Body Corporate 335089 v Vero Insurance New Zealand Limited
[2020] NZHC 2353
•10 September 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000666
[2020] NZHC 2353
BETWEEN BODY CORPORATE 335089
Plaintiff
AND
VERO INSURANCE NEW ZEALAND LIMITED
Defendant
CIV-2017-409-000671 BETWEEN
BODY CORPORATE 341154
PlaintiffAND
VERO INSURANCE NEW ZEALAND LIMITED
Defendant
Hearing: 27–31 May; 3–7 June; 10–14 June; 17–21 June; 1–5 July;
8, 10, 11 July 2019, with supplementary written submissions 13,
16 August 2019Appearances:
N A Till QC, K M Graham and M L Rhodes for Plaintiffs C M Meechan QC, M A H Macfarlane, S E M Corban,
R B McStay and A C Eager for Defendant
Judgment:
10 September 2020
JUDGMENT OF OSBORNE J
This judgment was delivered by me on 10 September 2020 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
BODY CORPORATE 335089 v VERO INSURANCE NEW ZEALAND LIMITED [2020] NZHC 2353 [10
September 2020]
TABLE OF CONTENTS
PART I – INTRODUCTORY MATTERS
Glossary of terms Abbreviations
Introduction[1]
Factual background
The layout of the properties[4]
Construction: Buildings 1[8]
Construction: Buildings 4[14]
Buildings 2 and 3[18]
Civil engineering[19]
Condition of the buildings and properties[21]
The Canterbury earthquake sequence[22]
Site visit[28]
The plaintiffs’ insurance
The Vero policies [31]
EQC’s involvement[38]
Category 3 damage[43]
The plaintiffs’ claims and the positions of the parties[45]
Issues[52]
PART II — THE LAW
The onus of proof[53]
What constitutes damage?[56]
How does “damage” relate to “failure”?[59]
What is the repair standard under the Policies?[65]
Compliance with the Building Act 2004
Compliance with the New Zealand Building Code (NZBC)[72]
Compliance with %NBS rating system[78]
PART III — THE DAMAGE AND REMEDIATION
Buildings 2 and 3 — 152 and 160
Description of the buildings[80]
Settlement caused by liquefaction at 152 and 160[84]
Various types of settlement at 152 and 160[91]
Plaintiff’s pleading in relation to 152[99]
Plaintiff’s pleading in relation to 160[101]
Buildings 2 and 3 — at 152 in particular
Slab-cracking (floor)[104]
Cause of slab-cracking[111]
Settlement and dislevelment[114]
The implications of the slab-cracking[124]
Voids[132]
Superstructures — Buildings 2 and 3/152[140]
Buildings 2 and 3/152 — requirements of remediation[167]
Repair by epoxy injection[172]
Plaintiffs’ position[174]
Vero’s position[176]
Conclusion — use of epoxy resin[187]
Buildings 2 and 3/152 — painting of cracks of 0.3 mm and less[188]
Buildings 2 and 3 — at 160 in particular
Background[194]
Slab-cracking (floor)[196]
Cause of slab-cracking[203]
Settlement and dislevelment[206]
The implications of the slab-cracking[214]
Voids[215]
Superstructures — Buildings 2 and 3/160[220]
Buildings 2 and 3/160 — requirements for remediation[229]
Buildings 1/152 and 160
Description of Buildings 1[230]
Plaintiff’s pleading in relation to 152[232]
Plaintiff’s pleading in relation to 160[233]
Vero’s defences[235]
Foundations and slab[237]
Pile head damage and failure[239]
Settlement of ground below Building 1/152[242]
Damage to pile heads[254]
Discontinuity of some piles at 3–4 m[258]
Tilted or bent piles[269]
Deduction of damage from lateral movement of Building 1/152[283]
Calculated damage[289]
Conclusion — damage to Buildings 1 piles[301]
Building 1/152 — damp proof membrane[302]
Building 1/152 — floor slabs[308]
Slab-cracking[310]
Ground floor slab dislevelment[316]
Superstructure[324]
Dislevelment of upper floors[325]
Verticality of walls[332]
Cracking in walls[335]
Roofs[379]
Holistic assessment[384]
Finite element analysis (FEA)[390]
Remedy — Building 1/152[400]
Remedy — Building 1/160[417]
The availability of natural servitude at 160 Salisbury Street
The relevance[419]
The factual context[420]
The legal context[421]
Position of the territorial authority[423]
Application of NZBC, cl E1[425]
The evidence — the path of secondary flow[429]
The evidence — the extent of secondary flow[438]
Conclusion — natural servitude[445]
Buildings 4/152 and 160
Description of Buildings 4[448]
Plaintiff’s pleading in relation to Building 4/152 foundation and slab[451] Plaintiff’s pleading in relation to building 4/160 foundation and slab[453] Vero’s pleading[456]
Overview of the respective cases[459]
Building 4/160 — “complete foundation failure”?[461]
Buildings 4/152 and 160 — voids[465]
Building 4/152 — slab-cracking[471]
Building 4/160 — slab-cracking [476]
Building 4/152 — dislevelment[478]
Building 4/160 — dislevelment[495]
Building 4/152 — superstructure[513]
Building 4/160 — superstructure[521]
Building 4/152 — settlement[530]
Buildings 4/152 and 160 — localised settlement[549]
Civil engineering issues
Around Building 4/152[554]
Underground/152[558]
Above ground/152[568]
Catchment fall and flow 152 and 160[592]
Underground/160[604]
Above ground/160[605]
Longitudinal fall[620]
PART IV — OUTCOMES
Relief sought
Declarations[623]
Professional fees[627]
Loss of rent[634]
Landlord’s fixtures and fittings[637]
Costs[639]
Orders[642]
PART I — INTRODUCTORY MATTERS
Glossary of terms
Abbreviations
AEP Annual exceedance probability (for stormwater) BRANZ Inc, an independent building research organisation
Cat 3 Category 3 damage, a categorisation of damage adopted by Vero CCC Christchurch City Council
CES Canterbury earthquake sequence
DPC Damp proof-course (in walls)
DPM Damp proof membrane (in solid concrete floor) E1/AS1 see NZBC E1/AS1 below
EQC Earthquake Commission
ETABSA software for structural analysis and design of multi-storey buildings
GPR Ground penetration radar (scanning) EAG report Engineering Advisory Group report
FEAFinite element analysis (for consideration of stiffness of structural elements)
FFL Finished floor level
FGL Finished ground level
IDS Infrastructure Design Standard (of CCC)
MBIE Ministry of Business, Innovation and EmploymentMBIE Guidance A guidance document (of MBIE) on the repair and rebuilding of houses affected by the Canterbury earthquakes (Version 3, December 2012), issued under s 175 Building Act 2004
NBSNew building standard — the standard for newly constructed buildings
NZS 3101 New Zealand Standard 3101:2006 (concrete structures) NZS 3109 New Zealand Standard 3109:1997 (concrete construction)
NZS 3114 New Zealand Standard 3114:1987 (specification for concrete/surface finishes)
NZS 4210 New Zealand Standard 4210:2001 (masonry construction)
NZS4404 New Zealand Standard 4404:2010 (land development and subdivision infrastructure)
NZBC New Zealand Building Code
NZBCE1/AS1 New Zealand Building Code clause E1 (surface water) Acceptable Solution 1 – an acceptable solution to compliance with Building Code clause E1
NZBCE2/AS1 New Zealand Building Code clause E2 (external moisture) Acceptable Solution 1 – an acceptable solution to compliance with Building Code clause E2
OFP Overland flow path
PIT Pile integrity testing
PGA Peak ground acceleration
RL Reduced level
SFP Secondary flow path
ULS Ultimate limit state – (for earthquake events)
Introduction
[1] These proceedings relate to earthquake damage to two near-neighbouring properties at 152 and 160 Salisbury Street, Christchurch. On each property there had been built in 2003/2004 almost identical residential apartment buildings (12 apartments in all). The plaintiffs in these proceedings are the owners of those properties (separately referred to as “the 152 plaintiff” and “the 160 plaintiff”, and jointly as “the plaintiffs”).
[2] The defendant, Vero Insurance New Zealand Ltd (Vero), insured the properties. Vero accepts that it has an obligation to fix damage caused by the 4 September 2010 and 22 February 2011 earthquakes, part of the Canterbury earthquake sequence (CES).
[3] The key issues in these proceedings are the extent of damage to the two properties and what is required to return the properties to a “when new” condition in terms of the insurance policies. Do they each require demolition and rebuilding (the plaintiffs’ case) or are there achievable repair solutions for each?
Factual background
The layout of the properties
[4] The buildings at 152 Salisbury Street (152) and 160 Salisbury Street (160) were designed and constructed upon similar layouts, as depicted in Figure 1.
Figure 1
North
[5] The properties are separated by a single property. They back on to properties in Peterborough Street (to their south) as depicted in Figure 2.
Figure 2
[6]For the purposes of this judgment the buildings will be described as:
(a)Buildings 1 — comprising units 1, 2 and 3 at 152 and 160;
(b)Buildings 4 — comprising units 4, 5 and 6 at 152 and 160; and
(c)Buildings 2 and 3 — comprising respectively the garages for units 1, 5 and 4 (in Buildings 2) and the garages for units 2, 3 and 6 (in Buildings 3).
[7] Buildings 1 at both 152 and 160 are adjacent to Salisbury Street. The rear of each property is accessed from Salisbury Street through an archway entrance under unit 3. Units 1 and 2 have ground floors either side of the archway. An original architect’s drawing showing the elevation of the northern face of Buildings 1 (facing Salisbury Street) is reproduced in Figure 3.
Figure 3
Construction: Buildings 1
[8] Each unit in Buildings 1 is three-storeyed. The building as a whole is rectangular in plan, approximately 15 m long and 8.4 m wide.
[9] There is a mix of foundations, including pile foundations and raft foundations, and there are some differences in superstructure between 152 and 160. Building 1 at 152 is constructed in concrete block whereas Building 1 at 160 is constructed in concrete tilt slab (panels).
[10] The piled foundations are a combination of 150 mm x 150 mm and 100 mm x 100 mm concrete piles extending approximately 9 m below ground level.
[11] Each raft foundation contains a 100 mm thick concrete slab on a damp proof membrane (DPM) on a minimum 150 mm thick compacted hardfill. The slab was reinforced with 665 mesh. The slab was not continuous but split in two, supporting units 1 and 2 respectively.
[12] The first and second floors were constructed of 75 mm thick in situ concrete topping on 75 mm unispan units with 665 mesh central.
[13] The concrete block walls at 152 are 190 mm thick with steel reinforcing. The pre-cast panels at 160 are 180 mm thick with both 120 mm and 200 mm thick concrete wall panels.
Construction: Buildings 4
[14] Buildings 4 are again three-storeyed structures in concrete block (152) or concrete tilt slab (160). As with Buildings 1, they are approximately 15 m long and
8.4 m wide.
[15] Each foundation contains a 150 mm thick concrete slab on DPM on a minimum 700 mm thick compacted hardfill. The slab is reinforced with 665 mesh. The compacted hardfill extends 1 m out from the perimeter of the foundation.
[16] Below the buildings are six 450 mm diameter concrete post-holes with steel reinforcing along the west and east sides, with the foundations extending around 1.3 m below floor level.
[17] There are 190 mm thick concrete block walls with steel reinforcing (152) or tilt-panel walls, generally 140 mm thick (160).
Buildings 2 and 3
[18]Buildings 2 and 3 (the single-storey garages) are described below at [80]–[83].
Civil engineering
[19] Both 152 and 160 had designed and constructed sewers and stormwater drains. Each property has a common asphalt driveway under the Buildings 1 archway and over the common area between the garages. There are on each property walls, fences, gates and paved courtyards around all units (except the elevated unit 3).
[20] The nature and rights of secondary stormwater flows particularly at 160 are the subject of disputed evidence (as discussed below at [429]–[444]).
Condition of the buildings and properties
[21] The evidence indicates that the properties had been well maintained and were in good condition at the time of the CES. Money and effort had been invested on landscaping. Unit courtyards had been variously developed.
The Canterbury earthquake sequence
[22] A number of the unit-owners have given evidence, including some who were in their units at the time of the 4 September 2010 and/or 22 February 2011 earthquakes.
[23] The evidence establishes that the September 2010 earthquake (with an epicentre 38 km from 152 and 160) made the buildings “swing” and caused minor damage. The owners of 152 commissioned a structural inspection report from Structex Metro Ltd in October 2010. The report provided them with assurance that the buildings at 152 remained structurally sound and recommended non-structural repairs which, for the most part, would involve repair and repainting.
[24] The February 2011 earthquake (with an epicentre 10 km from 152 and 160) caused much more extensive damage.
[25] The evidence of the witnesses is generally to the effect that the February 2011 earthquake was “quite something else”. Krista Hastings, who owns 5/160 along with her husband, described the impact:
I had just returned home from work. … When the jolt happened, I was in the kitchen. It was a huge struggle to get the four steps to the table for cover, as glassware and dishes, rained down around me. I felt not only the sideways movement but vertical movement as well.
[26] Electricity and water services were lost to both 152 and 160 for a lengthy period. Both properties lay within what became the central city cordon. Owners and tenants made arrangements to live elsewhere for at least that period.
[27] Alan Wightman, the geotechnical engineering expert called for Vero, provided unchallenged evidence as to ground accelerations caused in the CES. The September 2010 earthquake (with its epicentre 38 km away) had a mean equivalent peak ground
acceleration (PGA) of 0.20 g.1 The February 2011 earthquake (with its epicentre 10 km away) had a mean equivalent PGA of 0.33 g. Mr Wightman’s evidence was that the ultimate limit state (ULS) designed ground acceleration for liquefaction analysis at the properties is 0.35 g.
Site visit
[28] Following the openings of counsel for the plaintiffs and Vero, counsel and I attended both properties. Buildings 1 and 4 have not been the subject of permanent repair since the earthquake events. Cracking of varying extent and degrees was evident on the walls of Buildings 1 and 4. It was also evident on the (Buildings 2 and
3) garage floors (the floors of the residential units generally being covered and unavailable for inspection). The various areas of damage have been well represented in photos produced in evidence.
[29] There was an evident misalignment between some buildings. There was an apparent and significant drop in the level of the driveway and other areas adjacent to some buildings, exemplified in some areas by cracking, exposure of unpainted surfaces and slopes on structures such as concrete steps, fences and gates. Again, all these were well represented in photos exhibited at trial.
[30] Also evident were repair patches to garage floors at 160 (only) after the Earthquake Commission (EQC) had arranged for repair work on the garages (Buildings 2 and 3). As discussed at [40] below, it is common ground that those repairs were ineffective.
The plaintiffs’ insurance
The Vero policies
[31] Each of the properties was insured under Vero’s MaxiPlan Home Policy (Home Policy). Each property had been insured for full replacement against accidental loss of or damage to the property up to an agreed floor area.2
1 Peak ground acceleration (PGA) may be measured in g (the acceleration caused by the Earth’s gravity).
2 In the underwriting records, the floor areas for the two properties had historically been confused but the parties acknowledged, following the earthquakes, that there was cover for the full areas of improvements on each property.
[32] The primary insuring clause in the Home Policy is the same as that considered by this Court in Parkin v Vero Insurance New Zealand Ltd.3
[33]The Home Policy provides in its Introduction:4
What you are insured for
We will insure you for accidental loss or damage to your home at the situation shown on the schedule during the period of cover.
What we will pay – at our option
1.the cost incurred in rebuilding or repairing the damaged portion of the home using currently equivalent building materials and techniques to a standard or specification no more extensive, nor better than its condition when new; or
2.the indemnity value should you not rebuild or repair within 12 months unless we agree to extend the time period.
[34]Vero provides cover on a top-up basis:
15.Natural Disaster Insurance
In the event of the home suffering damage caused by
• earthquake;
…
… we will pay:
a.the difference between the cost of reinstatement and the amount received by you under the Earthquake Commission Act 1993 and its amendments provided that:
i.the Earthquake Commission has accepted liability under the Act for the loss or damage;
ii.we shall not be liable for any excess imposed by the Act; and
iii.the total amount paid by us with the addition of the amount recoverable from the Earthquake Commission shall not exceed the amount that would be paid under the policy if the cause of loss was other than natural disaster;
3 Parkin v Vero Insurance New Zealand Ltd [2015] NZHC 1675. Similar primary insuring clauses have also been considered in He v Earthquake Commission [2017] NZHC 2136; aff’d [2019] NZCA 373; Bligh v Earthquake Commission [2018] NZHC 2102; Bruce v IAG New Zealand Ltd [2018] NZHC 3444; and Fitzgerald v IAG New Zealand Ltd [2018] NZHC 3447.
4 Emphasis original in all excerpts from the Policy.
b.for loss or damage to any permanently installed swimming or spa pools, drains, pipes and cables, paths, driveways, garden walls (other than retaining walls that will be limited to $10,000) and tennis courts.
The basis for settling claims and all other policy terms and conditions will apply.
[35]The definition section of the Home Policy defines “home”:
Home means each dwelling (including residential flat or holiday home) within the residential boundaries of the property on which the home is situated.
It includes any part of the home used as a home office or health care practice. It also includes:
…
• walls, fences, gates;
• gas pipes, fresh-water pipes, electricity and telephone cables;
• any driveways, paths, footpaths and tennis courts; but does not include:
…
• the land itself.
[36] Each plaintiff also had insurance under Vero’s Residential Body Corporate Policy (the Body Corporate Policy) (together, “the Policies”). Under cl 4 of the Body Corporate Policy, the natural disaster insurance provision committed Vero to paying for loss or damage to any permanently installed drains, pipes and cable, paths, driveways and garden walls suffered by the home, to a limit of $25,000 in any one period of insurance.
[37] The term “home” is defined in the Body Corporate Policy to mean each dwelling within the residential boundaries of the property on which the home is situated. Accordingly, at each of 152 and 160, there are six homes (units 1–6).
EQC’s involvement
[38] The responsibilities of EQC in relation to insurance claims for earthquake damage are dealt with in the Earthquake Commission Act 1993.
[39] Under that legislation, EQC was required to cover the cost of repairing earthquake damage up to a “cap” of $115,000 (less excess) for each unit.
[40] Until March 2016, EQC maintained the position that the plaintiffs’ claims were within cap. EQC (in April/May 2015) arranged for repairs to the garages at 160 (Buildings 2 and 3). The EQC repairs were intended to address voids below those garages and to re-level the garages, using low mobility grout. There are issues as to the adequacy of the EQC repairs — it is recognised that Buildings 2 and 3 were not fully repaired by the EQC repairs and may have been further damaged.
[41] In March 2016, EQC notified the relevant parties that it now considered the plaintiffs’ claims to be over cap. For a brief period, Vero rejected the “over cap” status but in May 2016 it accepted the claims were over cap.
[42]In May 2016, EQC made payments:
(a)to the owners of 152 for the February 2011 event of $683,100 (being
$690,000 less excess of $6,900);
(b)to the owners of 152 for the September 2010 event of $46,282.02 (being
$48,082.02 less excess of $1,800);
(c)to the owners of 160 for the February 2011 event of $521,343 (after deducting $161,757 for the cost to re-level the garage buildings and
$365.57 for emergency repairs); and
(d)to the owners of 160 for the September 2010 event $37,265.82.
Category 3 damage
[43] Vero, as the private insurer, became responsible for any “over cap” sums. The Policies also responded to what Vero terms Category 3 (Cat 3) damage, being damage to garages, paths, driveways and garden walls.
[44] The unit owners at 152 or 160 have not attended to Cat 3 damage — the nature of other required repairs meant that it would have made no sense to undertake Cat 3 repairs in the meantime.
The plaintiffs’ claims and the positions of the parties
[45] By their statements of claim the plaintiffs sought declarations as to the earthquake damage sustained on the properties; the scope of reinstatement work required to repair the earthquake damage; and Vero’s obligation to pay the rebuilding or repair costs (and other identified, minor costs).
[46] In relation to all Buildings (1, 2, 3 and 4 at 152 and 160) the plaintiffs sought declarations that they were entitled to have each building rebuilt.
[47] It is common ground between the parties that (upon repair or rebuilding as the case may be) the plaintiffs will be entitled to reimbursement for the work necessary to repair Cat 3 damage.
[48] The plaintiffs also sought judgment for the professional fees which each has incurred and will continue to incur.
[49] As explained at [627]–[633] below, leave will be reserved to the parties to apply further in that regard.
[50] In the event of further application, the Court will need to determine to what extent professional fees incurred by the plaintiffs are covered under their policy entitlements.
[51] In opening the plaintiffs’ cases, Mr Till QC indicated that the plaintiffs were still considering whether to allege breach of contract on the part of Vero and, upon the basis of breach, to claim general damages. Witnesses’ evidence had been briefed in relation to matters going to general damage. In the event, before openings had concluded, Mr Till advised the Court that the plaintiffs would neither assert breach of contract nor pursue general damages. Accordingly, evidence was not led by any party as to breach of contract or matters which would inform general damage.
Issues
[52] The major issue between each plaintiff and Vero is whether the nature and extent of damage to the properties, and each of the four buildings thereon, necessitates a demolition and reinstatement of each building if Vero is to comply with the Policies’ standard of “when new”. The plaintiffs’ case is that all buildings have suffered such structural damage as to require replacement. Additionally, the plaintiffs assert that by reason of settlement caused by the CES affecting the clearance of Buildings 2, 3 and 4, those buildings need to be rebuilt at higher levels. In the event that the Court finds that demolition and rebuilding are not required, there are issues as to the aspects of Vero’s proposed remediation.
PART II — THE LAW
The onus of proof
[53] The insured make claims under the policies of insurance. As for claimants generally, it is the plaintiffs who have the burden of proving, on the balance of probabilities, every material fact of their causes of action.5
[54] The plaintiffs therefore have the burden of proving that there was damage caused by the CES and what is required to remedy that damage.6 An evidential onus may move to the defendant where the plaintiffs establish a prima facie case in relation to particular issues — as, for instance, in Jarden v Lumley General Insurance (NZ) Ltd.7 There, the Jardens’ evidence established that there had been no leaks to their house over the 10 years prior to the CES, with the consequence that the Court of Appeal held that the evidential onus moved to Lumley to show that the leaks resulted from causes other than earthquake damage.
5 As applied in recent earthquake cases — Jarden v Lumley General Insurance (NZ) Ltd [2015] NZHC 1427, (2015) 18 ANZ Insurance Cases 62-077 at [47]–[54]; He (HC), above n 3, at [55]; O’Loughlin v Tower Insurance Ltd [2013] NZHC 670, [2013] 3 NZLR 275 at [146]; M Ball and D Kelly Kelly and Ball Principles of Insurance Law (online looseleaf ed, LexisNexis) at [8.0190.1] and [8.0190.5]; and Anthony A Tarr and Julie-Anne R Kennedy Insurance Law in New Zealand (2nd ed, Law Book Company, Sydney, 1992) at 174.
6 Bligh v Earthquake Commission, above n 3, at [31].
7 Jarden v Lumley General Insurance (NZ) Ltd [2016] NZCA 193, (2016) 19 ANZ Insurance Cases 62-104 at [40].
[55] As Asher J recognised in O’Loughlin v Tower Insurance Ltd, there is some difficulty in assessing the correct approach to onus of proof where earthquake damage is established but neither party has carried out an actual repair.8 In that situation, a hypothetical repair is involved. In O’Loughlin, the Court found the insurer to have assumed the burden of establishing the appropriateness of its estimated cost of notional future repair (on the balance of probabilities) in a situation where the insurer had elected to make a payment based on an equivalent notional repair.9
What constitutes damage?
[56] By both the Home Policy and the Body Corporate Policy, the owners of the units comprising the Body Corporates were insured for accidental loss or damage (including damage caused by earthquake) (together with extended coverage).
[57] This Court and the Court of Appeal have considered the meaning of “damage” in a number of cases involving claims for earthquake damage.10 From that case law, I find that the term “damage” as used in the Policies has the following characteristics:
(a)there has been physical damage in the sense of an alteration in a negative way to the physical state of the insured property; and
(b)what has been impaired is the value, amenity or usefulness of the property; and
(c)the impairment has been material in the sense that it can be described as more than de minimis.
8 O’Loughlin, above n 5, at [148]. Asher J alternatively (and in case he was wrong in relation to the onus being upon the insurer) approached the question of onus on the assumption that the onus was on the plaintiffs to prove contractual breach, including the inadequacy of the offered payment based on a notional repair.
9 At [149]–[150].
10 For example, O’Loughlin, above n 5; Kraal v Earthquake Commission [2014] NZHC 919, [2014] 3 NZLR 42; aff’d [2015] NZCA 13, [2015] 2 NZLR 589 at [37]; Parkin, above n 3, at [36]–[38]; Jarden, above n 5; C & S Kelly Properties Ltd v Earthquake Commission [2015] NZHC 1690 at [175]; He (HC), above n 3, at [60]–[67]; Bligh, above n 3, at [17]–[27].
[58] The application of this approach to “damage” may be illustrated by reference to the outcome in two cases.11 In C & S Kelly Properties Ltd v Earthquake Commission, notwithstanding there being pre-existing settlement of floors, the Court rejected a de minimis argument in relation to earthquake damage. The Court found that the dislevelment caused by the CES was considerably more than de minimis and also had an impact on the amenity and utility of the house and its value.12 The decision in Sadat v Tower Insurance Ltd — another case involving pre-existing floor dislevelment — may be contrasted.13 The plaintiffs there established that the September 2010 earthquake probably caused some increases in floor sloping but were unable to establish that such increases as did occur were of such an extent as to require significant re-levelling. In other words, the increases did not result in a “material difference”.14 Similarly, the Court found that the plaintiffs had not established a “material difference” to the structural integrity of foundations arising from some further cracking of the perimeter foundation.
How does “damage” relate to “failure”?
[59] It is in the nature of the concept of “damage” that some material damage may be repairable while other material damage may not be so, instead requiring rebuilding.
[60] In short, not all damage to an element or a building will constitute a failure of that element or building.
[61] Warwick Weber (a structural engineer called by the plaintiffs) repeatedly in his evidence in chief, when addressing his opinion on matters relating to damage, spoke of “failure”. Ms Meechan QC began her cross-examination of Mr Weber with questions as to his use of the word “failure” in expressions such as “foundation failure” and “shear head failure”. Mr Weber explained his use of the term “failure” in this way: “So if there has been damage or a negative impact on those undamaged strengths I would call it a failure”.
11 As identified in He (HC), above n 3, at [65]–[66].
12 C & S Kelly, above n 10, at [306].
13 Sadat v Tower Insurance Ltd [2017] NZHC 1550.
14 At [254].
[62] When questioned as to how he differentiated the concepts of failure and damage, Mr Weber responded that he would say they are the same thing in this context.
[63] Ms Meechan cross-examined Mr Weber particularly in relation to 97 references he had made to “shear head failure”. She put it to Mr Weber that he was talking about damage to the head of the pile (through shear force). Mr Weber replied: “Yes that’s right, yes, I’d be happy with that.”
[64] In this judgment I will use the terms “damage” and “failure” distinctively, to reflect a difference in meaning — I use the term “damage” to signify damage in the sense identified at [57] above that may or may not be repairable, whereas I use “failure” to signify damage which is beyond repair.
What is the repair standard under the Policies?
[65] As set out above at [33], Vero’s commitment under the Policies (in the circumstances applying here) is to pay the plaintiffs the cost incurred in rebuilding or repairing damaged portions using currently equivalent building materials to a condition no more extensive, nor better, than their condition when new.
[66] In other words, the Policies incorporate a “when new” standard rather than an “as new” standard.
[67] The primary insuring clause contained in the Policies is the same as that contained in the Vero policy which was the applicable policy considered in Parkin.15
[68] Similar (but not identical) primary insuring clauses have been considered by this Court in a number of other cases.16
[69] 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.17 East establishes that “as new”,
15 Parkin, above n 3, at [107]–[121].
16 He (HC), above n 3; Bligh, above n 3; Fitzgerald, above n 3; and Bruce, above n 3.
17 East v Medical Assurance Society of New Zealand [2014] NZHC 3399 at [103]–[104]; aff’d [2015] NZCA 250, (2015) 18 ANZ Insurance Cases 62-074 at [38].
where used in relation to the rebuilt or restored condition of the house, 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 2003/2004).18 In Parkin v Vero Insurance Ltd, Mander J considered the same policy standard as contained in the present policies.19 His Honour reviewed authorities in relation to the standard, applying those to the facts in Parkin. He found that repair of piles employing a “jacking and packing” method met the policy standard — the piles themselves had no aesthetic quality and the “jacking and packing” methodology restored the structural integrity of the house.20
[70] 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
[71] The “when new” standard, based on the authorities, gives rise to a number of considerations:
(a)Where a component has a functional (which expression here includes a structural) purpose, the standard requires restoration so that the component functions in line with its “when new” condition. But where a component also has or only has an aesthetic purpose, the original aesthetic quality of the component must (also) be restored.
(b)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 currently equivalent building materials and techniques are to be used).
(c)The repairs must put the building in the same position as far as possible as it originally was.
18 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, above n 3, at [117]–[145].
19 Parkin, above n 3, at [105]–[116].
20 At [145].
21 Fitzgerald, above n 3.
(d)The result must render the fact of the earthquake damage immaterial.
Compliance with the Building Act 2004
Compliance with the New Zealand Building Code
[72] It is common ground between the parties that the repair methodology — to be recognised by the Court as meeting the Policies’ standard — will also have to comply with any relevant provisions of the Building Act 2004 and the New Zealand Building Code (NZBC) (promulgated by the Building Regulations 1992) which govern repair.
[73] In Fitzgerald v IAG New Zealand Ltd, Gendall J considered the provisions of the Building Act in the following summary which I adopt:22
[47] Section 17 of the BA [Building Act] requires that all building work must comply with the Building Code to the extent required by the BA. Sections 112 and 42A of the BA specify that, after repair, the building as a whole must continue to comply with the Building Code to the extent that it did before the repair or alteration. The BA does not require the repaired building to comply as if it were a new building.
[48]The requirements of s 17 have been summarised as:23
• Any new work must comply completely with the Building Code subject to any waiver or modification granted by the territorial authority (for example, if a shower compartment made of ordinary glass is being replaced, then the replacement must be made of safety glass as required to comply with the Building Code); and
• After the alteration, the whole building must comply with the Building Code to the extent specified by s 112.
[74]Section 112 Building Act relevantly provides:
112 Alterations to existing buildings
(1)A building consent authority must not grant a building consent for the alteration of an existing building, or part of an existing building, unless the building consent authority is satisfied that, after the alteration,—
(a)the building will comply, as nearly as is reasonably practicable, with the provisions of the building code that relate to—
22 Fitzgerald, above n 3 (footnote and emphasis original).
23 Duncan Laing and others Building Law in New Zealand (online looseleaf ed, Thomson Reuters) at [BL112.02]; adopted in Wheeldon v Body Corporate 342525 [2015] NZHC 884, (2015) 16 NZCPR 829 at [160].
(i)means of escape from fire; and
(ii)access and facilities for persons with disabilities (if this is a requirement in terms of section 118); and
(b)the building will,—
(i)if it complied with the other provisions of the building code immediately before the building work began, continue to comply with those provisions; or
(ii)if it did not comply with the other provisions of the building code immediately before the building work began, continue to comply at least to the same extent as it did then comply.
(2)Despite subsection (1), a territorial authority may, by written notice to the owner of a building, allow the alteration of an existing building, or part of an existing building, without the building complying with provisions of the building code specified by the territorial authority if the territorial authority is satisfied that,—
(a)if the building were required to comply with the relevant provisions of the building code, the alteration would not take place; and
(b)the alteration will result in improvements to attributes of the building that relate to—
(i)means of escape from fire; or
(ii)access and facilities for persons with disabilities; and
(c)the improvements referred to in paragraph (b) outweigh any detriment that is likely to arise as a result of the building not complying with the relevant provisions of the building code.
…
[75] As summarised in Fitzgerald, this means that the Building Act requires only the aspects of the house that have been repaired to be brought up to current compliance levels. Elements which are not repaired may be left at the same level of compliance as they previously were.24
[76] In any particular case, the Court may accordingly be required (upon evidence led) to determine whether a proposed methodology complies with the Building Act and/or will be granted a consent. That may in turn require the Court to consider the
24 Fitzgerald, above n 3, at [50].
applicability of what is commonly referred to as the MBIE Guidance (a guidance document of the Ministry of Business, Innovation and Employment (MBIE) on the repair and rebuilding of houses affected by the CES).25 The Court may refer to the MBIE Guidance in order to determine whether a proposed methodology is an acceptable solution which fulfils the obligation under ss 17 and 112 Building Act.26
[77] In an appropriate case, the Court when granting declarations based on a proposed methodology which the Court has found to be Code-compliant may make its declarations conditional upon the obtaining of relevant consents or exemptions. The Court may make an alternative declaration as to the methodology required in the event necessary consents and exemptions are unable to be obtained.27
Compliance with %NBS rating system
[78] For the purpose of the seismic (or earthquake) rating of existing buildings, engineers adopted a New Building Standard (NBS). The %NBS rating system has been explained thus:28
The rating given to a building as a whole expressed as a percent of the new building standard achieved, based on an assessment of the expected seismic performance of an existing building relative to the minimum that would apply under the Building Code (Schedule 1 to the Building Regulations 1992) to a new building on the same site with respect to life safety.
The %NBS is an evaluation in terms of protecting life in earthquakes and not in relation to the damage the building could be expected to sustain.
[79] It was common ground between the parties (and their experts) in this case that a %NBS of not less than 34 per cent must be achieved at Building 1 where the %NBS has its significant application in this case.29
25 Ministry of Business, Innovation and Employment Repairing and rebuilding houses affected by the Canterbury Earthquakes (3rd ed, 1 December 2012) [MBIE Guidance].
26 Fitzgerald, above n 3, at [56].
27 Fitzgerald, above n 3, at [82]–[85].
28 MBIE, 2017 (1).
29 Building Act 2004, pt 2, sub-pt 6A (Special provisions for earthquake-prone buildings) applies pursuant to the provisions of s 133AA (because Building 1 contains three or more household units and comprises two or more storeys).
PART III — THE DAMAGE AND REMEDIATION
Buildings 2 and 3 — 152 and 160
Description of the buildings
[80]The properties at 152 and 160 contain single-storey garages (Buildings 2 and
3) which are of identical layout and (with the exception of their construction in concrete block (152) and concrete tilt slab (160)) are similar in design.
[81] The foundations of both Buildings 2 and 3 consist of slab thickenings to the perimeter and below the walls. The thickenings are 400 mm deep (including 100 mm slab thickness). The slab is 100 mm thick, reinforced with a single central layer of 665 mesh. The slab sits on a DPM over a layer of compacted hardfill. The compacted hardfill extends 1 m out from the north, east and south sides (Buildings 2) and from the north-west and south sides (Buildings 3) of the foundation.
[82] The walls are respectively 190 mm thick concrete block walls with steel reinforcing (152) and concrete tilt slabs generally of 120 mm thickness (160).
[83] The garage buildings were constructed with lightweight roofs. They have a low seismic mass, which is dominated by the weight of the walls.
Settlement caused by liquefaction at 152 and 160
[84] For Vero, Mr Wightman, a geotechnical engineer of ENGEO Ltd, provided reports of cone penetration testing to depth, machine borehole testing, and depth and shallow borehole testing.
[85] The testing of ground at both 152 and 160 identified numerous layers below surface, including liquefiable layers. The sub-surface comprises interbedded alluvial material consisting of silt, sand and peat.
[86] Mr Wightman performed liquefaction analyses using on-site as well as published data.
[87]Mr Wightman then calculated liquefaction settlements for a ULS event (0.35
g) and for two different serviceable limit state (SLS) events (event 1 being a PGA of
0.13 g and event 2 being a PGA of 0.19 g).
[88] At 152, Mr Wightman’s calculations of vertical settlement (from liquefaction settlements) are set out in Table A:
Table A (152)
Design case Calculated vertical settlement Total Upper 10 m ULS 100–180 mm 90–160 mm SLS case 1 40–90 mm 40–70 mm SLS case 2 60–120 mm 60–100 mm
[89] For 160, Mr Wightman completed a liquefaction analysis based on similar testing to that conducted at 152. Mr Wightman’s calculations of vertical settlement (from liquefaction settlements) are set out in Table B:
Table B (160)
Design case Calculated vertical settlement Total Upper 10 m ULS 90–130 mm 90–130 mm SLS case 1 20–50 mm 20–40 mm SLS case 2 55–80 mm 55–65 mm
[90] In summary, the analysis of Mr Wightman indicated that the soils at both 152 and 160 have been and remain susceptible to liquefaction.
Various types of settlement at 152 and 160
[91] Issues arise as to the settlement of buildings in this case, and in particular as to which buildings and land have settled. Witnesses have referred to global, local and differential settlement.
[92] Adrian Cowie, in his brief of evidence for the plaintiffs, provided a diagrammatic explanation of how he uses the terms “global”, “local” and “differential” in relation to settlement, as set out in Figure 4.
Figure 4
[93]Mr Cowie would define the terms respectively:
(a)“Global settlement” — a settlement affecting both developed and undeveloped land, being the amount the entire footprint of a building settles in height (but excluding any local and/or differential settlement).
(b)“Local settlement” — the settlement of the building into the ground more or less on its own footprint (reducing the clearance of the floor to the ground).
(c)“Differential settlement” —the floor tilt or dislevelment of the floor.
[94] Mr Cowie also refers to “total settlement” representing the total by which the current lowest floor level has settled in height. He refers to this as the sum of the global, local and differential settlements. Mr Cowie approaches his analysis of total settlement upon the basis that three components — global, local and differential — may be identified separately and measured separately. Mr Cowie, as his diagram
(Figure 4) indicates, for the purposes of his calculations treats global and local settlement as uniform, with “differential settlement” representing any “tilt”. He nevertheless recognised (agreeing with Boyd Thomson (of Envivo Ltd), a surveying witness for Vero) that global settlement may not be uniform across a site.
[95] An issue arose in the course of the trial as to whether witnesses were using these terms in exactly the same way. It is unnecessary here to consider whether alternative meanings might more appropriately be used — given that Mr Cowie laid out these meanings at the start of the process of the exchanging of evidence, the convenient course is that the Court for this proceeding generally adopts Mr Cowie’s usages.
[96] Mr Thomson, while recognising the three concepts used by Mr Cowie, would not treat global and local settlement as necessarily uniform or consistent — he views global and local settlement as covering both uniform and non-uniform settlement.
[97] Both Mr Cowie and Mr Thomson recognised that what is ultimately important is that measurement of the extent of settlement (including any differential settlement) be accurate.
[98] Both Mr Cowie and Mr Thomson also recognised that beyond the footprint of a building which has experienced local settlement, there may be a zone of influence
— land which is affected by the local settlement in such a way as to itself settle. Mr Cowie referred to a concept of “the zone of influence for local settlement” from a particular building.
Plaintiff’s pleading in relation to 152
[99]The 152 plaintiff particularises damage to the garages at 152 as being:
(a)extensive cracking to slabs;
(b)voids under the slabs identified by slab-tapping;
(c)differential settlements (17 mm at Building 2/152 and 28 mm at Building 3/152); and
(d)floor slopes greater than 1 in 200 across 23 per cent of the floor.
[100] The pleading in relation to the garage slabs at 152 may be contrasted with the pleading in relation to the Building 1 slab which commences with an allegation of “complete foundation failure”.
Plaintiff’s pleading in relation to 160
[101]The 160 plaintiff particularises damage to the garages at 160 as being:
(a)extensive cracking to the slabs;
(b)injection and jacking holes from EQC repair;
(c)the buildings will require significant lifting; and
(d)floor slopes greater than 1 in 200.
[102] The pleading in relation to the garage slabs at 160 may be contrasted with the pleading in relation to Buildings 1 and 4/160 in which, for each, “complete foundation failure” is alleged.
[103] By its general pleading in relation to all alleged damage at 152 and 160, Vero admitted that all buildings had suffered cracking to the concrete ground floor slabs up to 1 mm but typically less than 0.5 mm.
Buildings 2 and 3 — at 152 in particular
Slab-cracking (floor)
[104] Mr Weber (the plaintiffs’ structural engineering witness) gave evidence of inspections he had carried out on all buildings. He stated that he had observed “very significant cracking” to the top of the floor slabs in Buildings 2 and 3/152. He referred
to the cracks being typically up to 1 mm wide. He referred to crack maps drawn by Mr Cowie as showing the extent of cracking. The crack maps show lines of cracking somewhat more numerous in Building 3 than in Building 2.
[105] Mr Cowie, who had prepared the crack maps, identified the visible cracking in Building 2 as being “a significant amount”. He stated that it was significantly more than would be expected solely due to shrinkage of the concrete slab during and after construction. Mr Cowie did not adjectivally describe the amount of cracking on the Building 3 slab. He again stated that he would not expect the amount and type of cracking purely from shrinkage.
[106] Mr Cowie opined in relation to both slabs that the cracking was due mainly, if not exclusively, to the CES.
[107] Mr Weber, considering the floor cracking on Buildings 2 and 3 alongside other “individual aspects of failure”, opined that the overall picture is one of “excessive earthquake damage”.
[108] For Vero, Samuel Polson, a structural engineer, addressed the cracking in the floor slabs of the 152 garages. He described the cracks as “minor … typically up to 0.5mm wide”. He observed that it appeared that no saw cuts were ever added to the slabs to assist with controlling the location of shrinkage cracks. He stated that, in relation to a slab only 100 mm thick, bearing directly upon the ground, his expectation was that many of the cracks evident were likely to have formed due to shrinkage. He stated that cracks smaller than 0.3 mm do not require repair whereas cracks in the slab surface and at the slab edge which exceed 0.3 mm in width should be repaired using epoxy injection techniques.
[109] I find Mr Cowie’s crack maps of the slabs of the 152 garages to be generally accurate as to location and length. Vero did not significantly challenge them in those regards. The crack maps are consistent with photographs which were produced in evidence and accord with the Court’s own overall impression gained from its site inspection with counsel.
[110]I find no evidence of crack width (in the 152 garages) greater than 0.5 mm.
Cause of slab-cracking
[111] There is no evidence that, at the time of construction or subsequently, saw cuts were made to assist with the control of shrinkage cracks and I find that there were no such cuts.
[112] Mr Polson stated frankly that he had not been able to determine if the slab cracks on Buildings 2 and 3/152 had been caused by earthquake shaking or slab shrinkage. He said it was also possible that cracks which had formed from slab shrinkage had opened further through earthquake shaking.
[113] Mr Weber considered it important, in considering foundation damage, to have regard to a range of matters including “significant cracking throughout the slab, excessive floor slopes and differential settlement”. He described the total damage to the garages (including cracking of the slab) as related to foundation settlements which occurred because of the CES. In Mr Weber’s evidence, the combined effect of the foundation damage negatively altered load paths in Buildings 2 and 3 and their building-strength because yielding or strain hardening occurred causing damage to reinforcement (in both slab and walls). This created an “ongoing deterioration of the structure due to loss of corrosion protection to reinforcement”.
Settlement and dislevelment
[114] Mr Cowie took measurements and concluded that Building 2 had suffered a total settlement of 221 mm, comprising 204 mm of global settlement and 17 mm of differential settlement (with the possibility that 14 mm of the settlement was local).
[115] Mr Cowie concluded that Building 3 had suffered a total settlement of 239 mm comprising global settlement of 211 mm and differential settlement of 28 mm, with no appreciable local settlement.
[116] Mr Cowie also presented maps of specific areas of the Building 2 slab with grades steeper than 1 in 200 (23 per cent) and 1 in 150 (4 per cent).
[117] Mr Weber’s conclusion, having regard to Mr Cowie’s measurements, was that there was evidence of earthquake-induced differential settlement in Buildings 2 and 3 which could then be taken (with other factors) to indicate that the slab-cracking was also earthquake-induced and “significant”.
[118] Vero’s case in relation to floor slopes, as outlined in Ms Meechan’s opening, was threefold:
(a)In Building 2, no slope exceeded 0.5 per cent over 2 m.
(b)In Building 3, the maximum slope was 0.65 per cent over 2 m, with an overall variation of 25 mm.
(c)All floor slope differentials were within “when new” construction tolerance.
[119] Mr Polson drew on a number of documents as a guide to determine the condition the building was likely to have been when new and whether, following the CES, there has been a loss of functionality (meaning damage). Mr Polson referred in particular to:
(a)the structural work specification for 152, which required the concrete slab to have finish class U3 per NZS 3114:1987 (the New Zealand Standard Specification for concrete surface finishes);
(b)table 3 in NZS 3114 which specifies for U3 a maximum gradual variation between two points less than 3 m apart of 5 mm, with an overall surface tolerance (pursuant to table 5.2 NZS 3109) of plus or minus 10 mm;
(c)Verification Method VMB1/VM4 of the NZBC, Appendix B, which limits a foundation design to a probable maximum differential settlement over a horizontal distance of 6 m to no more than 25 mm under serviceability limit state load combinations; and
(d)a report of the Engineering Advisory Group to the Department of Building and Housing dated 10 April 2011, which found evidence of an overall variation between 10 mm and 23 mm in the floor level of new concrete foundation slabs (the EAG report).
[120] The EAG report analysed details of nine slabs poured between the September 2010 and February 2011 earthquakes in Christchurch (six) Porirua (two) and Kaiapoi (one). None of the floors surveyed achieved the Standard Specification. The reporters noted that it was not possible to feel any appreciable slope on the slab surfaces when walking on the analysed slabs. In other words there was no apparent loss of amenity through the variation in levels.
[121] Against the background of the various documents to which he had referred, Mr Polson focused on the floor level variation across the ground floor of individual units (in relation to the garages, that is the individual garages). He observed that the floor slope across two points 2 m apart was less than 0.65 per cent. He stated that in his opinion the foundations of the 152 garages were within a reasonable “when new” construction tolerance, as found by the EAG report. He concluded that there had not been, through the CES, damage to levels such as required repair as there had been no loss in the functionality or performance of the foundation system.
[122] As a point of reference, Mr Polson identified also the MBIE Guidance.30 The MBIE Guidance was intended for timber-framed residential buildings, which these are not. Mr Polson nevertheless opined that the MBIE Guidance provides some useful guidance on criteria for re-levelling of foundations. Table 18.2 of the Guidance indicates that, for concrete slab buildings, when total differential settlement is less than 50 mm in a single unit and floor slopes are less than 0.5 per cent over a length of at least 2 m in a single unit, then no levelling is required. Mr Polson observed that the MBIE Guidance variation figure (50 mm) is significantly beyond the 20 mm variation threshold which he had adopted.
30 MBIE Guidance, above n 25.
[123] Upon the basis of the evidence, the plaintiffs have not established that there was any earthquake-induced dislevelment such as might indicate, in conjunction with the slab-cracking, additional evidence of structural damage.
The implications of the slab-cracking
[124] Mr Weber stated that he had inspected the top of the slabs of Buildings 2 and 3/152. He continued:
Cracks are typically up to 1mm wide which means the slabs have lost significant bending and shear strength, damage to reinforcement will have occurred and ongoing deterioration of [the] slab through loss of corrosion protection of the reinforcement.
[125] In relation to the width of cracking, Mr Weber produced video footage of an earthquake simulation (the “Shake Table test”) in which one could observe cracks opening up and closing on a wall under simulated shaking conditions. Mr Weber explained the purpose of the video was to show that it is very difficult to determine from residual cracks alone the extent to which the cracks had opened and closed during the CES. In cross-examination, Mr Weber noted that the video was for a six-storey or nine-storey building so that it was “pretty dramatic”, but Mr Weber added that: “to a certain degree this would be happening here”. He confirmed that the video was not a representation of this building but he could state with certainty that, at 152, cracks would have been opening and closing “to some degree” in the CES.
[126] The video simulation produced by the plaintiffs does not permit the Court to draw any conclusion as to the extent to which the cracks now evident in the building slabs opened during the CES beyond what is now visible. The only conclusions that can reliably be drawn on the evidence before the Court in relation to the structural significance of the cracking are those based on what the witnesses had been able to physically identify.
[127] I am satisfied that, of the cracking physically evident, some probably arose post-construction as a result of the failure to create expansion cuts. But I am equally satisfied that some of the cracking resulted from the CES. There is a final, further category of damage, namely cracking caused by slab shrinkage, which opened further as a result of the earthquake shaking.
[128] Mr Weber in his evidence opined that the crack patterns in both slabs and panels would have allowed moisture ingress and negatively impacted on the corrosion protection of reinforcing steel within the slabs/panels. However, in cross-examination he was taken to the provisions of the concrete structures standard, NZS 3101. He was questioned as to his conclusion that there would be deterioration of the reinforcing steel. Mr Weber stated that his comments were in relation to an area in which he is not an expert and derived “just from conversations with experts”.
[129] Within NZS 3101, cl 3 deals with “Design for Durability”. At cl 3.2.3, the standard states:
It is generally recognised that fine cracks in concrete do not significantly affect corrosion initiation of embedded reinforcement but larger crack widths may cause premature corrosion activity locally. Reference 3.1 considers that corrosion is not affected by crack widths less than 0.4 mm.
The reference referred to in the standard (3.1) is an article by Messieurs François and Arliguie published in 1999.31 The standard summarises the outcome of that research which flowed from experiments conducted over a twelve year period on reinforced concrete elements kept in a loaded state in a confined salt fog. Mr Weber was not aware of the François/Arliguie research until cross-examined in relation to it.
[130] In addition to Mr Weber, the plaintiffs also called Simon O’Brien (of Hampton Jones Consultancy Ltd), a chartered building surveyor with experience in post- earthquake repair assessments, including in relation to weathertightness. He similarly opined by reference to his own inspection and Mr Cowie’s crack maps that the extent of cracking had “fundamentally breached the weathertightness and durability of the buildings”, with “each crack” creating an opening for water ingress. He stated that this was evidenced by the presence of some lichen at cracks. He opined that water would likely have come into contact with the reinforcing steel. He concluded that repair to a “when new” standard would not be possible unless invasive testing demonstrated the absence of oxidisation. Mr O’Brien himself had not undertaken such invasive testing. It emerged in cross-examination that Mr O’Brien had also not conducted any non-invasive test such as exterior swabbing to determine any level of
31 R François and G Arliguie “Effect of Microcracking and Cracking on the Development of Corrosion in Reinforced Concrete” (1991) 51(2) Magazine of Concrete Research 143.
salt at the cracks in the buildings, although that could have been done. Mr O’Brien nevertheless took issue with Mr Polson’s focus on the width of cracks, and noted Mr Polson’s not commenting on the depth or frequency of cracking (he himself not giving evidence as to depth). As to crack width, he disagreed with the emphasis placed by Mr Polson on the recognition in NZS 3101.2006 of the work of Messieurs François and Arliguie (above at [129]). I did not find Mr O’Brien’s criticism of Mr Polson’s evidence to undermine the informed reliability of that evidence. I find, consistently with the recognition in NZS 3101, as referred to by Mr Polson, that the crack width is of critical importance in the assessment of potential damage and that Mr Polson’s conclusions accurately reflect the situation which probably exists across the buildings.
[131] There is not a sound evidential basis on which the Court could conclude that the nature of cracking caused to the concrete slabs in the CES will have led to any deterioration or risk of deterioration due to moisture ingress and/or corrosion.
Voids
[132] The plaintiffs assert that the CES created areas of voids under Buildings 2 and 3/152. The evidence of Mr Weber and of Mr Cowie is that the presence of such voids was established by slab-tapping. Mr Weber referred to hammer-tapping.
[133] In his evidence, Mr Cowie stated that he had carried out “hammer tests” to various portions of the garage floors and that sound typical of voiding was present in numerous areas throughout the structure. Mr Cowie stated that in his opinion the “soundings” (together with other measurements and site indicators) indicated that voiding was “significantly more than likely”. He added that, in order to conclusively determine the depth and extent of voiding, intrusive coring would be required entailing 100 mm diameter cores to be taken at around 1 m centres. Mr Polson rejected the use of hammer-tapping as a reliable or accurate method for stating with any certainty that voids existed beneath a slab.
[134] As the primary structural engineer called for the plaintiffs, Mr Weber was cross-examined by Ms Meechan as to best practice in relation to establishing the existence of slab voids. Mr Weber was referred to a passage in the evidence given by
Mr Cowie as a witness in the Jarden case.32 The passage which Ms Meechan quoted reads:33
I consider it good practice to carry out both ground penetrating radar and intrusive coring to determine accurately the presence or absence of slab voids. To rely solely on floor level variations and/or slab cracking is, in my experience, a very imprecise method to determine voids.
[135] In his judgment in Jarden, Kós J recorded: “Mr Cowie conceded that ‘tapping the concrete slab is an imprecise method of determining the presence, or absence, of slab voids’ ”.34
[136] In cross-examination, Mr Weber agreed with that evidence. He also confirmed that he had not carried out any intrusive coring to determine the presence or absence of voids under the slab.
[137] A picture of an area of sub-surface can be built up by ground penetration radar (GPR), utilising a device containing a transmitter and receiver. In this case GPR scans of the concrete slab foundations at 152 were carried out by Safety First Service Locators Ltd in June 2015. On the basis of the scans, the report writer (Rick Butson) reported that no significant voids were detected in any of the six garages comprising Buildings 2 and 3. Mr Polson in his evidence observed, having referred to that report, that he would have expected the garage buildings and underlying ground to have settled together, without voids forming beneath the slab, by reason of the shallow foundations all being founded above the potentially liquefiable layers.
[138] Having regard to the evidence, the plaintiffs have not established either that there are significant voids beneath the slabs of Buildings 2 and 3/152 or that the CES caused voiding. To the contrary, upon the basis of the GPR results and Mr Polson’s evidence I find it established that Buildings 2 and 3/152, during the CES, settled more or less consistently with the ground, with no significant voids resulting.
[139] As summarised by Mr Till in his opening for the plaintiffs, Mr Weber’s conclusions of observed foundation damage (significant slab-cracking, excessive floor
32 Jarden (HC), above n 5.
33 At [44].
34 At [44].
slopes and differential settlement, and slab voids) contributed to the conclusion that foundation damage of Buildings 2 and 3/152 has resulted in negatively altered load paths throughout the garage structures. By reason of the above findings in relation to those alleged components of damage, I also reject Mr Weber’s evidence that there has been a negatively altered load path throughout the Buildings 2 and 3/152 structures through foundation damage. I find positively that nothing that happened within the slabs in the course of the CES led to an alteration in the load paths of the garage structures.
Superstructures — Buildings 2 and 3/152
[140] By their statement of claim, the plaintiffs assert and particularise damage to the walls of the garage buildings as follows:
In the garages step cracking and cracking in concrete blocks indicate structure has racked and moved laterally during the earthquakes. Residual lean measurements do not show significant leans, but visible cracking indicates larger leans occurred during the earthquake shaking.
[141] In his evidence, Mr Weber summarised the damage to the superstructure of Buildings 2 and 3/152 as:
Cracking to the concrete block walls resulting in the significantly altered load path system and building strength. Damage to reinforcement including strain hardening and negatively affected stress and stain [sic] profiles. There is ongoing deterioration of the structure due to loss of corrosion protection to reinforcement.
[142] Later in his evidence in chief, Mr Weber again referred to the wall cracking damage which, in conjunction with damage at foundation level, led him to conclude that the “overall picture is one of excessive earthquake damage” with negatively altered load paths and building strength reduction.
[143] In the balance of his evidence in chief, Mr Weber devoted detailed analysis to a consideration of Buildings 1 and 4/152 based on verticality and other survey evidence produced by Mr Cowie. The plaintiffs have not produced verticality survey evidence for Buildings 2 and 3/152. Mr Weber did not comment on the verticality of Buildings 2 and 3. Nor did his initially briefed evidence in chief identify his assessment or reasoning in relation to any cracking of walls on Buildings 2 and 3/152.
[144] For his part, Mr Cowie produced six photos showing what he described as “lateral separations in the blockwork and between walls at the corners” in Building 2. He also produced “3d views” of Buildings 2 and 3/152 showing some cracking between blockwork on a number of faces of Buildings 2 and 3/152. He also produced a (more limited) number of photographs in relation to Building 3.
[145] Mr Polson’s evidence was briefed and served upon the plaintiffs in the pre-trial period. Mr Polson gave his evidence as briefed. Mr Polson carried out an inspection of the buildings on 6 March 2019 and assessed cracks (whether earthquake-caused or not) which required repairs. He approached the matter on the basis that, for repair, cracks which exceeded 0.3 mm would be epoxy-injected and that cracks of 0.3 mm or less would be raked out and re-pointed. Upon that basis, he estimated that in Buildings 2 and 3/152 there were 2.5 m of cracks to be epoxy-injected and 22 m of cracks to be raked out and re-pointed.
[146] Mr Polson stated that he completely disagreed with Mr Weber’s conclusion that for the garages “the overall picture is one of excessive earthquake damage”. Mr Polson considered the garage earthquake damage to be somewhere between nil and minor.
[147] Mr Polson also disagreed with Mr Weber’s conclusion that superstructure damage had caused the load paths in the buildings to be negatively altered and building strength reduced. Mr Polson opined that the garage buildings had not suffered a degradation in strength.
[148] He commented specifically on two aspects of the plaintiffs’ evidence in relation to the superstructure of Buildings 2 and 3/152. He first observed the lack of a verticality survey for the buildings. Secondly, he referred to what he described as “minor cracking” to a block course in the front garage (for unit 6) in Building 3. He stated that the crack was in one block face only and did not appear to propagate into the adjacent blocks. He opined that the crack may have formed during construction of the wall rather than being earthquake damage — he would have expected, if it were earthquake damage, that the crack would likely have extended to the top or bottom of the wall (which it does not).
[149] I recognise that Mr Cowie has gone to the extent of producing crack maps. In themselves, they identify what may be described as a modest presence of cracking. There is, however, no detailed analysis in relation to any of the particular cracks described on Mr Cowie’s crack maps for Buildings 2 and 3/152. To the extent the plaintiffs have produced photographs, they appear to show some cracks of noticeable width.
[150] I am satisfied on the evidence that Buildings 2 and 3/152 suffered some earthquake damage in the form of cracking between blockwork. I am not satisfied that all the cracking shown on Mr Cowie’s crack maps was caused in the CES — in particular, it is at least equally likely that a significant portion of it pre-dated the CES.
[151] Mr Weber opined that the reinforcement in the walls of Buildings 2 and 3/152 would have suffered strain hardening during the CES with negative effect on stress and strain profiles. Mr Weber in his evidence as briefed had spoken specifically of “strain hardening”, but he elected in giving his evidence to add to that by referring to both “yielding” and “strain hardening”. Mr Weber explained that he came to discuss strain hardening because of his conclusions in relation to other damage recorded in the standard of repair required.
[152] He stated that the level of strain hardening which occurred in the buildings at 152 was impossible to tell without dismantling the building. This was because of the “extensive nature of cracking”. He stated that fracturing of reinforcement will occur when cracks open up between 2–4 mm. Strain hardening represents a material reduction in strength, which Mr Weber noted is all that is required given the definition of damage and the reinstatement standard. Mr Weber stated that when cracks open up between 2–4 mm, reinforcing would start to deform and strain harden.
[153] Mr Weber referred to “yielding” as the point when the reinforcing could provide no further resistance — it suffers plastic deformation, being permanent or non- recoverable deformation after release of the applied load.
[154] Mr Polson also gave evidence as to the concepts of “strain” and “yielding”. He stated:
296.When reinforcing steel is loaded in tension, as occurs during the bending of a reinforced concrete element, the steel stretches. The proportional increase in the length of the steel is called the strain. Reinforcing under tension initially behaves linearly, in that the strain of the bar will reverse when the load is removed. This is called elastic behaviour.
297.… when the force on the bar causes the strain [to reach a certain point] the bar will yield. In theory, the maximum load the bar can resist has been reached, ... Permanent, residual deformation of … bars … is called plastic behaviour.
[155] In Mr Polson’s evidence, “strain hardening” occurs when a bar continues to be loaded following yield. When the bar reaches its ultimate strain, it will snap or fracture.
[156] Structural engineers design buildings deliberately to allow reinforcing to yield, a concept known as “ductility”. Ductile buildings will form plastic hinges, focusing the yielded region, and acting to dissipate energy.
[157] Mr Polson referred to the “trade-off for highly ductile buildings” being that they tend to suffer high levels of damage in large earthquakes. When the reinforcing bars yield, they can cause significant cracking at the hinge zones, residual deformation and spalling of concrete.
[158] Mr Polson described the lateral load resisting system at 152 as neither flexible nor highly ductile, the buildings being squat and stiff and designed to remain essentially elastic with very limited if any yielding of reinforcing, at ULS load levels.
[159] Mr Polson explained that for strain hardening of the reinforcing steel to occur, the reinforcing must yield. For the reinforcing to yield, cracks in the concrete must form. For strain hardening to significantly reduce the number of cycles that a bar can withstand, the yield in the bar would need to be significant, with the strain deformation resulting in considerable cracking damage. Mr Polson stated that a number of cracks exceeding 1 mm would be expected. (I note the parallel reference by Mr Weber to cracks of 2 mm to 4 mm.)
[160] Mr Weber made a detailed analysis in relation to strain hardening at Buildings 1 and 4. It was in relation to those buildings that he concluded, on account of the
evidence of wall deformation which he observed, that there had been between 10 and 100 per cent strain hardening. Although that evidence related to Buildings 1 and 4/152, the basis of Mr Weber’s conclusions is also relevant to (and indeed formed a basis of) his conclusions that there had been such deformation of Buildings 2 and 3/152 as to cause strain hardening and yielding.
[161] Mr Weber based his analysis of deformation (and his following conclusions as to strain hardening) primarily on external cracking, particularly to Building 1/152. In particular, he described as “the area of biggest concern” the cracking around the archway (below unit 3) in Building 1/152.
[162] Ms Meechan cross-examined Mr Weber in detail as to the extent of his investigation of cracking in the walls, Mr Weber having referred in his evidence to an external examination of walls. Mr Weber referred to only one crack which he described as “going all the way through” but added that he did not know how that crack had performed during the earthquake and whether it would have been more to do with “in plane”.
[163] Ms Meechan also cross-examined Mr Weber in relation to a “clean-out port” in a wall in Building 1/152. There was the opportunity to examine the reinforcing steel in that clean-out port. Ms Meechan noted that Mr Weber had the opportunity to examine the reinforcing steel to support his hypothesis of strain hardening but he had not taken that opportunity. Mr Weber explained that he not had done so because he did not believe that there was any deformation at that point. He therefore concentrated instead on the deformation which he saw outside rather than on the internal long north/south walls. Mr Weber had not assessed deformation limits for the north/south walls.
[164] Mr Polson disagreed with Mr Weber’s evidence that it was reasonable to say that the opening and closing of cracks would have been significant enough to yield (through strain hardening) and possibly fracture. Mr Polson also disagreed with Mr Weber’s further conclusion that the load paths in the building would have been altered. Mr Polson rejected the suggestion that there had been a reduction in strength and believed that any reduction in stiffness would have been so small as to be negligible.
[165] Mr Polson rejected a suggestion that the load paths in the building would have been interrupted by cracking. Mr Polson stated that that is not how cracking works, the load paths remaining the same if the load is the same. He observed that yielding does not mean a loss in capacity as the reinforcing bar still has the same capacity as it did prior to being yielded. He repeated that he did not consider there was any indication the reinforcing bars had yielded. He added that, if they had, it would not have altered the load paths within the structure. Load would still go through the wall elements which would bend along their length. Reinforcing would go into tension. Concrete would go into compression. Loads would transfer out to the foundations and then to the ground, the load path remaining unchanged.
[166] The plaintiffs’ assertions that the reinforcing bars suffered strain hardening and that the Buildings 2 and 3 suffered negative stress and strain profiles turns on Mr Weber’s evidence. That evidence falls short of establishing the conclusions stated. Having regard to the evidence of relatively limited cracking and in the absence of any direct investigation and conclusion as to strain hardening of the reinforcing bar, I am not satisfied that either strain hardening of reinforcing occurred or that the buildings were negatively affected in their stress and strain profiles.
Buildings 2 and 3/152 — requirements of remediation
[167] The plaintiffs have not established that Buildings 2 and 3/152 suffered such structural damage as to require any remediation beyond repair. I have rejected the plaintiffs’ allegations of fundamental structural damage.
[168] What requires repair is cracking to both slab and superstructure, for which Vero has provided a repair methodology. As the plaintiffs’ position has been that Buildings
2 and 3/152 require demolition and rebuilding, it is convenient to focus the remediation discussion first upon Vero’s position and evidence as to remediation.
[169] Vero’s proposed repairs to Buildings 2 and 3/152 are for all cracking (without regard to whether any particular cracking may have existed pre-CES).
[170] Vero proposes that cracks in floor slabs of greater than 0.3 mm be repaired by epoxy injection; that cracking in block wall mortar joints be removed and re-pointed;
that externally there be installed a Resene masonry render system by a Resene- approved applicator; and that for internal cosmetic repair of the garages there be provision for the grinding of floors, acid etching followed by preparation and painting of the floors, the raking out and cementing plaster on internal wall cracks and the preparation and repainting of walls.
[171] Scott McIlraith of Maynard Marks (a building surveyor) was instructed to prepare for Vero a scope of such repair works and provided a brief of evidence, which was taken by agreement as read.
Repair by epoxy injection
[172] The repair proposed by Mr Polson for cracks exceeding 0.3 mm in width uses epoxy injection techniques. In relation to such cracks, the cracks would be exposed and repaired with epoxy resin.
[173] The evidence relating to the potential effectiveness of epoxy resin injection for cracks at 152 and 160 was dominated by reference to two reports:
(a)a report 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 — generally referred to as the “Hamburger report”;35 and
(b)a report of Batchelar McDougall Consulting Ltd (BMC) entitled “Epoxy Resin Injection as a Repair Strategy for Concrete” which may be conveniently referred to as the “BMC report” and dated 23 May 2019 (that is, the week before this trial commenced).36
35 Nicholas G Wetzel and Ronald O Hamburger Evaluation of Epoxy and FRP Repair of Earthquake- Damaged Concrete Structures (Simpson Gumpertz & Heger Inc, November 2014) [Hamburger report].
36 Evie Anderson Epoxy Resin Injection as a Repair Strategy for Concrete (Batchelar McDougall Consulting Ltd, May 2019) [BMC report].
Plaintiffs’ position
[174] Mr Weber rejected the ability of epoxy resin to satisfactorily bond the cracks in the buildings at 152 and 160. In cross-examination, he confirmed that he was not “dissatisfied with the literature that suggests epoxy injection will satisfactorily bond cracks” but he identified, as he had in his evidence in chief, significant reservations as to the efficacy of epoxy injection in relation to the structures at 152 and 160. In particular, he opined that epoxy resin injection will not restore yielding of reinforcement or the stiffness of the structures.
[566] The evidence does not establish that earthquake damage has occurred at 152 to the primary stormwater network — it is probable, as opined by Mr Congalton, that silt deposits will be flushed out on remediation of the remainder of the system.
[567] Accordingly, the required remediation is the entire replacement of the waste water pipe systems and the stormwater laterals.
Above ground/152
[568] Civil engineering design distinguishes between the primary drainage system (through an underground drain system connected to the public network) and a secondary overland flow path (OFP). The “when new” primary stormwater network at 152 was limited to the single catchpit in the driveway area which dropped water into a collect pipe running north towards Salisbury Street and discharging to the roadside kerb there. There was no primary network for the rear of 152.
[569] There was common ground between Mr Congalton and Mr Tisch as to the following matters:
(a)as constructed, there was a 100 mm clearance between FFL and pavers (meeting the requirements of NZBC E2/AS1) although the design drawings specified 150 mm clearance;
(b)the design drawings allowed for crossfalls across the asphalt to the central dished channel as low as 1 per cent;
(c)the design drawings (extrapolated) provided for grades from 0.1 per cent to 1.5 per cent (with the possible exception of the east of unit 4 where the grade may have been steeper); and
(d)the area at the rear of the side (around Building 4) was designed to be relatively flat with only 25 mm fall available to the southern end of the asphalt driveway (a distance of 20–25 m, with a longitudinal grade of 1 in 800 to 1 in 1000 (a fall recognised by Mr Tisch as “minimal”).
[570] It is also common ground that the driveway catchpit as designed was to be located in the middle of the driveway immediately north of Building 1, that is close to Salisbury Street. But, as constructed, the driveway catchpit is to the immediate south of Building 1. Mr Congalton in his evidence demonstrated diagrammatically how the
area of ponding around the catchpit varied through the design and as-built scenarios and into the scenarios which currently exist and which Mr Congalton opines his proposed design will achieve. Mr Congalton’s diagram is set out as Figure 5.
Figure 5 (Driveway ponding diagrams (152))
[571] As indicated in Figure 5 (and recognised by Mr Tisch in his reply evidence), Mr Congalton’s strategy of replacing the catchpit adjacent to the Salisbury Street footpath would serve to provide a continuous fall over the length of the 152 site and to remove the existing ridge.
[572] Both Mr Congalton and Mr Tisch recognise that the extent of impermeable surfacing at 152 introduced after construction (such as through additional paving) was likely to have added to water run-off when compared to the “when new” state.
[573] In summary, 152 may be viewed as having in the first place an inferior design for surface water and OFP, some aspects of which were exacerbated through alterations made during construction and through the subsequent addition of impermeable surfaces.
[574] The plaintiffs allege, in relation to surface water and OFP, that there has been damage to 152 (as well as to 160) in the following ways:
(a)the asphalt seal and base course have been damaged;
(b)there has been differential settlement to the asphalt driveway and to the concrete dish channel, affecting surface water drainage;
(c)the settlement of buildings (both differential and local) has caused increased risk of inundation due to reduced slab to ground levels and reduction or removal of functionality of the SFP; and
(d)there are non-compliant slab to ground clearances.
[575] Nothing turns on some differences between the witnesses as to the extent of asphalt damage. Mr Congalton’s repair methodology, in order to achieve an appropriate gradient at 152 and to undertake underground drainage replacement at 160, proposes removing and replacing all surfacing and base course in any event and replacing them.
[576] It is common ground that Buildings 4/152 and 160 have both suffered global settlement (appropriately not pleaded as damage recoverable under the Policies) and localised settlement. I have above (at [549]) noted the evidence and Vero’s proposed repairs in relation to the rear of Building 4/152. In relation to issues of potential inundation from that point to the front of 152, the issue is as to whether Mr Congalton’s proposed design satisfactorily achieves an appropriate gradient and clearance from the garages (Buildings 2 and 3/152). As recognised by Ms Macfarlane, the critical question is whether any localised settlement of Buildings 2, 3 and 4 has materially increased the susceptibility of those buildings to flooding compared to their “when new” condition or rendered them non-code compliant when they were compliant before.
[577] The plaintiffs’ pleading of an increased risk of inundation (at both 152 and 160) related specifically to Buildings 4 — an understandable focus given the evidence
adduced by the plaintiffs as to the extent of localised settlement in Buildings 4 (but not other buildings).
[578] The context in which the following discussion occurs is that the original design for surface water and OFP was significantly less than optimal; that, as constructed, changes were made which increased the risk of ponding at catchpit (as illustrated in Figure 5, above at [570]); and that there had been post-construction modifications (such as paving) increasing areas of impermeability.
[579] Given the plaintiffs’ pleaded reliance on the increased risk of inundation, it is necessary before considering any repair designed to address what evidence of increased risk exists. In addressing that issue, it is necessary to distinguish (as the plaintiffs’ own pleading does) between any inundation risk created through a global settlement (the responsibility of EQC) and any increased risk of ponding as a result of local settlements of Buildings 2, 3 and/or 4.
[580] Having regard to the design drawings and the evidence of as-built conditions identified by the witnesses, it appears that the longitudinal fall from the rear to the front of 152 was in parts as little as 1 in 800 to 1 in 1000 and in terms of crossfalls (falls across the asphalt down to the central dish channel) as low as 1 in 100. Mr Congalton’s design is based on a longitudinal fall (from the rear to the front of 152) of 1 in 500, in order to comply with the IDS of the CCC. Vero’s position is that Mr Congalton’s design, in relation to longitudinal fall, achieves a substantial improvement over what is estimated to have been the achieved fall if the original design drawings were strictly adhered to.
[581] Mr Congalton’s design for the surface grade of his proposed slot drain in the driveway is 1 in 300, a grade which Mr Tisch recognised as best practice.
[582] Mr Congalton’s design for crossfalls on paving around Buildings 4 range from 0.8–2.6 per cent. Mr Congalton and Mr Tisch had calculated from the original design drawings that those falls had been between 0.1–1.5 per cent (except for the east of unit 4, where the fall may have been steeper). There is no regulatory requirement (NZBC or IDS) for minimum falls in courtyard areas. Vero’s case is that Mr Congalton’s
designed crossfalls around Buildings 4 achieve better outcomes than those originally designed. Vero further says that when the improvements to the primary drainage system are taken into account (both dished and slot drains around Buildings 4 which did not previously exist) there is a substantially better drainage outcome than existed before the CES.
[583] Mr Congalton’s design of crossfalls on the driveway range provide for falls of 2.2–2.9 per cent at the southern end and around 4 per cent at the northern end of Buildings 2 and 3. Mr Tisch referred to a best practice on asphalt of generally not less than 2 per cent. In any event, a fall in the 2 per cent range is a significant improvement on the 1 per cent crossfalls originally designed.
[584] Mr Congalton has built into his design beneath unit 3 (above the archway in Building 1/152) a crossfall of narrow width increasing to approximately 10 per cent (which may be contrasted with falls previously of up to 6 per cent north of Building 1). This design aspect was incorporated to accommodate a lowered level of the driveway at the front boundary. Mr Congalton was challenged by Mr Till in cross- examination upon the basis that such a grade (of 10 per cent or more) was “too high”. Mr Congalton explained that such a design is utilised in particular situations (such as the crossfall between a kerb and a vehicle crossing), with a 10 per cent fall in his evidence a not-uncommon occurrence when walking down a typical street in Christchurch. Mr Congalton rejected the suggestion that in that context such a crossfall was either hazardous or unsightly. Mr Congalton referred to having himself designed 8 and 9 per cent in some situations where he was free of any constraint.
[585] Mr Congalton’s design at the road frontage involves the lowering of the level of the driveway by 50 mm. That design flowed from discussion had with the Designer for the Transport Team of the CCC who had confirmed in writing that, with 300 mm from the existing boundary level to the roadside channel edge, lowering the boundary by 50 mm would have no detrimental effect on channel flows and would in fact improve the crossfall of the path at the driveway. Mr Congalton was cross-examined that the 50 mm lowering would adversely reduce the margin previously enjoyed by
152 against ingress of water from the street. Mr Congalton recognised that
“theoretically” there would be a change to the level of protection which 152 enjoyed from flooding from the street but explained:
Ah, theoretically, yes it would be but I don’t know that there is a risk to water entering the site. I haven’t seen anything presented by Mr Cowie or Mr Tisch to suggest it would at 152 because the street continues to fall all the way to the property at 166, so there’s no reason for water to stop and enter our site.
[586] The other evidence adduced confirms the fall of the street from west to east. There is no evidence to contradict Mr Congalton’s conclusion that a 50 mm lowering of the boundary would create only a theoretically increased risk of inundation.
[587] Mr Congalton’s design, at the perimeter of Building 1/152, involves construction of a 100 mm wide nib wall, the purpose of which is to protect the foundations and the DPM which had become exposed in the CES. Mr Cowie took issue with reduction of the driveway (200 mm in total) as being “a restrictive feature that will make it more difficult for vehicles entering and exiting the site”. Mr Congalton rejected that criticism — he observed that he doubted that a car would be driven within 100 mm of the wall because to do so would risk damage to parts of the vehicle such as wing mirrors. Mr Congalton expressed the view that vehicles should not be within 100 mm of the wall while on the driveway. Mr Congalton rejected the possibility of “tight manoeuvres” as, on that portion of the driveway, the exercise involves driving straight through.
[588] I prefer Mr Congalton’s evidence in relation to the implications of the nib wall. It addresses repair need without adverse effect on the needs of vehicles.
[589] Mr Congalton’s design also calls for the addition of (an additional) step to the front courtyards of units 1 and 2 at Building 1/152. Mr Congalton was cross-examined on the basis that he was including the additional step only because of the nature of the works he was proposing. He confirmed that that was so but explained also that through having the catchpit at the front of the site where it was originally designed, the additional step avoids the risk of ponding to the courtyards in units 1 and 2.
[590] Mr Congalton’s design incorporates two forms of drain being a short area of concrete dished channel at the rear western and eastern boundaries of 152 which takes
water to slot drains which then meet at the north of unit 5 from which point a single slot drain runs directly north to Salisbury Street. Apart from on matters of levels and falls, the plaintiffs did not take issue with the capacity of either form of drain to drain water. But Mr Congalton was cross-examined upon the basis that slot drains have disadvantages over dish drains, such as being prone to blockages. Mr Congalton answered that there are pros and cons. He explained that slot drains and dish drains (and associated catchpits) all require maintenance. It was suggested to Mr Congalton that the lids of slot drains “rock around”, which Mr Congalton explained did not occur if they are installed properly and the right product is chosen. Mr Congalton explained in response to a question as to the use of “cheap and nasty” products, that the product he would be specifying is rated to aircraft, having a proper metal slot drain over the top, not a plastic one. Mr Congalton explained that in his view the slot drain proposed for 152 mm is preferable in that it creates a flat transition in the centre of the driveway.
[591] I found no basis in the evidence to suggest that the choice of slot drains would produce a performance or amenity inferior to that of the system when new. To the contrary, there will be significant improvements in the system as a whole when compared to the as-built situation.
Catchment fall and flow 152 and 160
[592] Mr Congalton, alone of the experts, performed calculations of catchment fall and flow at both 152 and 160. His calculations were explained and I accept them. He concluded that there is minimal overland flow to 152 from adjacent properties. Shallow sheet ponding will occur around the relatively flat southern third of the site which will then spill north into the paved driveway area on the adjacent site to the west, at a combined flow rate of approximately 7.4 litres per second. Water will then pond around the catchpit until it spills over the crest at the front of the site and into Salisbury Street, to run away from the site to the east. Water from the courtyards of Building 1 will contribute to the driveway catchment or will flow onto adjacent eastern sites by reason of the western/eastern slope.
[593] Mr Congalton’s opinion is that all the relevant OFP occurrences would have occurred before the CES and that none of the calculated flow rates or sheet flow depths would pose a material risk to pedestrians or buildings with compliant clearances.
[594] The flow paths (both primary and secondary) must comply with the requirements of cl E1 of the NZBC. Relevantly, that requires that surface water run- off shall be “disposed of in a way that avoids the likelihood of damage or nuisance to other property” in a storm with an annual exceedance probability (AEP) of 10 per cent (cl E1.3.1) and surface water resulting from a 2 per cent AEP event shall not enter buildings (cl E1.3.2).
[595] The cl E1.3.1 protection of “other property” is directed to protecting neighbouring property (which in this case includes neighbouring units within the 152 and 160 properties). In other words, surface run-off from any individual unit must not cause damage or nuisance to any other unit.
[596] The protection of cl E1.3.2, on the other hand, is of all buildings, that is including each unit itself (not just other properties).
[597] The levels of protection under cls E1.3.1 and E1.3.2 are different — E1.3.1 requires the avoidance of the likelihood of damage or nuisance whereas E1.3.2 forbids the entry of surface water.
[598] Evidence was given as to CCC requirements and other guidance in relation to the allowable falls on roads and access ways which are taken into account in determining compliance with E1.
[599] Several requirements or guidance referred to at trial were in relation to land development and subdivision. Mr Tisch, for instance, referred to NZS 4404 (Land Development and Subdivision Infrastructure), for the requirement under cl 3.3.16.1 that crossfalls be not less than 2 per cent on accesses. The standard states that accesses are to be constructed in accordance with the requirements of a territorial authority unless alternative designs by the developer’s professional adviser are approved by the territorial authority.
[600] Reference was also made to the CCC IDS, which specifically applies to CCC funded assets and those which would vest on subdivision. The IDS states that it has replaced NZS 4404 within Christchurch City. Clause 8.12 of the IDS indicates that the CCC will be placing the onus of confirming both suitability of design and construction on the developer.
[601] Through the joint conferral by Mr Congalton and Mr Tisch, it was recognised that the CCC is entitled to and does accept lower falls for roads and access ways than apply under the standards and guidance in relation to subdivisions. While there were references in the evidence to “best practice”, it was recognised by the witnesses that approvals may be obtained (upon the basis of appropriate professional certification) for designs which might not fall within that usually recognised as “best practice”. Such was identified, for instance, in the evidence of Mr Tisch. He, while observing that “best practice” crossfalls on asphalt called for 3 per cent, identified that the CCC would accept 1.7 per cent. There was disagreement between Mr Congalton and Mr Tisch as to the ability of contractors (including major contractors such as Fulton Hogan) to lay asphalt at grades lower than 1.7 per cent. Mr Congalton referred to works he had designed and supervised where Fulton Hogan had successfully laid asphalt at grades of 1–1.5 per cent on public roads. He referred also to another contractor who in his experience has provided high quality and consistent work and will undertake to provide a warranty for asphalt laid at 1 per cent on both public roads and private accessways. Mr Congalton confirmed that the equipment used by that contractor is sufficiently compact to pass through the accessways at 152 and 160.
[602] There was a similar difference in opinion between Mr Tisch and Mr Congalton in relation to non-access areas such as the paved courtyards. Mr Tisch, while accepting that it was not a CCC requirement, opined that a 2.5 per cent crossfall represents best practice. Mr Congalton stated that there was no minimum acceptable fall for such areas and that the matter comes down to designer/contractor choice.
[603] In relation to the performance of what may be called “less than best practice” slopes and the ability of owners/contractors to obtain territorial authority approval for such slopes, I prefer the evidence of Mr Congalton, based on the practical experiences of which he was able to speak. To the extent that it might transpire that there is an
impediment in relation to any required consent or authorisation from a territorial authority in relation to Mr Congalton’s or another’s design, such may be accommodated within any declaration that this Court makes.
Underground/160
[604] I set out above at [562] Ms Macfarlane’s succinct summary of the primary stormwater networks at both 152 and 160. 160, as built, differs from both its design and from 152 — it does not have a main 100 mm diameter collect pipe running centrally through the site but instead has separate 100 mm diameter collect pipes for the northern and southern halves of the site, together with provision for a small sump located in the front courtyard of unit 5.
Above ground/160
[605] The waste water networks on both properties are similar (but also differing from their design).
[606] In terms of the parties’ pleadings as to damage, the situation at 160 differs in that both parties agree that the stormwater main at 160 (as well as the stormwater laterals) are probably damaged. That is in addition to their agreement that the waste water main and lateral underground pipes are probably damaged.
[607] Mr Congalton’s repair design for 160 accordingly makes provision for the replacement of the stormwater main at 160, along with the other underground drainage infrastructure.
[608] It is also common ground between the parties that the waste water pipe systems at 162 need to be entirely replaced. The regulatory framework and guidance in relation to surface water and overland flow paths applies at 160 as it does at 152 (discussed above at [594]–[597]).
[609] As constructed, the primary stormwater network for 160 was limited to a catchpit in the central driveway area which dropped into two 100 mm diameter collect pipes for the northern and southern halves of the site. There was no primary network
for surface water collection for the southern part of the site around Building 4 other than a courtyard sump for the front of unit 5.
[610] Both Mr Congalton and Mr Tisch agreed that with no primary system available to units 4 and 6, nuisance flooding might occur. Planter boxes constructed in the courtyard of unit 5 meant that the natural flow path (west to east from unit 4 to unit 6) was blocked, with the potential for inundation.
[611] It is common ground that, following the CES, there is less than a 150 mm clearance between the lowest FFL in Building 4 and the lowest FGL on the southern boundary, between 160 Salisbury and 149 Peterborough.
[612] As in relation to 152, it was Mr Congalton who provided the Court with flow calculations. He calculated a moderate overland flow from adjacent properties onto the site resulting in:
(a)ponding in the western courtyard of unit 4. Affecting that courtyard were a garden bed which had been constructed at a raised level, a step- up constructed to the driveway area to the north and a barrier formed by planter boxes in the front and back yards of unit 5;
(b)water ponding in the driveway from above the catchpit until it spills over the crest to the north of the building for courtyards;
(c)water ponding in front of units 1 and 3/160, which will spill into the driveway and flow north to the road or south to the driveway catchpit;
(d)water flowing from the eastern boundary from 166 Salisbury to join the overflow from the driveway and eventually crossing the southern boundary; and
(e)the combined secondary OFP eventually discharging over the southern boundary at approximately 24 litres per second.
[613] On Mr Congalton’s calculations, units 4 and 5 would suffer inundation in a 2 per cent AEP event.
[614] Mr Congalton’s opinion is that inundation from the driveway sump ponding does not extend to the garage FFLs, with consequently no more risk of flooding of garages than there was before the CES. He and Mr Tisch agree that inundation of units 4 and 5 would have occurred in a 2 per cent AEP event before the CES (as after).
[615] The consequence of Mr Congalton’s evidence is that the CES has slightly increased the risk of ponding at 160 and, in particular, flooding to the units in Building 4 in a 2 per cent AEP event (but with units 4 and 5 having previously been exposed to that risk).
[616] Mr Tisch recognised as poor design what the original design showed as an apparent (175 mm) step down from 14.90 m to 14.725 at the (northern) courtyard entrances to Building 4.
[617] Mr Congalton’s design for remediation to deal with the risk of inundation around the northern side of Building 4 has two particular features. First, he would introduce to each of the courtyards (units 4, 5 and 6) a sump connecting to the underground system (whereas there had previously been a single sump designed for the unit 5 courtyard). Secondly, Mr Congalton’s design provided for a gap at the bottom of the timber fences dividing the courtyards and at the bottom of the planters installed by the unit 5 owners. These (sumps and ground level gaps) are proposed by Mr Congalton to deal with the recognised risk of ponding and flooding in a 2 per cent AEP event to which, in his opinion, units 4 and 5 were exposed as they were before the CES.
[618] For his part, Mr Tisch recognised that the sumps designed by Mr Congalton represent an improvement from what existed previously, in that a primary network has been added. Mr Tisch nevertheless expressed a concern that were a sump to become blocked or were there to be an event bigger than the design event, particularly outside unit 5, the FFL of unit 5 (at 14.570–14.580) sits below the level of RL 14.65 represented by the top level of the step up out of the unit 5 courtyard.
[619] Notwithstanding Mr Tisch’s objections to Mr Congalton’s solution, I find it to be an acceptable solution. Mr Congalton fairly recognises that floor clearance at Building 4/160 has reduced slightly as a result of the CES but such is mitigated by the system he proposes for allowing flow under the planter box and fences. It cannot be ignored that the introduced planter boxes themselves are the flow path impediment. Mr Congalton’s addition of a sump for each courtyard is a recognised improvement, diverting flow at each sump point to the primary system.
Longitudinal fall
[620] Mr Congalton’s strategy for surface water and OFP at 160 can be considered in three parts. Aspects have already been discussed above from [433] in relation to natural servitude at 160. First, he proposes a degree of recontouring of the site north of Building 1 to shed onto Salisbury Street. Secondly, he proposes an uninterrupted flow from Building 1 in the north to a sump on the driveway towards the southern end of the shared driveway. With the southern part of 160 lying below the level of Salisbury Street, its underground services were originally designed and constructed to flow through easements to the south, and will continue to follow that route under Mr Congalton’s design. Thirdly, he establishes the west to east uninterrupted flow to reinstate what he believes to have been the original secondary OFP, ultimately flowing over the southern boundary (utilising natural servitude, as to which see [419]–[447] above).
[621] Mr Congalton’s design proposes that, for collection of surface water from the driveway, the existing concrete channel concept will be retained. Stormwater will then be conducted through the primary (underground drainage) system, as it is at present, to Salisbury Street.
[622] The falls designed in Mr Congalton’s primary and secondary systems along and below the driveway at 160 are not materially different to those involved in his design for 152, with the exception of the continued need at 160 for services to flow to the south in keeping with the natural lie of the land. The conclusions I have reached in relation to Mr Congalton’s design for 152 apply to 160. Crossfalls on the driveway range from 1–1.7 per cent at the northern end of Buildings 2 and 3 and progressively
increase as the driveway slopes downward to the catchment point in a southerly direction (the channel slope being 110 mm over 12.5 mm).
PART IV — OUTCOMES
Relief sought
Declarations
[623] The declarations sought by the plaintiffs were based on the proposition that all buildings at 152 and 160 required demolition and rebuilding and that Mr Congalton’s designs for restoration of civil engineering services would not restore those services to the required standard.
[624] By reason of the findings I have made, the plaintiffs are not entitled to the declarations they seek.
[625] Had Vero pursued a cross-claim for alternative declarations, the Court could have fashioned appropriate declarations subject to certain limitations and reservations (including reservation of leave to apply further in the event of difficulties in relation to any consents required from CCC). On the pleadings, it is not appropriate to grant such relief.
[626] As between the parties, the Court has made findings of fact which will bind the parties in relation to such further steps as either may pursue. To that extent, at least, there is a confirmed position on which the parties may proceed. This accords with the position urged by Mr Till in closing, namely that the Court should make determinations of fact as necessary and as proven. I will reserve leave to the parties to file a memorandum or memoranda if the parties would be assisted by having made in declaratory form particular findings which assist the ultimate resolution of the plaintiffs’ insurance entitlements. As it stands, this judgment serves to determine factual matters which were in issue between the parties.
Professional fees
[627] The plaintiffs provided evidence as to professional fees incurred in order to advance reinstatement under the Policies (separated out from professional costs in connection with the litigation). The requested fees largely relate to investigations and reports from investigations. The 152 plaintiff seeks $54,428.18 and the 160 plaintiff seeks $68,751.
[628]Vero invokes cl 6.B of each policy, by which Vero’s agreement is to pay:
architects, surveyors, consultants, legal and council fees to reinstate or repair the home, incurred with our prior consent following any loss insured by this policy.
[629] There is no evidence of prior consultation between the plaintiffs and Vero such as to give rise, in terms of cl 6.B, to “prior consent”.
[630] Mr Till submitted that, in view of “the defendants [sic] unwillingness to engage with the plaintiffs on their claims, and plaintiff’s experts [sic] involvement triggering a substantial change in the defendant’s position in respect of the claims”, it is appropriate and reasonable for an order to be made.
[631] A foundation for Mr Till’s submission is not established on the evidence as it at present stands. That is scarcely surprising as the focus of the hearing (which substantially overran the duration estimated by counsel) was on the damage to 152 and 160 and the scopes of remediation.
[632] The appropriate time to determine the validity of the plaintiffs’ claims for reimbursement of some or all of the identified professional fees will be as and when remediation commences and an informed determination can be made as to the relationship between the various fees and the reinstatement or repair of each item.
[633] So as not to preclude the proper resolution of that matter between the parties, I will reserve leave to the plaintiffs to apply further as and when there is agreement or directed outcome on the issue of reinstatement or repair.
Loss of rent
[634] The 152 and 160 plaintiffs have a prayer for loss of rent for tenanted units up to the (policy) limit of $40,000, which Vero accepts under cl 16.B of each policy in relation to units which were tenanted before the earthquakes.
[635] The parties agreed that quantification of loss of rent entitlements should be deferred for the time being.
[636]Leave will accordingly be reserved to the parties in that regard.
Landlord’s fixtures and fittings
[637] The plaintiffs also have a prayer for recovery of up to $20,000 for loss or damage to landlord’s furnishings (in such units as were tenanted). That again was not the subject of evidence at this trial.
[638]Leave will be reserved to the parties in that regard also.
Costs
[639] The pivotal issue in the litigation has been whether the earthquake damage at 152 and 160 was such as to require demolition and rebuilding of improvements on each property.
[640] The plaintiffs have not established an entitlement to have the buildings demolished and reinstated. It has been established by Vero that there is for each property a set of achievable repair solutions. My tentative view is that costs must follow the event.
[641] I will reserve costs and disbursements, with those matters to be dealt with (in the event of disagreement between the parties) upon the basis of memoranda filed (10 pages each, in addition to appended schedules setting out relevant costs calculations and details of disbursements, together with copies of all fee notes or similar in relation to any disbursements claimed).
Orders
[642]I order in relation to each proceeding:
(a)The declarations sought by the plaintiffs in relation to their Schedules A and B are refused, but with leave to the parties by memorandum/memoranda to request the Court to identify in declaratory form such factual findings as are made in this judgment and are relevant to the ultimate resolution of the plaintiffs’ insurance entitlements.
(b)Leave is reserved to the plaintiffs upon 20 working days’ notice to apply further in relation to entitlements regarding:
(i)landlords’ fixtures and fittings;
(ii)loss of rents; and
(iii)professional fees incurred.
(c)Costs and disbursements are reserved.
Osborne J
Solicitors:
Cavell Leitch, Christchurch Hesketh Henry, Auckland
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