildings) and related to the overall rotation of the building caused by differential settlement of the main building structure. …
[443] Beca’s suggested remediation method was to “relevel” Units 14 and 39 and remove and replace the Unit 39 concrete floor beam.
[444] Vero’s experts conducted an investigation in June 2019 which involved lifting the carpet to Unit 14 to inspect the floor for signs of earthquake damage. They found no damage and therefore concluded the differential levels in the floors were likely a result of long-term sagging (curving of the beams downwards) under gravity loading and not earthquake damage.
[445] Further, Vero’s experts said that, while the sagging has led to differential levels outside construction tolerances, if they were caused by the CES they should be consistently reflected across all levels of the building and this is not the case.
[446] Vero’s suggested remediation was to inject epoxy into the cracks in the concrete beam. It did not suggest any repairs to the timber floor.
[447] Quoin did a more fulsome investigation of the floors (having also carried out numerous inspections of the buildings since the CES) as detailed in its 29 August 2016 report. Quoin concluded that the building is not grossly out of alignment, but there was localised differential falls in Units 39 and 14 outside of construction tolerances.
It found cracks in the concrete floor beam in Unit 39 together with broken concrete to the edge of the floor beam in Unit 39.
[448] I prefer the evidence in the Quoin report to that of either the plaintiff’s or Vero’s experts because the investigation appears to have been more reliable as it was more proximate in time to the damage.
[449]Thus, I conclude that any remediation should include allowance for:
(a)removing floor coverings and flooring in Units 39 and 14 and relevelling the floor joists:
(b)repairing cracks to the concrete floor beams by epoxy injection for cracks greater than 0.2 mm in width; and
(c)breaking back the damaged/broken concrete and providing concrete repairs.
Masonry block walls
[450] It is agreed that the plaster and external fibre cement board on the walls has cracked as a result of the CES. What is not known is the full extent of the cracking. The parties agree that, in order to undertake the works to address the cracking to the concrete frames by epoxy injection, the plaster will need to be removed from both sides of the walls. If cracking has occurred in the mortar or face of the masonry shell but not the concrete core, the epoxy repair of the cracks in the masonry walls suggested by Vero can be undertaken easily. If, however, cracking is observed in the core or significant damage has occurred to the walls, those walls will need to be replaced in their entirety.
Windows and joinery
[451] The parties are agreed the building’s aluminium windows, sliding doors and cladding have been damaged by the CES and need to be replaced.
Stairs and landings
[452] The damage to the stairs and landings is agreed by the parties and set out above at [226].
[453] Cracking was observed to the precast concrete stairs and landings throughout the building. Cracking of the stair units has likely occurred from differential movement of the floors. However, with the exception of the Unit 2 stair, this does not appear to have resulted in any permanent deformations of the stairs.
[454] The precast stair to Unit 2 was identified as having a drop of 10 to 15 mm at its midspan. This has likely resulted from the stair being compressed by the movement of the first floor, causing it to deflect downwards. There was also some evidence of spalling and rust staining on the masonry stairwell walls. The parties agreed that the stairs to Unit 2 need to be demolished and rebuilt.
[455] The plaintiff’s experts suggested the cladding sheets need to be removed and replaced where there is cracking present. They also suggested that the masonry walls within the stairwells and those walls with evidence of moisture ingress need to be removed and replaced. They said the concrete stairs and landings with concrete damage also need to be removed and replaced. Vero’s experts suggested that the heavily damaged sections of masonry walls be rebuilt and the rest be injected with epoxy.
[456] The preponderance of the expert evidence (Structex, Quoin and BMC) supports remediation being effected by epoxy injection together with removal and reconstruction of the stair flight and landing to Unit 2 (west-end stair). I find no reason has been advanced by the plaintiff to depart from the majority expert opinion in this regard.
Internal damage
[457] The parties are agreed cracking has occurred to the plasterboard walls and ceiling linings within the units. With the exception of the third-floor units, these
linings are not considered part of the primary structural system and as such the internal walls may be treated as partitions.
[458] This cracking to the units, which was recorded by Structex and Quoin, is considered minor and insufficient to have material effect on the ongoing performance of the structure. However, portions of the internal plasterboard linings will require removal to enable access to structural elements for assessment and repair.
Pool house and gym
[459] The parties agree as to the damage to the pool house and gym noted above at [226]. They also agree there has been cracking to the block walls but disagree as to the nature and extent of the cracking.
[460] The parties previously agreed that damage to the pool house could be addressed by repair rather than demolition.
[461] Vero proposes to address the cracking and voiding beneath the pool-house floor slab by:
(a)epoxy injection of cracks; and
(b)void filling underneath the slab.
[462] Vero also suggested removing and replacing the plasterboard cladding and floor coverings of the pool house.
[463] Mr Govind now says that the pool house must be demolished and rebuilt because of his concern that the grout used to fill voids underneath the slab will overflow into the neighbouring property. He claims that the building is on the northern boundary. This is incorrect. The plans indicate that the pool house is set approximately 240 mm off the northern boundary.
[464] The plaintiff has submitted that the owners of the neighbouring land would not consent to the works, without first seeking their view.
[465] Mr Hobbs has confirmed that in his view there are no issues with grout migration across the boundary given the proposed methodology. The proposal is to use a low-pressure system and a high viscosity grout of a consistency closer to concrete than water. Under these circumstances, Mr Hobbs did not expect migration of the grout through the soil structure. Mr Wilson advised the Court there was a common methodology which could be used to inject the grout (curtain wall injection) which would prevent the migration of the grout filler onto the neighbouring land.
[466] The plaintiff has done no more than raise a possibility that the repair proposed by Vero would inevitably be inefficacious and provided insufficient evidence in support of their view to meet the onus of proof.
[467] I am satisfied Vero’s proposals for the pool house and gym remediation should be preferred.
Summary — apartment building superstructure
[468] The plaintiff’s proposed remediation method is unnecessary to address the damage to the buildings, would be risky and impractical to carry out and may not deliver improved performance in a future earthquake event.
Summary of findings
Pile heads
[469] As discussed at [273], there is no scope for the Court to find that the piles suffered earthquake damage as there is no evidence to that effect before the Court. This trial was the occasion for the plaintiff to produce any evidence it had of pile damage. Not only has it not done so, its experts have also belatedly resiled from prior conclusions that there is pile damage and from the modelling that produced that conclusion. Furthermore, I consider that Dr van Ballegooy’s evidence to the effect there has been no pile damage is more likely than not to be the most reliable.
The basement slab
[470] As outlined at [346], it is premature on the evidence to say that demolition of the basement slab may not in fact have to occur. That conclusion will depend on the trials to be undertaken preliminary to the proposed application of epoxy injection. If those trials reveal that the proposed remediation is not effective, for instance because the sheer extent of the cutting and drilling of the slab necessarily affects its structural integrity, another method of remediation may have to occur which may include the complete reconstruction of the slab. What would be required by ground improvement in those circumstances has not been fully ventilated in the evidence before me.
[471] Further, as set out at [347], the alternative remediation scheme for the BFFS raised by the plaintiff during the course of the hearing cannot be endorsed as a suitable method given the lack of evidence and pleading in relation to it.
The basement superstructure
[472] At [378] I have found that the epoxy repaired concrete elements will meet the policy standard of restoring the damage to a condition substantially the same as its condition “when new” given that the minor reduction in stiffness is unlikely to have a significant effect in a future event.
Unispan floor planks and structural topping
[473] At [392] I have found that the only proper solution is the replacement of the cracked Unispan to redress the cracking and restore the Unispan structural slab to its condition when new.
Ground-floor slab
[474] As outlined at [407], I prefer Vero’s approach to remediation of the ground-floor slab.
Ground-floor beams
[475] At [419] I have found the plaintiff has not established that the ground-floor beams need to be removed and replaced. They can be remediated by epoxy injection as proposed by Vero.
Apartment building superstructure
[476] As discussed at [468], the plaintiff’s proposed remediation method for the apartment building superstructure is unnecessary to address the damage to the buildings, would be risky and impractical to carry out, and may not deliver improved performance in a future earthquake event.
Relief sought
[477]The plaintiff seeks the following orders:
(a)a declaration that Vero must pay to the plaintiff the cost to repair the damage caused by the CES to the building according to the Beca extended reinstatement methodology (Rev C) dated 30 October 2020 with the following additions/amendments/clarifications:
(i)whether the piles are to be decommissioned in favour of a gravel raft or, alternatively, reconnected to the new slab is a matter reserved for detailed design with leave reserved to either of the parties to revert to the Court for further declarations as required;
(ii)basement lid Unispan panels with cracking shall be removed and replaced with new;
(iii)all window and door aluminium joinery shall be removed and replaced with new double-glazed powder coated joinery; and
(iv)the pool house shall be demolished and reconstructed;
(b)leave is reserved to either of the parties to further address the Court concerning pile head damage as required;
(c)leave is reserved to either of the parties to apply further in respect of any further entitlement under the policy and/or breach of the policy, including in respect of payment of indemnity value and implementation of the Court’s orders; and
(d)costs reserved for further submission.
[478] By reason of the findings I have made, the plaintiff has been only partially successful in relation to the declarations it seeks.
[479] Both parties will need now to consider the implications of the determinations of fact in this judgment.
Orders
[480] In light of the ongoing matters relating to indemnity payment referred to at [34]–[39] above, I reserve leave to the plaintiff, Body Corporate 328564, to apply further in respect of any entitlement under the policy and/or for any breach of the policy.
[481] I reserve leave for the parties to file a memorandum or memoranda if they would be assisted by the Court making in declaratory form the particular findings of fact that have been made.
[482] I reserve costs and disbursements with those matters to be dealt with upon the basis of memoranda filed (no more than 10 pages each) with appended schedules setting out relevant costs calculations and details of disbursements with copies of all relevant fee notes.
Doogue J
Solicitors:
Rhodes & Co, Christchurch McElroys, Auckland
APPENDIX A
Glossary of terms
Axialload an applied force that acts directly along the axis of a building element (for example, the weight of a building sitting on a column). Tension is an axial force that acts to lengthen (stretch) a member, while compression is an axial force that acts to shorten (squash) a member.
Beam-column joint the junction of a beam and column.
Bracedframe a really strong structural system commonly used in structures subject to lateral loads such as wind and seismic pressure. The members in a braced frame are generally made of structural steel, which can work effectively both in tension and compression.
Cold jointa plane of weakness in concrete caused by an interruption or delay in concreting operations as the batches of concrete do not intermix.
Continuous load path the structural condition whereby a building can
only be designed to resist earthquakes if it is considered as a whole; that is, decisions made about the design of one aspect of a structure impact upon the demands placed on other aspects.
Corescylinders of concrete that are extracted for testing of the concrete.
Cyclicloading the application of repeated or fluctuating stresses and strains (as in an earthquake).
Deformation the change in size or shape of an object.
Deflectionthe degree to which an element changes shape when a load is applied.
DiamondDowels a trademarked type of steel plates that have a structural purpose, which is to transfer the load on the basement floor slab to the basement ground beams.
Diaphragma horizontal element in a structure that transmits inertial forces from the floor system to the vertical elements of the structure.
Differential settlement the uneven or unequal settling of a building’s
foundation, usually caused by shifting of the soil.
Ductilitythe ability of a material to plastically deform (that is, change permanently due to applied force) without fracturing.
Displacement the overall change in the position of a body (including a direction) between two points in time.
Efflorescence white crystalline deposits that form on the surface of concrete, caused by vapour migrating through the concrete and bringing salts to the surface.
Elasticitythe ability of a deformed body to return to its original shape and size when the forces causing the deformation are removed (an elastic element will deform temporarily and an inelastic element will deform permanently on removal of the force).
Energy dissipation capacity the ability of a structure to remove unwanted
energy.
Fatiguelife the number of loading (stress or strain) cycles of a specified nature that a specimen sustains before failing.
Flexure the action or condition of bending or curving.
Gravityframe structural framing that is proportioned to have strength and stiffness as required for gravity loads.
Gravityloading force applied perpendicular to the ground; vertical forces acting on a structure.
Lateralloading force applied parallel to the ground; horizontal forces acting on a structure.
Loadingforce applied to a structure or its components that cause stress or displacement.
Membera physically distinguishable part of a structure such as a wall, beam, column, slab or connection.
Momentthe tendency of a force to rotate a structure (causing it to bend).
Moment-resisting frame a rectilinear assemblage of beans and columns,
with the beams rigidly connected to the columns, which provides resistance to lateral forces by transferring them from the upper level of a building to its foundations.
Prestressed concrete a form of concrete where initial compression is
introduced in the concrete (by high-strength steel wire or alloys called tendons) during production in a manner that strengthens it against loads imposed in service.
Rotational stiffness the ability of a material to resist rotation caused by
applied moment.
Sheara type of force that acts in a direction parallel to (over the top of) a surface or cross-section of a structure.
Shearkey structural fuses to prevent the transmission of large seismic forces to the piles.
Shearwall a vertical structural member in a reinforced concrete structure that is designed to resist lateral forces acting on it (such as seismic loads).
Spallingthe breakdown of concrete that results in sections of cement flaking, peeling or chipping off the main body.
Stiffnessthe rigidity of a structural element — that is, the extent to which the element is able to resist deformation or deflection under the action of an applied force, such as seismic activity, and return to its original formation.
Strengththe amount of force that can be applied to an element before it fails (namely, when it can no longer support the load).
Strongbacka beam or girder which acts as a secondary support member to an existing structure.
Structuralsystem the method of assembling and constructing structural elements of a building so that they support and transmit applied loads safely to the ground without exceeding the allowable stresses in the members.
Superstructure the visible part of a building that sits above the ground.
Tensilestrength the amount of load or stress that a material or element can support without fracture when being stretched.
Voidingthe formation of gaps or holes within or beneath concrete slabs.
Yieldingthe permanent deformation of a material or element due to stress or loading.
APPENDIX B – Beca Crack Mapping
APPENDIX C – The Experts Plaintiff’s experts
The plaintiff called Mr Samir Govind, Ms Jan Stanway and Mr Campbell Keepa.
Mr Govind was the lead author of the 10 November 2017 Beca Report and attended the conferral which produced the first JER on 5 September 2018. He is a technical director of structural engineering at Beca. Mr Govind joined Beca in 1996 and has worked there for the last 26 years. He has, throughout his career, specialised in structural engineering. He has won a significant number of awards. He has worked on a number of commercial buildings and industrial facilities (varying from new building developments to strengthening and repairing existing buildings), and more recently on earthquake insurance damage assessments and reinstatement schemes for a number of commercial and institutional clients.
Ms Stanway and Mr Keepa joined the plaintiff’s expert ranks when in late 2020 the issue arose of damage to the piles of the main apartment building.
Mr Keepa is a technical principal engineer employed by WSP. He has worked as a civil engineer for 20 years. For the last 15 years his specialist field has been geotechnical engineering and geotechnical earthquake engineering, and he has worked on a number of commercial buildings and infrastructure projects. He is the author of more than 10 published geotechnical engineering papers, some related to the design of foundations on liquefiable sites.
Ms Stanway is a principal structural engineer employed by WSP. She has worked as a structural engineer for the last 27 years. Her specialist field is structural engineering and the seismic performance of non-structural elements.
Ms Stanway has worked on a number of commercial buildings and industrial facilities. She is the New Zealand Industry Champion tasked with improving the seismic performance of non-structural elements through the Building Innovation Partnership (BIP) programme, which is an industry-led research programme that responds to selected challenges and opportunities facing the building and construction industry.
She has also co-authored three papers with Professors Tim Sullivan and Rajesh Dhakal from the University of Canterbury (in 2018 and 2020) that focus on improving the seismic performance of non-structural elements in New Zealand and the development of a national framework for the seismic rating of non-structural elements in buildings.
Vero’s experts
Vero called as its principal witnesses Mr Michael Hobbs, Dr Nicholas Brooke, Mr Ian McCahon, Mr Desmond Bull, and Dr Sjoerd van Ballegooy.
Mr Hobbs was Vero’s lead expert. He assumed the mantle in August 2019 after his colleague Mr Warren Batchelar (who was one of the experts from the outset) withdrew from the project due to health issues. He is a senior structural engineer with BMC. He has practised as a structural engineer for nine years. His practice area is the design, construction monitoring, and assessment of low-rise buildings (generally defined by Engineering New Zealand as less than five storeys). He has experience in the structural design, assessment, and construction of reinforced concrete and masonry beams, columns, walls and floors (also known as diaphragms).
Mr Hobbs has structurally designed and assessed numerous industrial, commercial and residential buildings and has developed, reviewed and supervised the implementation of repair strategies for such buildings. These assessments and repair strategies have involved the use of:
(a)forensic assessment, including assessment of building degradation owing to earthquake damage in concrete, masonry and steel members;
(b)3D-modelling and analysis; and
(c)epoxy injection repair techniques for concrete members, including both injection of fresh cracking and reinjection of poorly completed epoxy repairs.
Dr Brooke was called by Vero because of his expertise in structural engineering. He is a principal of Compusoft Engineering Ltd and has practised as a structural engineer
for more than 15 years. He is the current president of the Concrete New Zealand Learned Society, a member of the board of Concrete New Zealand and the current vice-president of the Structural Engineering Society of New Zealand. His specialist areas of expertise include the design and assessment of reinforced concrete structures, including the effects of earthquakes on such structures.
Dr Brooke has provided numerous clients with advice on the nature, extent and significance of earthquake damage to buildings in Wellington and Christchurch. These buildings range from single dwellings to very large buildings (up to 20 storeys and approximately 25,000 m2).
Mr McCahon was called by Vero because of his expertise as a geotechnical engineer. He has 45 years’ experience in geotechnical and civil engineering. He is a director of Geotech Consulting Ltd. Much of his work for the last 35 years has been on geotechnical investigation and design for building foundations throughout Christchurch and elsewhere.
While he has not practised as a structural engineer for 30 years, he did practice in the field for the first 15 years of his career. Although his experience is not current, I am satisfied that background provided him with a good understanding of how structural systems work.
In addition, Mr McCahon has a longer involvement with these buildings than any other expert. His involvement with the buildings at 400 Durham Street began in May 2002 when he was asked to prepare a geotechnical report for the development. He planned and oversaw site testing, carried out analysis and compiled the initial geotechnical report dated June 2002. He was subsequently retained to provide geotechnical engineering input during the pile construction and ongoing issues related to the site dewatering during 2002 to 2003.
Mr Desmond Bull was engaged by Vero for his vast experience as a structural engineer. He is a technical director and senior partner of Holmes Consulting LP. Holmes Consulting is a consulting engineering company specialising in structural and civil engineering. Mr Bull has practised as a structural engineer for 40 years and is a
Distinguished Fellow of Engineering NZ (formerly the Institution of Professional Engineers New Zealand).
He has served on the Code Revision Committees for the national Standards: NZS 3101: Concrete Structures and NZS 1170.5: Earthquake Loads, and has provided evidence with respect to structural engineering and performance of buildings in earthquakes to the Canterbury Earthquake Royal Commission hearings.
Mr Bull has written or co-written some 150 papers and eight design guidelines/manuals used in New Zealand.
Guidelines, in use nationally, that he has contributed to include:
(a)design methods for reinforced concrete buildings — beams, columns, walls, foundations, piles, and floors;
(b)design of reinforced concrete masonry buildings; and
(c)assessment of the performance of existing reinforced concrete structures when subjected to future earthquakes.
[483] The final principal witness for Vero was Dr van Ballegooy, a senior geotechnical engineer and technical director at Tonkin + Taylor Ltd, a geotechnical consultancy company. Dr van Ballegooy has been a practising engineer in New Zealand for the past 17 years, specialising in geotechnical work. He has extensively supported the Engineering Advisory Group for MBIE for the development of technical guidelines for repairing and rebuilding houses affected by the CES.
He has conducted numerous geotechnical investigations for New Zealand insurers, individual property owners and developers in relation to residential and commercial properties.
Dr van Ballegooy’s main specialisation area is earthquake engineering, including seismic site response, liquefaction, lateral spreading, effects on structures and ground improvement, hazard mapping, earthquake loss modelling, earthquake resilience
assessment and stakeholder engagement (which includes expert evidence work for hearings, mediations and the courts).
Dr van Ballegooy has been involved in leading the geotechnical response to the damage caused by the CES and the 2016 Kaikōura earthquake and received the Queen’s Service Order, Honorary Companion, for his services to geotechnical science. His main roles involved helping the Canterbury Earthquake Recovery Authority (CERA) determine the areas where to rebuild and not to rebuild, helping EQC understand its land liabilities, and overseeing the mapping of the land damage, building damage and the ground surface changes as a result of the earthquakes through remote sensing technologies including the LiDAR (light detection and ranging) data sets. Dr van Ballegooy has been the architect of and overseen the development of the online New Zealand Geotechnical Database (NZGD) system.
Dr van Ballegooy also designed and led the Christchurch Ground Improvement trials to assist the development of the MBIE technical guidelines for repairing and rebuilding houses affected by the CES. These guidelines were developed to enable residential Christchurch to be rebuilt with greater resilience to future damage using affordable solutions.
Finally, Mr Nyman and Mr Wilson. Mr Nyman is a chartered professional fire engineer and is the director of Fire Review Solutions Ltd. Mr Wilson is a strategic business innovator employed at the Connect Group Ltd.
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