Goodier v Earthquake Commission
[2019] NZHC 2176
•2 September 2019
IN THE HIGH COURT OF NEW ZEALAND WHANGANUI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGANUI ROHE
CIV-2016-483-16
[2019] NZHC 2176
BETWEEN MARK ALBERT GOODIER AND NICHOLA JANE GOODIER
AS TRUSTEES OF THE GOODIER FAMILY TRUST
PlaintiffsAND
THE EARTHQUAKE COMMISSION
First Defendant
AND
IAG NEW ZEALAND LIMITED
Second Defendant
Hearing: 17 – 28 September 2018
8 – 10 October 2018
12 October 2018
16 October 2018
7 February 2019, 27 February 2019 and 14 March 2019 (further submissions received)Appearances:
G D R Shand and N T P Lala for the Plaintiff
B A Scott and J Y Moran for the First Defendant
R W Raymond QC and S K Swinerd for the Second DefendantJudgment:
2 September 2019
JUDGMENT OF CULL J
TABLE OF CONTENTS
Overview 1
PART I – THE CLAIM, THE CONTEXT AND THE ISSUES 9
Background facts 9
The house and land 9
EQC’s response to claim 16
IAG’s response 20
The insurance context 25
The EQC Act 1993 28
Natural disaster definitions 35
EQC 39
GOODIER v THE EARTHQUAKE COMMISSION [2019] NZHC 2176 [2 September 2019]
IAG’s insurance policy 42
The Goodiers’ claims 49
The first statement of claim 49
Revision of remedial costings 54
The amended statement of claim 56
Issues 60
PART II – THE LEGAL ISSUES: CAUSATION 62
Natural disaster damage 62
The legal contest between the parties: causation 68
Burden of proof 79
PART III – THE FACTUAL CONTEST 85
The flaw alleged by the defendants: the landslip “mechanism” 92
The geotechnical evidence 95
The “vibration” theory 101
The lay witnesses’ evidence 106
The Goodiers’ evidence 107
The evidence of friends and clients 124
The experts’ evidence 132
The house 137
(a)Sloping floors in the first-storey lounge 143
(b)Hearth cracking 149
(c)Internal wall linings of the house 151
(d)Roof leaks 155
(e)Doors in the downstairs flat and lounge 157
(f)The firebox 159
The garage 161
(a)Matters of agreement on the garage claim 161
(b)Points of disagreement on the garage claim 165
(c)EQC’s opening position 174
(d)Mr Hunt’s site revisit 178
(e)The defendants’ site revisit 188
Summary of positions 198
PART IV – RESOLUTION OF THE FACTUAL AND LEGAL ISSUES 202
Credibility of witnesses 205
The Goodiers’ challenge to the impartiality of EQC’s experts 206
The Goodiers’ challenge to the Tonkin & Taylor evidence 213
The defendants’ challenge to the Goodiers’ lay witnesses 219
The defendants’ challenge to the Goodiers’ expert witnesses 223
Causation 225
The mechanism 230
Causation by “natural landslips” 239
Damage to the house 250
The sloping floors and pavers 263
The rotation or bending of the lounge bay window corner post 270
Roof leaks 273
Cracking to internal plasterboard linings 275
Jamming doors 279
Cracks in the firebox and movement to the timber cross bracing beneath and behind the firebox 281
Conclusions on damage to the house 283
Damage to the garage 284
Lateral movement of the garage slab and wall relative to house 297
The garage floor and foundation subsiding 300
Cracking in the garage concrete floor slab and exacerbation of existing cracking 304
A crack across the junction between the workshop and garage 309
A void beneath the slab and adjacent to the pile and pile lean(s) 316
Separation and dislevelment of weatherboards between the new and existing garage 320
The sticking or jamming garage door 323
Slumping below the gully trap on the eastern elevation between the new and existing garage 327
Misalignment in the roof and gutter lines above the garage door 331
Conclusion on damage to the garage 333
Resolution of the legal issues 336
Inferences 341
No further liability 351
Summary of conclusions 353
PART V – SUMMARY OF FINDINGS 355
Costs 359
Overview
[1] This is an insurance claim by house owners to recover loss to their house and property, following a landslip. Over the weekend of 20 and 21 June 2015, a one in 85 year weather event brought torrential rainfall and floods after three weeks of rain to the Whanganui region, resulting in a number of landslips. One such landslip occurred on Bastia Hill in Whanganui, affecting Mr and Mrs Goodier’s (the Goodiers) property at Shakespeare Road (the Property). It washed away a significant part of their driveway and lower slopes beneath their accessway, including retaining walls.
[2] A week later, on 30 June 2015, the Whanganui District Council issued a notice under s 124 of the Building Act 2004 requiring the Goodiers to vacate the Property because their house was assessed to be a dangerous building and was uninhabitable.
[3] The Goodiers claim compensation from the first defendant, the Earthquake Commission (EQC), under the Earthquake Commission Act 1993 (the EQC Act). They also claim against the second defendant, IAG Insurance (IAG), under a policy of insurance covering sudden and accidental loss to the house on the Property (the Policy).
[4]EQC has accepted liability under the EQC Act and has paid the Goodiers
$136,790.21 (less excess) in respect of the building, retaining walls, and land.1 IAG has paid a further $41,776.05 (less excess) for the repair of the driveway. IAG maintains its Policy does not cover damage to the land itself.
[5] The Goodiers have not accepted that EQC and IAG have settled their claims as the EQC Act and the Policy require. They seek additional payments for the shortfall
1 All payments referred to in this judgment from EQC and IAG to the Goodiers are total figures, and do not take into account Policy excess to be paid.
to remediate their Property, as well as general damages. Both EQC and IAG contest that they are not liable for any further payment or damages.
[6] The critical issue in this case is whether the landslip, or another event, caused damage to the Goodiers’ Property, for which the Goodiers claim further relief. During the trial, one of the Goodiers’ experts revised the costings for remediation from the estimates previously served. I adjourned the evidence on the costs of remediation and quantum to a further hearing following my liability determination,2 and directed that the trial proceed on the issue of liability only.
[7] I have found the claimed damage to the Goodiers’ Property was not caused by the landslip.
[8]In this judgment, I will deal with the facts and the legal issues in five parts:
(a)Part I: the Goodiers’ claim, the insurance and legislative context and and the refined issues on liability;
(b)Part II: the legal issues among the parties;
(c)Part III: the factual contest;
(d)Part IV: resolution of the factual and legal issues; and
(e)Part V: summary of findings.
PART I – THE CLAIM, THE CONTEXT AND THE ISSUES
Background facts
The house and land
[9] The storm which occurred in Whanganui over 20 and 21 June 2015 occurred in the middle of a particularly wet winter and followed three weeks of heavy rain.
2 Goodier v The Earthquake Commission HC Whanganui CIV-2016-483-16, 1 October 2018 (Ruling 2 of Cull J).
Almost 230 millimetres of rain fell in the first three weeks of June, and the storm on 20 and 21 June contributed 140 millimetres of this rain, equivalent to one month’s worth of rain in 24 hours. It was assessed as being a one in 85 year event. EQC responded to over 200 landslips in the month following the storm, as a result of soils being saturated throughout the region, causing many landslips.
[10] One of the landslips was at the Goodiers’ Property on Shakespeare Road, which winds up Bastia Hill. The Property sits on the crest of the hill, with access by a reasonably steep driveway off Shakespeare Road, which runs over the crest of the hill and levels out onto a flatter paved area leading to the house. A building platform was formed for the house by cutting into the crest of the hill to create a flat area and some stepped benches. The soil on the outer edge of the southward slope was fill that had been excavated to create a platform where the house was originally built in 1975. The garage was built in 1989, some 14 years later.
[11] During the storm, the saturated, predominantly loose, fill soils on the edge of the southward slope both above and below retaining walls mobilised in a shallow but wide landslip, taking away the four retaining walls and a portion of the driveway. The landslip caused part of the paved driveway to collapse and evacuated soils under the southwest of the garage.
[12] The Goodiers claim that the landslip, which evacuated land within eight metres of the dwelling on the Property, caused sudden and accidental loss to the Property.
This included land loss, driveway and downslope loss, and damage to the garage and house.
[13] On 22 June 2015, the Goodiers notified EQC and IAG of the landslip and made their claims for loss. The particulars of damage claimed in the first statement of claim filed by the Goodiers expanded markedly during the trial. At the conclusion of the trial after his final reply, Mr Shand for the Goodiers filed an amended statement of claim, pleading the particulars of damage which had been the subject of evidence at the trial. Those particulars are summarised below, at [87]. The essence of the damage includes land loss, damage to the driveway and slope, cracking in the garage floor and walls, and cracking, sloping, bending and movement to various parts of the house.
[14] On 30 June 2015, the Whanganui District Council issued the Goodiers a notice under s 124(2)(c) of the Building Act 2004, which stated that by reason of the landslip, the building was a dangerous building (s 124 Notice). The s 124 Notice states that no entry to the building is permitted and using or occupying the building would be an offence under the Building Act 2004.3
[15] The s 124 Notice requires the Goodiers to make arrangements for suitable engineering investigations as to the structural integrity of the building and/or the imminent risk of further slips that may affect the building. It also requires the Goodiers to reduce or remove the danger by carrying out remedial works, and to ensure that the building remains unoccupied (except for assessment or repair works) until it is deemed not to be dangerous.4
EQC’s response to claim
[16] EQC accepted liability under the EQC Act and paid the Goodiers $38,290.21 (less excess) under s 18 of the Act, which relates to EQC's liability in respect of an insured residential building. The maximum amount payable by EQC under s 18 is
3 Section 128.
4 Originally the s 124 Notice was due to expire on 30 July 2015, but because the Goodiers have not taken the steps necessary under the s 124 Notice, the Council has reissued it, with the s 124 Notice currently in force.
$115,000.00 (inclusive of GST). EQC has also made land-related payments to the Goodiers of $80,750.00 (less excess) and $17,750.00 under s 19 of the EQC Act.
[17] The Goodiers say that the payments made by EQC are inadequate. Initially, they claimed that the landslip resulted in a total loss, because the house was so damaged as to lose its identity and function as a home and repairs were impracticable. They also said repair and/or rebuilding the house was prohibited by the s 124 Notice.
[18] At the trial, however, and in their amended statement of claim, the Goodiers contend that if the house and external features were rebuilt on its current site to a condition as near as possible to when it was new, as s 18 and the Policy provide, the cost would be in excess of $660,000.00.5 The Goodiers therefore claim $76,709.79 from EQC under s 18 of the EQC Act, the difference between the statutory “cap” of
$115,000.00 and the $38,290.21 which has been paid.6 They also seek general
damages of $50,000.00.
[19] EQC says that it has paid the Goodiers their full entitlement under ss 18 and 19, and it has no further liability.
IAG’s response
[20] The IAG Policy covers the Goodiers for full replacement of the house arising out of sudden accidental loss, limited to a floor area of 280 square metres and up to a value of $521,749.00. IAG has paid $41,776.05 (less excess) which is said to be the amount payable under the Policy for repairs to the driveway on the Property.7 The Goodiers say that they are entitled to the full cost of rebuilding: allowing for the
$115,000.00 which they say EQC is liable to pay under s 18 of the EQC Act, IAG should pay them the balance of $369,972.95.8
5 This figure comprises a $226,095.72 estimate to remediate the dwelling to near-new condition, and a $440,864.36 estimate to remediate the external features to near-new condition.
6 The Goodiers initially claimed further payment under s 19 of the EQC Act. This part of the claim was abandoned at the commencement of the trial.
7 After a deduction of $5,000 for Policy excess, IAG has in fact paid $36,776.05.
8 This figure is calculated as the sum insured of $521,749, less EQC’s liability of $115,000, less IAG’s previous payment of $41,776.05 less $5,000 excess.
[21] The Goodiers have also claimed from IAG landscaping costs of $2,500.00, retaining wall costs of $20,000.00, a payment of $1,000.00 for stress and $50,000.00 for general damages.
[22] IAG accepts that it must pay the reasonable costs to repair or rebuild the part of the home that has suffered insured damage to a condition as similar as possible to when it was new. To that end, IAG has paid $41,776.05 (less excess) for repairs to the driveway. However, the Policy expressly excludes stabilising, supporting or restoring land, earth or fill. The Policy insures physical loss or damage specifically to the home, not land. IAG also submits that there can be no claim under the Policy in respect of the retaining walls, as cover under the Policy for retaining walls is limited to
$20,000.00 and EQC has already paid $20,500.00 to the Goodiers for the retaining walls. Further, cover for stress is available under the Policy only if there is a total loss to the home, which it says there is not.
[23] IAG submits its liability is therefore the difference between the Goodiers’ maximum entitlement from EQC ($115,000.00) and the total cost to repair the insured loss to the home up to $521,749.00. It says that once the land is repaired, repairing the damage to the house will cost less than $115,000.00. IAG says it has therefore fulfilled its obligations under the Policy and has no further liability. There is no liability for IAG, in any event, until EQC’s liability meets the maximum entitlement, which it has not done here.
[24] To understand the insurance context of the Goodiers’ claim, it is necessary to set out the statutory framework governing natural disasters in New Zealand and the provisions of the insurance Policy.
The insurance context
[25] On the occurrence of any natural disaster damage to a property which qualifies as insured under the EQC Act, the insured person must give notice to EQC of the occurrence of natural disaster damage within three months.9 A person is automatically deemed to be insured against “natural disaster damage” under the EQC Act when a
9 Earthquake Commission Act 1993, sch 3, cl 7.
contract of fire insurance with an insurance company is entered into in respect of a “residential building”.10 It is accepted that the Goodiers qualified as insured under the EQC Act and that they gave the required notice to EQC within the prescribed three month period after the landslip.
[26] In addition, the Goodiers had a policy with IAG. The basis of insurance under the EQC Act is governed by the legislative provisions, which dovetail with the Goodiers’ IAG Policy. The Policy provides for additional or “top-up” cover where EQC cover applies in the event of natural disaster damage.
[27] The EQC Act envisages private insurers providing additional cover for natural disaster insurance. Thus, private insurers have structured their policies in such a way that EQC provides the first layer of insurance and the private insurers provide additional insurance above the statutory limit or cap on EQC’s liability. I turn to consider the relevant provisions under the EQC Act before dealing with the IAG Policy.
The EQC Act 1993
[28] The EQC Act provides a statutory scheme of insurance for natural disaster damage in respect of three different types of property:
(a)residential buildings under s 18;
(b)residential land under s 19; and
(c)personal property under s 20.11
[29]A “residential building” is defined in s 2(1) of the Act as:
(a)any building, or part of a building, or other structure (whether or not fixed to land or to another building, part, or structure) in New Zealand which comprises or includes 1 or more dwellings …
…
10 Section 18(1).
11 Insurance for personal property is not at issue in these proceedings.
(c)every building or structure appurtenant to a dwelling referred to in paragraph (a), or a building or part of a building referred to in paragraph (b), and that is used for the purposes of the household of the occupier of the dwelling or for the purposes of the residents of the building or part:
(d)all water supply, drainage, sewerage, gas, electrical, and telephone services, and structures appurtenant thereto–
(i)serving a dwelling referred to in paragraph (a), or a building or part of a building referred to in paragraph (b), or surrounding land; and
(ii)situated within 60 metres, in a horizontal line, of the dwelling or building or part; and
(iii)owned by the owner of the dwelling or building or part, or by the owner of the land on which the dwelling or building or part is situated
[30] In this case, the “dwelling” includes the house and the attached garage. The appurtenant structures include the children’s playhouses, and the drainage and sewerage include such services within 60 metres of the house.
[31] Residential land under s 2(1) means, in relation to any residential building, the following property situated within the land holding on which the residential building is lawfully situated:
(a)the land on which the building is situated; and
(b)all land within 8 metres in a horizontal line of the building; and
(c)that part of the land holding which–
(i)is within 60 metres, in a horizontal line, of the building; and
(ii)constitutes the main access way or part of the main access way to the building from the boundary of the land holding or is land supporting such access way or part; and
…
(e) all retaining walls and their support systems within 60 metres, in a horizontal line, of the building which are necessary for the support or protection of the building or of any property referred to in any of paragraphs (a) to (c).
[32] Residential buildings are now insured against natural disaster damage on a “replacement value” basis, but only up to certain statutory limits. This has been the
case since 1993 and as is shown below, s 18(1)(c) governs the limits on amounts payable:
18 Residential buildings
(1)Subject to any regulations made under this Act and to Schedule 3, where a person enters into a contract of fire insurance with an insurance company in respect of any residential building situated in New Zealand, the residential building shall, while that contract is in force, be deemed to be insured under this Act against natural disaster damage for its replacement value to the amount (exclusive of goods and services tax) which is the least of–
(a)if the contract of fire insurance specifies a replacement sum insured for which the building is insured against fire under that contract, the amount of that sum insured:
(b)if the contract of fire insurance does not specify such a replacement sum insured but does specify an amount to which the building is to be insured under this Act, that amount:
(c)the amount arrived at by multiplying the number of dwellings in the building (being the number determined in accordance with subsection (3)) by $100,000 or such higher amount as may be fixed from time to time for the purposes of this paragraph by regulations made under this Act.
…
(3)For the purposes of subsection (1)(c), a residential building is deemed to comprise 1 dwelling unless the existence of a higher number of dwellings in the building is disclosed to the insurance company at the time that the contract of fire insurance is entered into.
[33] Under s 19, the residential land on which a residential building is situated will be insured under the EQC Act against natural disaster damage while the residential building insurance is in force. The amount to which the land will be insured is the sum of, in the case of any particular damage:12
(a)the value, at the site of the damage, or –
(i)if there is a district plan operative in respect of the residential land, an area of land equal to the minimum area allowable under the district plan for land used for the same purpose that the residential land was being used at the time of the damage; or
(ii)an area of land of 4 000 square metres; or
12 Section 19(a) and (b).
(iii) the area of land that is actually lost or damages – whichever is the smallest; and
(b)the indemnity value of any property referred to in paragraphs (d) and
(e) of the definition of the term residential land in section 2(1) that is lost or damages.
[34] Importantly, in the context of this landslip claim, the insurance cover provided for buildings and land under both ss 18 and 19 is for “natural disaster damage,” which has a statutory definition under the EQC Act.
Natural disaster definitions
[35] “Natural disaster” is defined under s 2(1) of the EQC Act and includes a “natural landslip”. A “natural landslip” is defined and means:
… the movement (whether by way of falling, sliding, or flowing, or by a combination thereof) of ground-forming materials composed of natural rock, soil, artificial fill, or a combination of such materials, which, before movement, formed an integral part of the ground; but does not include the movement of ground due to below-ground subsidence, soil expansion, soil shrinkage, soil compaction, or erosion
[36]“Natural disaster damage” means, in relation to property:
(a)any physical loss or damage to the property occurring as the direct result of a natural disaster; or
(b)any physical loss or damage to the property occurring (whether accidentally or not) as a direct result of measures taken under proper authority to avoid the spreading of, or otherwise to mitigate the consequences of, any natural disaster, but does not include any physical loss or damage to the property for which compensation is payable under any other enactment [Emphasis added]
[37]“Physical loss or damage” is also defined and, in relation to property, includes:
… any physical loss or damage to the property that (in the opinion of the Commission) is imminent as the direct result of a natural disaster which has occurred
[38] It is common ground among the parties that the landslip on 20 June 2015 was a natural disaster, being a natural landslip, and on this basis EQC and IAG accepted the claim and paid the Goodiers $136,790.21 for loss of land, retaining walls, actual
damage to their residential building, together with an imminent risk payment in respect of the risk of further damage occurring to the southwest corner of the garage.
EQC
[39] EQC is a Crown entity which administers the EQC Act and insurance against natural disaster damage.13 From an historical development of the Act, EQC emphasises that there is an important difference in the basis on which land and buildings are insured. “Land”, which is defined to include retaining walls, continues to be insured on an indemnity basis, on the basis of its value or condition at the time the damage occurred. Buildings and contents are insured on a replacement value basis up to certain statutory limits. The relevant limit is governed by s 18(1)(c) which is
$100,000.00 (excluding GST) in respect of each natural disaster event, that is,
$115,000.00 including GST.
[40] Applying those limits to this case, the maximum for which the Goodiers’ Property could be covered by EQC is:
(a)in respect of the building under s 18, for its replacement value up to the statutory cap of $115,000.00 with IAG providing cover for any repair cost in excess of this cap; and
(b)in respect of the land under s 19, on an indemnity basis, to the amount of:
(i)the minimum lot size, being the smallest of the three areas of land in s 19(a); and
(ii)the indemnity value of the damaged retaining walls.
[41] As noted, EQC has paid to the Goodiers $38,290.21 (less excess) under s 18 for the building, and $98,500.00 under s 19 for the land (comprising $78,000.00 for the minimum lot size and $20,500 for the retaining walls). This amounts to the total
13 Earthquake Commission Act 1993, ss 4A and 5(1)(a).
sum of $136,790.21. EQC does not accept that the Goodiers’ house needs replacing or rebuilding.
IAG’s insurance policy
[42] The Goodiers’ Policy with IAG covered their home for up to $521,749.00. “Home” is a defined term in the Policy and includes the residential dwelling (the house and garage), a driveway of permanent construction, and walls – including garden and retaining walls. Relevantly in this case, “home” expressly excludes “land, earth or fill.” It does not include a gravel or shingle driveway or path.
[43] The primary insurance covers sudden and accidental loss. As part of the definition, the Policy explains what is not covered and this includes natural disaster cover:
Exclusions that apply to the whole policy
…
Natural disaster
You’re not covered for loss to the home caused by a natural disaster except for loss covered under the ‘Natural disaster cover’ …
[44]The Policy then defines the “natural disaster cover” benefits:
Natural disaster cover
You’re covered for any sudden and accidental loss to the home that occurs during the period of cover caused by a natural disaster, subject to the following:
Where EQC Cover applies
1.If that loss is covered under the EQC Act, or would’ve been but for:
a.the application of an excess under the EQC Act,
b.a failure by you to correctly notify a claim to the Earthquake Commission within the time required under the EQC Act,
c.a decision by the Earthquake Commission to decline a claim or limit its liability for that loss in whole or in part and for any reason whatsoever,
d.any act or omission on your part, the part of your agent, or the part of the Earthquake Commission,
and the cost to repair or rebuild the part of your home that suffered the loss exceeds your maximum entitlement available (or that would’ve been available but for the reasons in 1.a. to d. above), for that loss under the EQC Act (plus the excess under that Act), we’ll pay the difference between that maximum entitlement (plus that excess) and the cost to repair or rebuilt the part of your home that suffered the loss.
2.The most we’ll pay under this benefit is the difference between that maximum entitlement (plus the excess under the EQC Act) and the total sum insured.
Where no EQC Cover applies
3.Where your claim for loss to the home under this benefit is for, or includes, any part of the home that is not covered under the EQC Act, then the excess will be the highest of:
a. $5,000, and
b. the excess otherwise applicable to the claim under this policy.
Some examples of parts of the home not covered under the EQC Act are: gate or fence,
driveway,
patio, path, paving, tennis court or other artificial surface,
swimming pool or spa pool which is not an integral part of the building.
[45] Thus, only “top-up” cover is provided for accidental loss caused by natural disaster events.
[46] Clause 2 of the natural disaster cover specifies that the most IAG will pay under the benefit is the difference between the Goodiers’ maximum entitlement under the Act (plus the excess) and the total sum insured, which was $521,749.00.
[47] On 25 February 2016, IAG made a payment of $36,776.05 to the Goodiers for the damage to the paved driveway, which was based on a quote to remove and replace pavers at $41,776.05, less the Policy excess of $5,000. IAG accepted that it had a separate liability under the Policy for the driveway damage, as it falls within the Policy
definition of “home”, but is outside the cover under the EQC Act.14 The driveway pavers met the definition of “home” in the Policy being a “driveway of permanent construction”. IAG says that this payment satisfies its liability in respect of this damage. Further, IAG says that the Policy insures for physical damage to materials and structures that make up the body of the property said to be damaged. This is not land. The Policy does not respond to repair, stabilise, support or restore earth or fill.
[48] With respect to physical damage or physical loss to the materials and structures that make up the home, IAG’s liability is the difference between the Goodiers’ maximum entitlement from EQC and the total cost to repair the insured loss to the home up to the maximum liability. IAG’s position is that it has no further liability to the Goodiers under the Policy, because EQC’s payments in relation to the remaining items has indemnified the Goodiers for the landslip damage to the “home”.
The Goodiers’ claims
The first statement of claim
[49] The Goodiers filed their first statement of claim in May 2016, pleading that their house suffered a total loss with the cost of remediation in excess of the amount insured. The claim contained two causes of action against EQC, and one cause of action against IAG. The first cause of action against EQC sought an additional payment of $77,091.79 under s 18 of the Act in respect of the Goodiers’ house and garage plus general damages of $50,000.00 (with interest and costs). The second cause of action sought an additional payment of $39,250.00 under s 19 in respect of the residential land, including four retaining walls and support systems, plus general damages of $50,000.00 (with interest and costs).
[50] The cause of action against IAG sought an additional payment of $406,749.00 to reinstate the Goodiers’ house,15 plus general damages of $50,000.00, landscaping costs of $2,500.00, retaining wall costs of $20,000.00, and stress payment of
$1,000.00. The Goodiers claim that IAG has failed or refused to meet its obligations
14 Earthquake Commission Act 1993, sch 2, cl 10.
15 This figure is $521,749.00 (the maximum amount insured for under the Policy) less the EQC payment of $115,000.00.
under the Policy by paying them only $36,776.05 for repairs to the driveway and IAG’s conduct has caused the Goodiers substantial distress, inconvenience, and mental anguish.
[51] Just prior to the commencement of the trial, Mr Shand for the Goodiers advised the defendants that the Goodiers’ s 19 land claim against EQC was abandoned. EQC sought judgment and costs on that abandonment. I have reserved that application.
[52] The Goodiers’ initial pleading was primarily based on the claim that the Goodiers’ house suffered a “total loss,” with the cost of remediation in excess of the amount insured. They claimed the “total loss” arose because the Whanganui District Council “will not grant a building consent for building work in relation to the house” and the house “cannot now legally be repaired and/or rebuilt on its current site”. EQC and IAG challenged that claim, saying that neither proposition was legally or factually correct.
[53] During the course of the trial, two issues arose in relation to the evidence on remediation costs and the expanded evidence on damage at trial, leading to an amended statement of claim.
Revision of remedial costings
[54] Counsel for EQC and IAG raised their concerns that the Goodiers had filed substantial fresh evidence, outside of the timetable directions, including expert evidence which significantly revised the damage claimed. This was done primarily by way of an updated brief of evidence from Mr Hunt, a qualified and experienced quantity surveyor and building consultant who appeared for the Goodiers.
[55] Counsel for EQC and IAG strongly objected to the late amendment of Mr Hunt’s brief, which substantially changed the damages claim. I directed that the most appropriate course was to continue the trial on liability only.16 Damages, including the reasonable cost of remediation, should await the outcome on liability.
16 Goodier v The Earthquake Commission, above n 2.
The amended statement of claim
[56] During the course of the trial, the lay witnesses and experts called by Mr Shand for the Goodiers gave substantive evidence in their reply briefs and orally on elements of the Goodiers’ claim which had not been pleaded.
[57] At the very conclusion of his final right of reply, Mr Shand submitted an amended statement of claim which pleaded the elements of damage which had been the subject of significant evidence. The particulars of damage, as amended, are set out at [87] below. In their amended statement of claim, the Goodiers no longer pleaded that they suffered a total loss but sought liability findings against EQC and IAG to sustain their claims for reinstatement costs and general damages.
[58] In respect of the very late amendment to the statement of claim, I allowed EQC and IAG to file submissions in respect of Mr Shand’s oral application to amend the Goodiers’ statement of claim and the amendment so provided. Following a telephone conference with counsel, I granted the Goodiers leave to file the amended statement of claim and gave directions regarding the provision of further submissions and/or evidence on the additional matters pleaded.17
[59] A further issue emerged at the close of submissions. Mr Shand in his closing reply in answer to my questions on the causation mechanism said there were multiple landslips, including a slip in the soft soil under the carport post, which came under the definition of “natural landslip”. As the defendants did not have an opportunity to address this submission on the extent of “natural landslip”, I directed the parties to file further submissions, if they wished.18 All parties did so, and this issue is addressed at [239]-[248].
Issues
[60] Counsel filed an agreed statement of issues, which include liability, remediation costs and damages.19 As this decision is concerned with a determination
17 Goodier v The Earthquake Commission [2018] NZHC 2980.
18 Goodier v The Earthquake Commission HC Whanganui CIV-2016-483-16, 18 December 2018.
19 The agreed statement of issues is set out in Appendix I.
on liability only, the issues from the agreed statement of issues for determination in this trial are:
(a)What is the nature and extent of the natural disaster damage to the “residential building” (as defined in the EQC Act), and/or to the “home” (as defined in the Policy)?
(b)Was the damage caused by the landslip?
(c)What is the liability of IAG and EQC for the cost to reinstate?
(d)Are EQC and/or IAG liable for general damages?
(e)Does the s 124 Notice have any impact on EQC and IAG’s liability or obligations?
[61] The real focus of the evidence and the submissions at the trial was whether the additional damage to the home and garage was caused by the landslip. Because determination of the first two issues rely essentially on the same evidence and resolution of the factual contest among the parties, I propose to deal with them together.
PART II – THE LEGAL ISSUES: CAUSATION
Natural disaster damage
[62] EQC and IAG are liable under the Act and the Policy respectively for damage to the Goodiers’ Property if it is caused by a “natural disaster”, which includes landslips.20 Under the EQC Act, “natural disaster damage” is defined as meaning any physical loss or damage to the Property occurring, or that is imminent, as a direct result of a natural disaster.21
20 See [25]–[48] of this judgment.
21 Section 2(1).
[63] In Bligh v Earthquake Commission, Nation J traversed the recent decisions on natural disaster damage and helpfully summarised them as follows:22
[17]… In O’Loughlin v Tower Insurance Ltd, Asher J considered, in the context of the insurance of a house from loss or damage from accident, the word “physical” meant loss or damage to the materials and structures that constituted the body of the house. It does not include purely economic loss.
[18]In Earthquake Commission v Insurance Council of New Zealand, the Full Court of the High Court, considered that, for there to be “natural disaster damage” to residential land for the purposes of the EQC Act, there needed to be a physical change or loss to the body of the land that had occurred, or was imminent, as a direct result of the earthquakes, and which affected the use or amenity of the land.
[19]In Kraal v Earthquake Commission, the Court of Appeal considered whether there was “natural disaster damage” to a house where the threat of rockfall and other hazards caused by the earthquake had led to a local council prohibiting persons from approaching or entering the house. The Court of Appeal held that the loss flowing from the insured person’s inability to use the house in these circumstances was not “natural disaster damage”. The Court of Appeal held that, in the case of a house, there had to be “physical” loss or damage to the structure and materials of the house. They held that “damage” had to be harm done to something that impairs its value or usefulness.
[20]In Sadat v Tower Insurance Ltd, a claim was made that there was further cracking to foundations already in a damaged, inadequate state. The Court held the plaintiffs had been unable to prove:
… that any such further damage made a material difference to the structural integrity of the foundations as a whole, or that the work required to remedy that damage was any different than what would have been required to remedy all the problems.
[21]In He v Earthquake Commission, Dunningham J held:
An insurer should not be required to repair or reinstate something to its condition when new when, observed objectively, there has been no discernible change to the value, amenity or utility of the insured property caused by the natural disaster.
[22]In insurance generally, the damage claimed must be more than de minimis. In Arrow International Ltd v QBE Insurance (International) Ltd, McKenzie J said:
Each case must be examined on its own facts to determine when an alteration to the physical state has occurred to an extent which is more than de minimis so that the point has been reached where physical damage has happened.
22 Bligh v Earthquake Commission & IAG [2018] NZHC 2102 at [17]-[22] (footnotes omitted).
[64]Nation J then found that:23
… for there to be cover, the damage must be such that it affects the use or amenity of the building. For elements of the building that have a structural or functional purpose, the damage has to affect that structural or functional purpose. Similarly, for elements of the building that have an aesthetic purpose, for example, wall linings such as wallpaper, the damage must affect that aesthetic purpose.
[65] From those authorities, “natural disaster damage” has been held to mean physical loss or damage, or further loss or damage to the insured property, such that it impairs its value or usefulness and is more than minor. Importantly, the damage must be as a direct result of the natural disaster, which has affected the use or amenity of the insured property.
[66] The task for the Court here is to first, identify whether the particular physical damage, alteration or disturbance, if any, that occurred to the structure or materials of the Goodiers’ Property was as a direct result of the landslip, and second, to assess how, if at all, any such physical change materially affected the structural integrity or performance of the house for the worse.24
[67] In claims for aesthetic damage, the Court must determine whether, having regard to the state of the Property before the landslip, there has been damage that has materially altered the aesthetic value of what was there before the landslip.25
The legal contest between the parties: causation
[68] Mr Shand presented the Goodiers’ case on the basis that this case should be determined using common sense and logic. He submits that 23 independent witnesses gave evidence of the condition of the Goodiers’ house and garage before the landslip and compared it with the damage they described occurring after the landslip on 20 and 21 June 2015. If the Court does not decide that the landslip was the more likely cause of the damage, then, Mr Shand submits, it must find that 26 people were either lying or were mistaken about the condition of the Property before the landslip.26
23 Bligh, above n 22, at [26] (footnotes omitted).
24 Bligh, above n 22, at [29].
25 At [30].
26 The Goodiers called 26 witnesses, including themselves and their son.
[69] The Goodiers’ claim is that all the damage pleaded is landslip-related or exacerbated by the landslip.27 Mr Shand put forward their case on a two-pronged basis:
(a)losses covered by an insurance policy may exist in the absence of structural damage to the insured property; and
(b)the fact of damage is enough to prove natural disaster damage.
[70] Mr Shand pointed to the s 124 Notice under the Building Act 2004 and the resulting inability of the Goodiers to use or occupy the home as evidence of an insured event which is covered by the Goodiers’ Policy. The authority he relied on for that proposition was Murray v State Farm Fire and Casualty, a North American case involving insured homes at risk of rockfall which could not be occupied because of that risk.28 The insurers there argued that while their policies cover actual physical damage, the policies did not cover any losses occasioned by the potential damage that could be caused by future rockfalls.29 The Court found that all three homes were unsafe for habitation and that the insurance policy providing coverage for “sudden and accidental loss” or an accidental direct physical loss requires only that the property be damaged, not destroyed.30
[71] Similarly, in another North American authority, Hughes v Potomac Insurance Company, a landslide caused the insured house to be left standing on the edge of a cliff and partially overhanging a newly-formed 30 foot cliff.31 The Court there held that the insured’s policy covered damage to the dwelling as a result of the landslide, even if there was only minor damage to the house itself.32 The Court accepted that a dwelling or a dwelling building connotes a place fit for occupancy, being a safe place in which to dwell or live.33
27 The particulars of damage are set out at [87].
28 Murray v State Farm Fire and Casualty Co 509 SE 2d 1 (WVa 1998).
29 Murray, above n 28, at 16.
30 At 17.
31 Hughes v Potomac Insurance Company 199 CalApp 2d 239 (1962).
32 At 4.
33 At 4.
[72] Mr Shand relied upon these cases to demonstrate that losses covered by an insurance policy, including those rendering a property unusable or uninhabitable, may exist in the absence of structural damage to the insured property. He says the relevance of those cases to the Goodiers is that they had to vacate their Property, because the s 124 Notice stated their house was dangerous and uninhabitable.
[73] In closing, Mr Shand also relied on the High Court case C & S Kelly Properties Ltd v EQC and Southern Response to submit that the evidence of the Goodiers and other lay witnesses, in the face of contradictory geotechnical evidence, ought to be given considerable weight.34 He submitted that the lay witnesses’ evidence confirms that the damage to the house and garage did not exist before the landslip but was evident following the landslip. Therefore, he submits, common sense, logic, and 23 independent people prove that, more likely than not, the damage that exists to the house and garage was caused by the landslip.
[74] The defendants say that the Goodiers’ case is flawed because they have not proved that the damage was caused by the landslip. In the absence of expert geotechnical and/or engineering evidence identifying the mechanism by which the landslip could have caused the damage to the Property, the Goodiers have not proved that the damage was caused directly by the landslip, or ruled out any likelihood of another cause.
[75] The defendants also submit that the North American authorities provide no assistance to the case at hand: the authorities are dealing with different insurance contexts and different policy wording to the New Zealand policies, including the IAG Policy and the EQC Act.
[76] I accept that the EQC legislation provides a unique scheme which is incomparable to the underlying law in North America. Further, the North American authorities cited by Mr Shand have been considered by a Full Bench of this Court in
34 C&S Kelly Properties Ltd v Earthquake Commission and Southern Response Earthquake Service
Ltd [2015] NZHC 1690 at [291]-[307].
Earthquake Commission v Insurance Council of New Zealand Inc and held to be unhelpful in the EQC Act context.35
[77] Finally, in Kraal v Earthquake Commission, the Court of the Appeal discussed what constitutes physical loss or damage under the EQC Act.36 In that case, the plaintiff argued that the red zone imposed in the wake of the Christchurch earthquakes caused the physical deprivation of use of the plaintiff’s property, similar to the s 124 Notice on the Goodiers’ Property. It was submitted this came within the definition of physical loss or damage in the Act. The Court rejected this approach:
[78] We conclude that the plain meaning, the context, the legislative history, and relevant authorities in New Zealand, Australia and England, all support an interpretation of the ECA [the EQC Act] that limits the meaning of natural disaster damage to physical damage that arises from a natural disaster, and which is suffered by the land and buildings that are the subject of the claim, or such loss or damage when it results from an authorised measure to mitigate the damage from the disaster, or when such loss or damage is imminent. If the property is a building there must be a physical disturbance to the materials or structure of that building, and the ECA does not extend to a claim for losses arising from an event which has not physically affected the body of the property.
[78] Kraal is both authoritative and persuasive. I therefore proceed on the basis that the Goodiers must prove there has been actual physical loss or damage to the Property, as a result of the landslip. The s 124 Notice therefore has no impact on EQC or IAG’s liability or obligations.37
Burden of proof
[79] As a general principle of insurance law, it is the insured person who must make out his or her claim under the policy of insurance.38 The fundamental principle is that
35 Earthquake Commission v Insurance Council of New Zealand Inc [2014] NZHC 3138, [2015] 2 NZLR 381 at [79].
36 Krall v Earthquake Commission [2015] NZCA 13, [2015] 2 NZLR 589 at [73]-[79].
37 In any event, Mr Hoobin, the building control team leader for the Whanganui District Council, explained that the Goodiers could have the s 124 Notice on the Property lifted if the sewer and stormwater pipes are replaced, an appropriately-constructed fence or barrier on the headscarp is erected, and on receipt of an engineer’s report on the extent of work required for the house, garage, and driveway to be safely used. In the event that an engineer considers there is no further risk to the building, then a retaining wall to mitigate the damage or any further damage can be constructed with the dwelling occupied. Mr Hoobin said that the Council would give encouragement to the Goodiers and cooperate with their engineer to have them reinstated in the Property.
38 He v Earthquake Commission [2017] NZHC 2136 at [55].
it is the plaintiff who has the burden of proving, on the balance of probabilities, every material fact of his or her cause of action.39
[80] In ACC v Ambros, the Court of Appeal held that, while the legal burden to prove causation in accident compensation cases remains with the claimant, a tactical burden, defined as the burden resting upon a party who appears to be at risk of losing on a given issue at a particular point in trial, passes to the defendant when “some evidence of causation has been adduced by the plaintiff.”40 Supporting this, the Court then referred to the nature of the accident compensation regime:41
In our view, it is in keeping with the non-adversarial nature of the claim and review process that the Corporation should investigate all possible aspects of a claim, at least in a rudimentary fashion and as far as practicable. It would thus be in a position, once the matter comes before court, to lead evidence on all points that were investigated, whether strictly obliged to or not.
[81] A similar argument was raised in relation to the Earthquake Commission in Bligh v Earthquake Commission and IAG.42 In that case, the plaintiff submitted that if he could establish a “credible prima facie evidential foundation” for his allegations, the burden would effectively shift to the defendants.43 Nation J held however that the evidential (or tactical, to use the language of Glazebrook J in ACC v Ambros) burden will shift only if there is credible evidence supporting the plaintiff’s allegations to the extent required to meet the burden of proof which is on the plaintiff.44
[82] Ultimately, whether the burden of proof is satisfied must be considered having regard to all the evidence that has been presented.45 Applying this to the present case, the Goodiers will fail to have met the burden of proof upon them if, when considering all the evidence, the Court finds that they have not proved the particular material allegation on the balance of probabilities.
[83]In another attempt to shift the burden of proof in He v Earthquake Commission,
the plaintiff argued that because EQC had already paid the plaintiff $15,934.08 and
39 He, above n 38, at [55]; and Bligh, above n 22, at [31].
40 Accident Compensation Corporation v Ambros [2007] NZCA 304, [2008] 1 NZLR 340 at [63].
41 At [64].
42 Bligh, above n 22.
43 Bligh, above n 22, at [33].
44 At [34].
45 At [34].
asserted that was its full liability, EQC had assumed the burden of proving that the payment met its replacement obligation under the Act – that is, EQC had assumed the burden of showing that that payment discharged its obligation for the damage to the property it had purported to settle.46 This argument was rejected by Dunningham J, who found that the material dispute was not whether the agreed repairs could be achieved for the sum paid by EQC, but whether EQC and the insurers had underestimated the extent of the damage and the extent of their obligation to repair.47 The Judge was satisfied that the plaintiff had the burden, on the balance of probabilities, to establish that an insured loss had been suffered, and the extent of that loss.48
[84] The Goodiers therefore have the burden of proving that there has been natural disaster damage. This means they must prove there has been damage of the kind pleaded, and that the damage was caused by the landslip.
PART III – THE FACTUAL CONTEST
[85] The Goodiers claim that the landslip on 20 June 2015 caused sudden and accidental loss to the house and garage. In their initial statement of claim, the Goodiers made a building and a land claim. Of the 11 particulars of damage first pleaded, eight of the 11 particulars related to the driveway and downslope (the land). The following are the particulars that related to the building:
(3)differential settlement of the dwelling’s foundation with a floor level differential of 64 millimetres;
(4)cracking in the concrete foundation slab;
…
(6) a sticking garage door.
[86] The claim also pleaded that the house was at imminent risk of further evacuation of land, including land supporting the accessway, re-inundation of land, and further settlement of the foundation, causing warping of the walls, doors, and the garage door.
46 He, above n 38, at [56].
47 At [58].
48 At [59].
[87] As noted above, during the trial, extensive evidence was adduced on behalf of the Goodiers, traversing a substantial number of elements of damage to the Goodiers’ house and garage, which were not the subject of an amended pleading. In the amended statement of claim, the full particulars of alleged damage were pleaded as follows:
Land loss
(1)evacuated and inundated land with eight metres of the dwelling;
(2)evacuated land supporting the accessway, including evacuation of the cobble driveway and concrete path;
Driveway and downslope
(3)damage to the sewer and storm water pipework leading from the dwelling;
(4)collapse of a timber pole retaining wall;
(5)collapse of the stairs associated with the timber pole retaining wall;
(6)rotation and slumping of a second timber pole retaining wall;
(7)rotation and slumping of two concrete crib walls;
(8)collapse of two children’s playhouses downslope of the
accessway;
(9)driveway and walkway collapse;
The house
(10)differential settlement of the dwelling’s floors and
foundation(s);
(11)a fall in the lounge floor of 24mm over approximately 3m;
(12)lounge bay window sloping in the same direction as the floor;
(13)crack at the base of the bay window lining and architrave junction;
(14)rotation or bending of the lounge bay window corner post;
(15)roof leaks;
(16)cracking to internal plasterboard linings;
(17)doors that are jamming;
(18)cracks in the firebox;
(19)movement to the timber cross bracing beneath and behind the firebox;
(20)the cracking and separation of pavers; and
(21)movement of pavers adjacent to the support pole at ground level directly below the southwest corner of the lounge;
The garage
(22)movement of the garage concrete foundation slab relative to the house;
(23)movement of the eastern garage wall in relation to the house;
(24)garage floor and foundation subsiding;
(25)cracking in the garage concrete floor slab;
(26)exacerbation of existing cracking in the garage concrete floor slab;
(27)a crack across the junction between the workshop and garage;
(28)a void beneath slab and adjacent to pile;
(29)pile lean(s);
(30)separation of weatherboards on the eastern elevation between the new and existing garage;
(31)weatherboards out of level;
(32)the sticking or jamming of the garage door;
(33)slumping below the gully trap on the eastern elevation between the new and existing garage;
(34)misalignment in the roof and gutter lines above the garage door;
[88] In describing the factual contest among the parties, I do not propose to deal with each of the particulars of damage individually. Rather, the particulars can be grouped into two categories of damage: damage to the house and damage to the garage.
[89] The particulars relating to land loss and the driveway and downslope do not need further consideration, as the Goodiers abandoned their s 19 claims under the EQC Act against EQC and IAG at the commencement of the trial. However, Mr Shand explained that although the s 19 claim was abandoned, the reason for its inclusion in the amended claim at the close of the trial was to preserve the Goodiers’ claim for general damages. I granted leave to file the amended claim, but disallowed the claim for general damages on the grounds that general damages are unavailable where there is no breach or a wrong.49 The Goodiers have abandoned their s 19 claim against IAG and in the absence of a finding of wrong or breach, general damages are not available.50
[90] Before addressing the respective claims of damage to the house and to the garage, I deal with the issues arising in this order:
(i)the flaw alleged by the defendants and the geotechnical evidence;
(ii)the lay witnesses’ evidence;
(iii)the expert witnesses’ evidence; and
(iv)summaries of evidence positions.
49 Goodier v The Earthquake Commission, above n 17, at [63].
50 Jarden v Lumley General Insurance (NZ) Ltd [2015] NZHC 1427 at [129], a finding which was not overturned on appeal in Jarden v Lumley General Insurance (NZ) Ltd [2016] NZCA 193.
[91] Before doing so, however, I address the flaw which is alleged by the defendants to be fatal to the Goodiers’ case.
The flaw alleged by the defendants: the landslip “mechanism”
[92] From the outset, Mr Scott for EQC forewarned that the evidence called for the Goodiers did not support their claim that the elements of alleged damage to the house and garage have been caused by the landslip. During the evidence of the Goodiers’ experts, including their cross-examination, EQC consistently challenged the Goodiers’ lack of structural engineering and geotechnical evidence to establish how the alleged damage to the house had been caused by the landslip.
[93] This “alleged flaw” became the major point of contest between the Goodiers and the defendants, both in relation to the lay witnesses’ evidence, which canvassed their observations of the Property before and after the landslip, and the experts’ evidence.
[94] What follows is an overview of the evidence provided by each party as to the landslip “mechanism”, that is, how the landslip occurred on 20 and 21 June 2015 and any resulting damage. In essence, the geotechnical evidence distinguishes the soils upon which the Goodiers’ house was built and the soils at the southern end of the garage around the southwest pile, the retaining walls, and the driveway. This evidence is critical to my findings on causation.
The geotechnical evidence
[95] Mr Peters, a geotechnical engineer, was called by EQC and IAG. His evidence was the only geotechnical evidence called. He took soil samples from the Property around the Goodiers’ house, and from those, he reached the conclusion that the landslip could not have caused the claimed damage to the house. This is because the house site was excavated into competent ground which remained unaffected by the landslip. However, as part of the site development, loose fill soils with retaining walls were placed on the outside edge of the southern slope. Mr Peters called the slope edge the “escarpment”, where the land movement occurred during the landslip. He then
described how the different geology over the Goodiers’ Property dictated the mechanism of the landslip.
[96] First, Mr Peters described the nature of the soils under the house. The siteworks undertaken prior to the construction of the house had resulted in a number of stepped cuts into the soil. He described the building platform as comprising “mixtures of dense sand and stiff silt deposits of the Shakespeare Group”. His investigations confirmed that the foundations of the house are likely embedded in this undisturbed stiff/dense material.
[97] In contrast, however, nearly half of the garage was likely to have been founded initially on the silts and sands of the Shakespeare Group overlain with a natural mantle of more weathered soils and colluvium. Mr Peters said it is likely to be for this reason that the builder of the garage added a pile at the southwest corner and thickened the perimeter ring foundation in the corner of the garage to better support the garage. Comparatively, the soils around and beneath the pile and supporting the retaining walls and driveway were fill-type soils. It is these soils that evacuated during the landslip.
[98] Mr Peters concluded that the soils that slipped in the June 2015 landslip did not comprise any of the undisturbed silt and sand deposits of the type that existed under the house. They comprise solely the soils that have been excavated and placed downslope, together with some of the natural-formed softer soils which underlay the fill. He illustrated this by means of a photograph, which shows the house embedded on the stiff/dense building platform.
[99] In his view, the landslip was a combination of a rotational and translational landslip that resulted in a saturated debris flow down the slope below. It was triggered
by the heavy rainfall event on 20 and 21 June 2015, and the landslip was primarily the result of a reduction of the effective strength of the near soils at the top of the slope, because of their saturation and softening by the heavy rainfall. The mechanism for the landslip, therefore, was the saturation of the predominantly loose-fill soils on the edge of the slope, both above and below the retaining walls, which were not robust enough to resist failure. Once the ground started to move, the walls collapsed and evacuated along with the soils.
[100] Importantly, the differences in geology between the escarpment slope and under the house, in his view, made the likelihood of the landslip extending back under the house very unlikely. His conclusion was reinforced by the lack of any observable evidence of further land damage post-slip, in the vicinity of the house and garage, other than at the southwest corner of the garage. He gave evidence that none of his inspections of the Property since the landslip, along with his initial assessment of photographs on site, have revealed any observable evidence of such land damage. He points the following facts to support this view:
(a)No cracks in the land back from the escarpment have opened up either at the time or subsequently.
(b)There is no evidence of land subsidence consistent with any wider area of land having been affected by the landslip.
(c)The well-laid pavers on the driveway are good indicators of land movement, as they are sensitive to land movement occurring underneath them. The pavers leading back to the house are undisturbed. If land movement had occurred below them, they would have displaced and been separated over a wide area and not just in localised pockets.
The “vibration” theory
[101] In contrast, no geotechnical evidence was called for the Goodiers. Prior to trial, no evidence on behalf of the Goodiers had been directed at the mechanism of how the landslip caused the claimed damage to the house and structure of the garage.
Mr Csiba was called as the Goodiers’ structural engineer expert, who had prepared a three-page engineering report, two and a half years before the trial. His brief of evidence was attached to this report, and contained a summary that the damage to the Property was caused by the landslip and the consequential movement and differential settlement of the land.
[102] In response to the defendants’ evidence from Mr Donnan and Mr Smith that the floor levels and wall verticalities are a result of the complex structure of the house and its relatively poor standard of construction, Mr Csiba responded by saying the observed condition of the house after the landslip was beyond the acceptable level to be considered as-built defects. In his initial brief of evidence, however, Mr Csiba did not provide an explanation of how the landslip had caused the damage to the house and garage.
[103] After the trial commenced, Mr Csiba inserted belatedly, and for the first time, into the joint experts’ report, his “vibration” theory. This theory was advanced by Mr Csiba as the mechanism by which he believed the landslip caused the damage. In essence, the theory is that while the ground beneath the house may be adequate for the structure, in an event such as a significant landslip there may be ground movement and/or vibration that causes structures to vibrate, shudder and rock without permanent deformation of the land. The description was encapsulated in the joint experts’ report as follows:
5.2.5 While the Geotech Engineer assess the ground beneath the house to be adequate for the structure, in an event, such as an earthquake and significant landslip, there is ground movement and/or vibration that causes structures to vibrate, shudder and rock without permanent deformation of the land. This, for example, is a regular occurrence with earthquakes, where a house will rock causing cracking to linings etc. but no permanent or visible damage to the land. This vibration or movement to the structure can be sufficient to cause break the seal on sealants, soldered joint, pop roofing nails and the like.
[104] Under cross-examination, Mr Csiba was unable to give a coherent explanation of how the vibration occurs in a landslip or how the land will perform in a landslip, apart from his own personal observation of Christchurch properties having suffered earthquake damage and his own personal observation of a post-landslip event in different circumstances. He accepted he was not an expert engineering geologist or a
geotechnical engineer, and ultimately could not provide an explanation as to how or what causes change or the extent of such damage.
[105] I turn now to consider the lay witness evidence, and then the expert evidence, as it relates to the damage pleaded.
The lay witnesses’ evidence
[106] Mr and Mrs Goodier gave evidence, as did their son, Louis Goodier. They also called a further 23 lay witnesses who gave evidence about their observations of the house and garage. Because of the commonality and observations on the respective elements of damage amongst the lay witnesses’ evidence, I have described their evidence in general terms.
The Goodiers’ evidence
[107] Mr Goodier Senior has been a qualified builder with 30 years’ experience. He and Mrs Goodier purchased the Property in 2004 and, as all of the lay witnesses confirmed, the Goodiers maintained their house to a very high standard. Mrs Goodier was noted for her meticulous housekeeping and the interior decoration of the house, and Mr Goodier, as a builder, maintained the house with the help of his sons and apprentices over the time that they lived there.
[108] In 2013, the Goodiers were preparing to sell the Property. It was placed on the market for sale with accompanying photographs, showing the Property as neat and well-maintained. The Goodiers withdrew their Property from sale, as it did not achieve the desired market price. Contrary to the allegations made by the defendants’ engineer that the house was poorly constructed, the Goodiers emphasised that the house won awards when it was built. Mr Goodier gave evidence that he would have noticed any of the damage to the house which Mr Smith, the defendants’ engineer, says was pre-existing damage.
[109] Mr Goodier described the 10 minutes before the landslip occurred. He noticed that some of the driveway pavers had gaps between them, and dropped at the edge of the driveway. It was serious enough for him to remove the car from the garage and
park it at the end of the driveway. After going back into the garage, “a loud indescribable noise” was heard. Mr and Mrs Goodier went outside and saw that the fence at the side of the driveway had gone, along with the flower border and the trees.
[110] When Mr Goodier notified EQC of the landslip on 22 June 2015, he advised that the landslip was extensive. He advised that the garage had been compromised and, as the garage is attached to the dwelling, the dwelling is no longer level and all services had been broken off by the slip, making the house uninhabitable. On 3 July, Mr Goodier called EQC again and expressed his concern about the dwelling levels and that the floor had dropped in the front room, which was the room closest to the slip. He did not make reference to other damage within the house. The other damage referred to by Mr Goodier in subsequent calls to EQC and to Mr Williamson on 28 August 2015 was to the southwest corner of the garage, including the wall linings and the dog wash area, the gap under the garage door, and the crack in the slab, and in relation to the house, the carport post including the lounge floor above and the pavers below, together with the brick courtyard at the rear of the ground floor flat. The other items of damage, such as wall damage, the cold joint, the firebox, the doors in the downstairs flat, the wall linings in the house and the roof were not mentioned.
[111] During the hearing, Mr Goodier gave further evidence of structural damage to the house which occurred after the slip. This included the wall lining damage and movement, the levels of the ground and first floor sloping noticeably towards the slip, the level of the lounge also sloping towards the slip, and exterior damage to the house consistent with the slip. The garage slab, in Mr Goodier’s view, moved and cracked and now slopes. There is also damage to the interior and exterior of the garage.
[112] Mr Goodier acknowledged that the house had been subjected to heavy rain since it was built in 1977, but says only after the landslip was there any effect on the soils at the property. Since the landslip, the paving tiles near the post under the lounge have slumped, and the post has sunk. In relation to the geotechnical evidence about the soils next to the post, in a garden bed, he believed the post settled because of the movement of the underlying soil towards the landslip.51 He accepted, however, that
51 “Settlement” in geotechnical engineering terms is defined as the vertical movement of the ground, caused by stresses in the earth. It includes subsidence, “caving in”, or sinking of the ground.
the pavers leading to the house are undisturbed, while the ones nearest the garage are very disturbed or gone altogether. He gave evidence that the pavers near the carport have slumped and were not this way before the landslip.
[113] He disagreed strongly with the defendants’ proposition that the post under the lounge would have settled in the softer soil about the time of construction. He was categorical in his evidence that there was no damage to the post, pavers, or floor in the lounge above the post prior to the landslip. He maintains the lounge floor beams that are visible in the carport are twisted and the joints have opened up. He said none of these aspects were this way before the landslip.
[114] Mr Goodier also gave evidence that some of the internal doors on the landslip side of the house that were working before the landslip now do not open and close freely. There are cracks in gib board and paintwork on the landslip side of the house. He points to the fact that they had previously redecorated and there was no damage before. The toilet door in the downstairs flat and first floor lounge worked perfectly well before the slip, yet the following day when the Goodiers went back to the Property, the same doors were not shutting properly.
[115] Lastly, Mr Goodier gave evidence that the electric garage door began sticking after the landslip, the roof of the house is now leaking in at least two places, the garage roof is also leaking, and the firebox now has cracks in it.
[116] In summary, Mr Goodier’s evidence concerned the following four elements that changed after the landslip:
(a)The garage. The garage door was an electric garage door and he says was working perfectly well before the landslip. He maintains that after the landslip, it no longer worked and he had to adjust it in order for the family to remove larger items from the house. The garage floor also now has a slope which it did not have prior to the landslip. Although there were hairline cracks in the garage slab prior to the landslip, during the landslip these cracks opened up and new and bigger cracks appeared. The garage roof now also leaks after the slip.
(b)The sticking doors. He gave evidence internal doors on the landslip slide of the house that were working before the landslip now do not open and close freely.
(c)The sloping floors. He says the living room floor now slopes to the corner nearest the slip and it did not slope prior to the slip. He disagrees that the slope in the southwest corner of the lounge was due to settlement at the time of construction, because the slope was not there before the landslip. Mr Goodier emphasised that he had lived in the house for 11 years and did not notice any slopes. Within 24 hours of the landslip, he immediately noticed that the floors were sloping and he would have noticed any sloping beforehand because of his familiarity with the house and his own building experience.
(d)The roof. The roof was in sound condition before the slip, but is now leaking in two places, causing damage.
[117] Mrs Goodier gave similar evidence. She emphasised that their house was an architecturally-designed house and had won awards. It was a sound house until the landslip, in her view, and she was critical of the suggestion that the house was not well constructed. Because she and Mr Goodier have “an eye for perfection”, with Mr Goodier working on many old and new builds in his 30 years of carpentry and building career, she claims “there is no way we would have purchased a poorly-built or constructed property.”
[118] Mrs Goodier described the sloping garage floor, the roof leaks, the sticking doors, the sloping floors in the lounge, the cracks to the firebox and the cracked wall linings. She gave evidence all of this damage occurred as a result of the landslip. Mrs Goodier emphasised that her background is in painting and decorating which she has been doing since her husband was a builder in the United Kingdom. The wall linings were all painted by her and were in top quality condition. A number of the lay witnesses confirmed that Mrs Goodier is an extremely good painter and decorator.
[119] Mrs Goodier maintains there were no cracks in the walls of their house and the finishing was very good prior to the landslip. After the landslip, the cracks appeared and are presently visible. She also refers to open joints in the weatherboard where the garage is pulling away from the house. She says they were not there before the landslip.
[120] The Goodiers’ son, Louis Goodier, described that both of his parents were incredibly proud of their house and have maintained the Property fastidiously. His last visit to the Property prior to the landslip in June was February 2015. The house was at that time recently decorated and was in excellent condition. He next visited the house two months after the landslip.
[121] He described the cracks in the walls and floors that were immediately visible. He described doors not opening and closing correctly and expressed his view that the house had moved, causing damage throughout the house. The damage is distributed, he says, exponentially, starting with very little damage in the furthest corner of the house from the landslip, but a significant number of damaged elements closer to the slip. He noted the carport area, with the pavers nearest the southwest corner having sunk and moved, and gaps have opened. He observed the slope in the garage, in contrast with his experience of being in the garage during his high school years. He described that prior to the slip, a join between the two concrete slabs had been installed by his father. The join had been present for several years but after the landslip the join was cracked the entire length.
[122] Louis Goodier said that the garage floor had hairline cracks before the slip, but they were not as prominent as they appear now. The garage now also has leaks when it did not previously, and he refutes that the staining of the Douglas Fir beam is natural, as suggested by Mr Smith. He was adamant that the leaks and the water ingress during rain did not exist prior to the landslip.
[123] The further damage he observed was that the garage door no longer opened without detaching it from the chain, there is a noticeable slope towards the TV corner in the lounge post-slip, there were no cracks in the firebox when he helped repaint the house in 2009 but they are evident now, and the carport area was level with no gaps
between the pavers prior to the slip. He also gave evidence that immediately after the landslip, two leaks developed in the house, one above the window and the top of the stairs and a more visually significant leak in the front room, the latter destroying the contents of the storage units including his childhood toys.
The evidence of friends and clients
[124] In addition to the Goodiers giving evidence about their observations both before and after the landslip, they called a further 23 witnesses. Those witnesses range from friends that they have known for many years, to clients of Mrs Goodier, tradesmen, and acquaintances who have visited the house prior to and after the landslip. They gave evidence on their observations of the elements of the house and garage which they observed had been damaged after the landslip. Those elements included the sticking doors both downstairs and upstairs, visible cracked wall linings, the bowed pole in the upstairs lounge, the sloping floors upstairs, and the general “feel of the rooms,” the cracking to the garage floor, and the garage leaks in the roof.
[125] There are some witnesses that deserve particular mention. Mr Hardy gave evidence that he wanted to buy the house when it was on the market and the Goodiers purchased it. He and his wife looked at the features very closely. He did not notice any sloping floors, cracking to walls, or any doors that did not open or close freely. He asserted these are things he would have noticed because he came from an English mining village where tunnels underneath the land often caused settlement, and so cracks in footings or cracks in the plaster are the first things for which one checks when looking to buy a house. He therefore disputes that there were issues with the house that occurred at the time of construction, before the landslip, because he did not notice these things in 2004.52
[126] There were also a number of witnesses who had been friends with Mr and Mrs Goodier for years. Some helped them into their home in 2004. Others had kept in touch by visiting or staying with the Goodiers and had observed Mrs Goodier’s redecoration after 2013. Mrs Layman had visited the Goodiers about five times a
52 The Hardys’ own house was on the market at the same time and the reason he and his wife did not purchase the Goodiers’ house was that their own house had not sold in time.
month between 2004 and 2008, when she and her family moved from Whanganui. She had helped the Goodiers move into the Property, and she described it as being in sound condition with no repairs required. She also remembered visiting the Property after Mrs Goodier had redecorated sometime between 2013 and 2015, and recalled there were no cracks in the walls then as Mrs Goodier had freshly painted them. After the landslip, she noticed the main stairwell and the living areas of the home “are now full of cracks that were not there before the landslip”, and described the sloping floors in the formal lounge and upstairs rooms.
[294] Importantly, none of Mr Smith’s conclusions were subject to any cross- examination or contrary engineering evidence from the Goodiers. Although Mr Smith was cross-examined about his change of opinion, his revised conclusions were not challenged. I therefore consider that Mr Smith’s evidence in relation to the cause of damage to the garage is the most persuasive.
[295] Finally, and despite the challenge to the commercial relationship of Mr Smith’s firm, Spencer Holmes, with EQC, I do not place less weight on Mr Smith’s evidence because of that relationship. Although Mr Smith initially expressed a firm structural engineering opinion that the southwest corner pile of the garage was supported, as soon as Mr Hunt identified his findings of void around the pile, the defendants’ experts thanked Mr Hunt through their counsel and immediately undertook a further investigation. Mr Hunt’s evidence was taken seriously by the defendants’ experts, and although Mr Smith and Mr Donnan revised their briefs accordingly, further assessments and investigation were undertaken to ascertain the true position about the southwest corner of the garage, the loading capacity of the perimeter concrete foundations, and their assessments in relation to their investigations. It is the hallmark of a professional to accept that they may have been mistaken and to undertake further
investigation to ascertain the correct position, and Mr Smith’s credibility cannot be impugned for doing so.
[296] I turn, then, to each of the pleaded elements of damage in respect of the garage, with those that overlap considered together.
Lateral movement of the garage slab and wall relative to house77
[297] As described above, this allegation and Mr Hunt’s opinion is not supported by engineering evidence or geotechnical evidence. The garage slab is a large flat pad sitting on a flat section of the site, with a small section of it being undermined in the landslip.78 The experts agreed that there had been only minimal evacuation since the landslip.
[298] Mr Peters said that the land movement cannot have caused any lateral movement of the slab and he explained it as follows:
So a landslip, the fundamental requirements of a landslip is a slope, so to be on the slope face and to have loose soils on that slope, and they are the most susceptible to instability and when that material displaces what it will do it will typically affect materials immediately, or potentially immediately, adjacent to the face. When the slope is gone and the ground levels out and becomes flat, the driving forces that are making the land move go. They’re gone. So although you can have loose soils around a site, it does not make them susceptible to instability if they are on flat land. It’s those right on the top of the slope which could potentially be susceptible but on the flat they’re not.
[299] There is no engineering evidence contradicting Mr Smith’s or Mr Peters’ evidence that the garage slab has not moved laterally and, indeed, Mr Hunt’s 2017 report did not mention lateral movement of the slab for repair or costing. I am not satisfied that there has been lateral movement of the garage slab or wall and I accept the geotechnical and engineering evidence adduced by the defendants.
77 This section addresses the particulars outlined at [87](22) and (23).
78 Mr Peters gave evidence that only 1.5 metres², or three per cent of the footprint, was undermined by the slip.
The garage floor and foundation subsiding
[300] As noted earlier at [163], it is agreed that the southwest corner of the garage has a level of -26 millimetres. This is compared with +1 millimetre at the other side of the garage door northwest corner and +14 millimetres in the opposite northeast corner. Mr Smith says that such floor differentials in the garage slab are not evidence that the slab has subsided due to the landslip. He says that garage floors are commonly poured in a manner which allows surface water that is transported into the garage by vehicles to drain out of the garage, and there is no evidence to suggest that these slopes are attributable to anything other than the manner in which the garage was constructed.
[301] In the absence of engineering analysis from Mr Csiba, I accept Mr Smith’s explanation of the construction variations in the garage slab and reject Mr Csiba’s conclusions that the floor differentials occurred as a result of settlement from the landslip.
[302] In addition to Mr Smith’s explanation as to the measurements in each of the parts of the garage slab and his reasons for the variations in level around all sides of the garage, including a lack of care in achieving a flat surface during construction, he suggests the following provides an explanation for the slope in the southwest corner:
(a)Shortly after construction, a part of the slope in the southwest corner of the garage slab may have been caused from the inadequate founding of the pile and slight static settlement at that time.
(b)A small portion of the overall garage slab was ultimately undermined by the landslip, being 1.5 metres² or three per cent of the footprint.
(c)There are indicators that the land near this corner was subsiding before the landslip. Mr Goodier was in the process of constructing the concrete walkway shortly before the landslip, and I accept the defendants’ submission that settlement was likely occurring on that southwest corner, along the southern slope beside and slightly below the garage, before the landslip.
(d)There is no evidence of land movement further back than the headscarp following the landslip, as assessed by Tonkin & Taylor.
[303] I find the differential levels in the garage slab and floor were not caused by the foundation subsiding as a result of the landslip. I accept Mr Smith’s evidence that any slopes in the floor are attributable to the way the garage was constructed.
Cracking in the garage concrete floor slab and exacerbation of existing cracking
[304] The experts agreed that there is cracking present in the garage concrete floor slab, and that the primary cracking is an east-west crack which existed prior to the landslip. Mr and Mrs Goodier said that it was a hairline crack only before the landslip, and it got longer and wider after the landslip, with Mrs Goodier saying it got up to three millimetres wider.
[305] Mr Goodier accepted that there were other hairline cracks in the garage slab before the landslip, which is consistent with shrinkage cracks which typically occur after the initial set of the concrete. This acknowledgement is reflected in the Goodiers’ amended pleading, with the particular “exacerbation of existing cracking in the garage concrete floor.” Mr Goodier further said there were two additional cracks that did not exist before the landslip.
[306] Again, there is a contest between the parties’ respective building experts. Mr Williamson saw the garage floor within two months of the landslip and concluded that these cracks were clearly aged due to their rounded edges and the extensive debris inside some cracks, and showed no signs of new movement. In contrast, Mr Hunt believed the cracks supported his view that there had been a lateral movement of the garage slab, but accepted that he was not an engineer and could not tell whether the cracks in the concrete were caused by shrinkage that pre-existed the landslip. Mr Smith examined the cracks on three occasions and said they were aged shrinkage cracks with no sign of recent movement or exacerbation. Further, he said that if the southwest corner had subsided, he would expect to see a diagonal crack in this corner, not one parallel with the southern wall.
[307] In view of the expert evidence adduced by the defendants on the cracking in the garage slab, I accept that the current cracks have no structural or functional effect on the slab and were most likely to have been present prior to the landslip. Despite the evidence from the Goodiers that the cracks were exacerbated after the landslip, their measurement estimates were unable to be compared with the pre-landslip cracking and were in excess of the actual measurements available after the landslip. For example, the crack that Mrs Goodier estimated widened by three millimetres in fact measured only 1.2 millimetres wide.
[308] I am not satisfied on the balance of probabilities that cracking of the garage slab was caused by or sufficiently exacerbated by the landslip. The geotechnical and engineering evidence confirms that the garage slab is supported by the perimeter foundation, that there has been no lateral movement of the slab and that there has been minimal further evacuation. Even if exacerbation to the cracks has occurred, it is minimal.
A crack across the junction between the workshop and garage
[309] This particular of damage evolved during the trial from an example of a crack in the slab to an allegation that there has been lateral movement of the garage slab by a few millimetres. Mr Goodier gave evidence that at the cold joint between the two slabs, there was a couple of millimetres’ gap pre-landslip, that is, at the base of each of the walls between the workshop and the garage. Mr Goodier placed floor levelling compound to make the cold joint safer, because of the chamfered, or sloped, edge between the two bases. He pointed to the floor levelling compound pulling apart after the landslip, and being broken up along the entirety of the joint. He accepted there was an existing small gap between the wooden wall where the two concrete slabs meet, but it was not as wide as it is now following the landslip.
[310] Mr Smith measured the cold joint at 10 millimetres at its widest at the base of both walls, which is consistent with Mr Goodier’s evidence that the cold joint was eight to 10 millimetres wide. Consistent with Mr Peters’ evidence that the landslip movement could not have caused any lateral movement of the slab, Mr Smith found
that there was no material movement post-landslip, as shown by the floor levelling compound still being intact over the eastern section of the cold joint.
[311] I accept Mr Smith’s evidence. It was demonstrated by a comparison of the cracking apparent around the cold joint and where a crack or break would be expected to occur if the garage slab had moved. The floor levelling compound appears in the 10 millimetre opening just before the end of the wooden wall. If the opening at the base of the wall had occurred as a result of the landslip, the floor levelling compound coming out of that corner would have been broken, creating a similar-sized 10 millimetre gap. Thus a similar crack would have occurred if there had been landslip damage. However, no such crack occurred.
[312] I note that Mr Csiba also acknowledged that if the 10 millimetre separation at the base of the eastern wall had opened up in the landslip, it would be logical to see additional cracking in the floor levelling compound immediately in front of the wall. Mr Hunt, although he disagreed with Mr Smith, relied on the curved extension of the crack to show movement. However, I find that conclusion is not consistent with separation having occurred at the base of the wall.
[313] In addition to Mr Smith’s evidence, I take into account that the separation of the cold joint with the resulting broken floor levelling compound was not raised in the initial reports of damage by the Goodiers to EQC. Nor was it photographed either by the Goodiers at the time, or Mr Csiba, or persons from Earthquake Services when they inspected the house shortly after Mr Csiba’s report and took a series of photographs. They took no photographs of the cold joint or the broken floor levelling compound. Nor was it shown to Mr Williamson by Mr Goodier on 28 August 2015, when Mr Goodier was expressing his concern that Tonkin & Taylor had failed to consider damage to the garage. Notably, it is not referred to, either in Mr Hunt’s December 2017 report or in his costings for remediation.
[314] In addition, the defendants’ experts point to the age of the separation between the weatherboards at the corner of the eastern side of the junction between the garage and the workshop to show that any movement in the cold joint is historical and occurred before the landslip.
[315] In light of the evidence, I do not accept that the crack across the junction or cold joint between the workshop and the garage was caused by the landslip.
A void beneath the slab and adjacent to the pile and pile lean(s)
[316] The void beneath the garage slab was raised by Mr Csiba in the joint experts’ report. The slab was referred to as being “drummy on top” when tested with a hammer, indicating voids under the slab caused by the landslip. Despite an early drill hole depicted in a photograph of the garage floor, no evidence of any testing was adduced. Mr Csiba did not include this item in his report or in his briefs of evidence, and in giving evidence, he said he did not know whether there was a void under the slab. The void adjacent to the pile was identified by Mr Hunt on his site visit as discussed earlier at [181], but no evidence was led about its significance on the structural integrity of the garage from Mr Csiba.
[317] On his site visit, Mr Hunt also identified the southwest pile of the garage was leaning outwards towards the slip, but did not obtain a level on the pile at the time. Mr Smith examined it and found the pile was not damaged, with no signs of cracking in the mortar interface between the precast wall liners.
[318] I reject the Goodiers’ claim for damage in respect of these items for two reasons:
(a)The defendants’ engineering evidence that the southwest pile was not loadbearing was not challenged. The southwest corner continued to be supported by the substantially deepened perimeter foundation, which are up to 800 millimetres deep and rest on better ground, back from the southwest corner. Mr Smith was not cross-examined on these conclusions, and I accept Mr Smith’s evidence.
(b)EQC has paid for the underpinning of the garage corner as part of its settlement, despite what is now known – that the need for this underpinning predated the landslip.
[319] I find, therefore, that the landslip, although causing evacuation of the soil around the pile, did not undermine the southwest corner and the pile in the way claimed. In any event, the southwest garage corner continues to be supported by the perimeter foundations and the experts all agree that minimal further evacuation of ground from under the southwest corner of the garage slab and foundation has occurred.
Separation and dislevelment of weatherboards between the new and existing garage79
[320] These two particularised claims are part of the Goodiers’ evidence that the garage has moved as a result of the landslip, and is strongly contested by the defendants’ experts. Mr Goodier gave evidence that there is now a gap in the weatherboards between the garage and workshop. He says there is now daylight coming through this gap, which was not there before the landslip. Mr Hunt and Mr Csiba, in the joint experts’ report, say the gapping between the joints of the weatherboards is evident from paint and sealing material not being present inside the gapping, and paint being stretched on top of the gapping. This indicates, they say, the gaps occurred after the weatherboards were installed and painted. Mr Hunt also gave evidence that the weatherboards are out of level, in his opinion, due to the garage floor and foundations subsiding as a result of the landslip.
[321] Mr Smith says there is no such damage and if the southwest corner settled as a result of the landslip, there would be significant consequential damage to the garage superstructure. Mr Donnan analysed the levels and verticalities of the weatherboards, the facing boards, and the internal and external faces of the southern wall. He found the weatherboards on either side of the corner are level and the facing board on the western side of the corner leans back to the north away from the landslip. He says if the southwest corner had subsided as a consequence of the landslip, the weatherboards on the exterior of both sides of the corner would show a tilt consistent with the subsidence. However, on both sides the weatherboards remain essentially level.
[322] I note Mr Donnan’s evidence on the weatherboards being level was not the subject of cross-examination. However, given the absence of contrary structural
79 This section addresses the particulars outlined at [87](30) and (31).
engineering evidence, I am unable to accept that these particulars of damage were caused by the landslip.
The sticking or jamming garage door
[323] There are two issues relating to the allegations about the electric garage door. The first is that Mr Goodier found that the door would not work after the landslip. The power was then switched off, and he made an adjustment to the frame to open the door manually. Louis Goodier said that when he tried to open the garage door in August 2015, there was power and he could not open it with the remote, so he detached the door from the motor. Mr Hunt too found that the door was catching. On the other hand, Mr Donnan says that the door works perfectly well at the present time. The only issue was the need to disconnect the door when there was no electricity.
[324] The second issue was the gap under the garage door, which the Goodiers said was not there before the landslip. However, Mr Donnan, in his supplementary brief of evidence, explained that when the door was lowered but not locked there was no gap apparent. However, in order to use the manual locking system the door needs to be lifted slightly, at which point the gap is visible.
[325] Mr Shand submits that common sense and logic says that if the garage door worked properly before the landslip and it did not work without adjustment immediately after the landslip, the landslip must be the cause of the garage door not operating, with the explanation being that the landslip caused movement to the garage.
[326] I have difficulty in accepting this submission, as it ignores the cross- examination of Mr Goodier about the difference between opening the garage door with power on and the adjustment he had to make when the power was off to work the garage door manually. I accept Mr Donnan’s reassessment that the garage door does currently work. The problems described of the garage door jamming appear to me to be a result of adjustments made to the garage door when the power supply was off. I do not uphold the claim that the garage door is consistent with landslip damage and movement of the garage slab, and reject this particular of damage.
Slumping below the gully trap on the eastern elevation between the new and existing garage
[327] Mr Hunt in his reply brief of evidence observed that there was slumping below the gully trap on the eastern elevation of the garage between the new and existing garage junction. Mr Csiba did not address this in his evidence-in-chief, but under cross-examination said that in his view there had been some localised land settlement under the gully trap, which was caused by land movements associated with the landslip. In the joint experts’ report, he and Mr Hunt said there is also slumping and eroding material from the embankment directly behind the garage. They explained the gully trap has been installed for many years, and any localised uncompacted fill associated with the drain would have long settled and eroding material of the adjoining bank would have filled the cavity. Mr Csiba was pressed as to his geotechnical expertise on this subject and he accepted he had not measured the subsidence or tested the area. He had only observed it. However, it was not referred to in his 2016 report or his briefs of evidence filed.
[328] Mr Hunt gave evidence that it was unusual for any slumping to have occurred under a gully trap without some form of movement or ground settlement. He accepted he could not give a reason for this, and when asked in cross-examination if he considered the slumping was related to the floor issue in the garage, he accepted he was not a “geotech” and he photographed it because it seemed unusual.
[329] Mr Shand cross-examined Mr Peters and asked whether the soils under the gully trap were loose and susceptible to wetting and movement. Mr Peters said the soils could get wet and saturated, but not necessarily move. Further, he rejected the proposition that the soils, apart from on the southwest corner, had moved as a result of the landslip on the edge of the slope, and he did not believe there was any damage to the land on the eastern corner of the garage. This was consistent with Mr Peters’ evidence that the landslip was not deep-seated and did not extend into the soils beyond the headscarp, let alone the house.
[330] I accept Mr Peters’ evidence that the soils had not moved under the gully trap as a result of the landslip, because of the distance from the edge of the headscarp to
the gully trap on the eastern elevation between the new and existing garage. I therefore do not accept this particular of damage.
Misalignment in the roof and gutter lines above the garage door
[331] Mr Hunt described a misalignment of the roof and gutter line above the garage, which he said showed that the garage roof had subsided in the southwest corner of the garage. He accepted Mr Donnan’s evidence that the gutter should fall back to the northern end of the garage to where the stormwater downpipe takes the water away, but said as a result of subsidence due to the landslip the guttering itself is now “dead level”, when it ought to be leaning down to the north. He says this is consistent with the garage roof subsiding in the southwest corner.
[332] For the reasons already outlined, the subsidence of the garage roof is not consistent with Mr Smith’s engineering assessment of the structural integrity of the garage. This claim is not upheld.
Conclusion on damage to the garage
[333] In summary, I have reached the following conclusions about the evidence of damage to the Goodiers’ garage:
(a)The southwest pile was founded on unsuitable material, namely the fill soils that slipped away during the landslip.
(b)I accept the evidence of Mr Smith that the pile on the southwest corner of the garage is not load-bearing and has not been load-bearing for some time. The garage is supported by the thickened perimeter foundation to transfer the weight from the unsupported corner and suspended pile.
(c)Therefore, the garage is not supported by any of the loose-fill soils that have slipped away during the landslip. Because the pile was not contributing materially to the support of this corner of the garage, the loss of soils under this corner has not caused any damage or movement
to the garage. Significantly, I find there has been no lateral movement of the garage slab.
(d)Any particulars of damage claimed in respect of the garage have therefore not occurred as a result of the landslip.
[334] I find on the balance of probabilities that there is no natural disaster damage to the garage, that is, no damage caused by the landslip.
[335] I note that EQC accepted that the southwest corner of the garage was at “imminent risk of damage” occurring in the short-term future. “Imminent risk of damage” falls within the definition of “natural disaster damage” under the EQC Act, and EQC paid $27,040.93 to the Goodiers to underpin the southwest corner of the garage under s 18.
Resolution of the legal issues
[336] The Goodiers had the burden of proving that there has been natural disaster damage to their house and garage, as claimed. This required proof, on the balance of probabilities, that the pleaded damage was caused by the landslip.80 In closing, Mr Shand submitted that common sense, logic, and 23 independent people prove that more likely than not the damage that exists to the Property was caused by the landslip. Further, he submitted defendants’ evidence was tainted by collaboration and the lack of independence and impartiality, and was also weakened by previous assessment errors fundamental to the defendants’ case.
[337] I have already dealt with the credibility challenge raised by Mr Shand in relation to the defendants’ experts and their evidence, applying to their evidence the reasons for my preference for one expert over the other in reaching my conclusions. For completeness, I reject the allegation that the experts’ evidence was tainted because of their relationship with EQC. The expertise was critical to the determination of the factual contest between the parties, particularly in the absence of relevant expertise in engineering and geotechnical evidence being called by the Goodiers.
80 See [84] of this judgment.
[338] I accept the defendants’ submission that, despite the obvious relevance of geotechnical evidence in a case such as this, where the Goodiers allege that the landslip has caused damage to their house and garage, geotechnical evidence is critical, particularly where the defence to their claim was that there was no mechanism that caused the damage to the house by the landslip. The Goodiers could not refute Mr Peters’ evidence that the Goodiers’ house was built on firm ground and there was no disturbance between the house and the headscarp, eight to 10 metres away, where the landslip occurred.81 Nor could the Goodiers refute Mr Smith’s evidence, with contrary engineering evidence, that the loss of soils under the southwest corner of the garage had not caused any damage or movement to the garage.82
[339] The Goodiers’ case was based on the observations of their 23 independent witnesses of elements within the Property, before and after the landslip, together with the Goodiers’ evidence, to prove the damage alleged. However, they could not explain the link between the landslip and the Property and Mr Csiba, the structural engineer for the Goodiers, did not have a plausible or viable explanation for the damage which is alleged to have occurred. I specifically rejected his vibration theory for the reasons set out above.83
[340] I consider Mr Shand’s submission essentially relies on the inferences that can be drawn from the lay witnesses and the Goodiers’ observations and memories of the Property before and after the landslip. I turn, then, to consider the authorities on inferences.
Inferences
[341] In Jarden v Lumley General Insurance (NZ) Ltd, the High Court, referring to the judgment of Lord Brandon in Rhesa Shipping SA v Edmunds, explained that proof on a balance of probabilities must be applied with common sense.84 It requires the Judge to be satisfied on the evidence that an event or outcome is more likely to have occurred than not.85
81 See [230]–[238] of this judgment.
82 See [189]–[197] of this judgment.
83 At [237] of this judgment.
84 Jarden, above n 50 at [52], referring to Rhesa Shipping SA v Edmunds [1985] 1 WLR 948 (HL).
85 Jarden, above n 50, at [52].
[342] It was also recognised in ACC v Ambros, though notably in the medical context, that courts usually “proceed on their general impression of the sufficiency of the lay and scientific evidence to meet the required standard of proof… The legal method looks to the presumptive inference which a sequence of events inspires in a person with common sense”.86 The legal approach to causation is therefore different from the scientific approach. In law, problems of causation arise in the context of “ascertaining or apportioning legal responsibility for a given occurrence.”87 The Court of Appeal concluded that:
[67] The different methodology used under the legal method means that a court’s assessment of causation can differ from the expert opinion and courts can infer causation in circumstances where the experts cannot. This has allowed the Court to draw robust inferences of causation in some cases of uncertainty... However, a court may only draw a valid inference based on facts supported by the evidence and not on the basis of supposition or conjecture… Judges should ground their assessment of causation on their view of what constitutes the normal course of events, which should be based on the whole of the lay, medical, and statistical evidence, and not be limited to expert witness evidence.
[343] In making this observation, the Court went on to emphasise that there must be “sufficient material pointing to proof of causation on the balance of probabilities for a court to draw even a robust inference on causation. Risk of causation does not suffice.”88
[344] In Strathboss Kiwifruit Ltd v Attorney-General, Mallon J too confirmed that the court must be careful to draw the distinction between mere conjecture and a reasonable inference.89 Drawing on guidance from Lord Justice Toulson in Milton Keynes Borough Council v Nulty, Mallon J explained that in assessing a circumstantial case, the court should ask itself whether the strands of circumstantial evidence are best accounted for by the plaintiff’s explanation.90 This assessment involves looking at all the strands of circumstantial evidence as a whole, whether the individual strands relied upon are in themselves properly established, what factors point away from the suggested inference, and what other explanation might fit the whole of the evidence.91
86 ACC v Ambros, above n 40, at [65].
87 At [66].
88 ACC v Ambros, above n 40, at [70].
89 Strathboss Kiwifruit Ltd v The Attorney-General [2018] NZHC 1559, at [991].
90 At [993], citing Milton Keynes Borough Council v Nulty [2013] EWCA Civ 15 at [34].
91 At [993].
At the end of this assessment, the court must “stand back and ask itself the ultimate question of whether the plaintiff’s explanation is more likely than not to be true.”92 Lord Justice Toulson framed it as a “satisfied” test:93
The civil “balance of probability” test means no less and no more than that the court must be satisfied on rational and objective grounds that the case for believing that the suggested means of causation occurred is stronger than the case for not so believing.
[345] In this case, standing back and asking the ultimate question of whether the Goodiers’ explanation is more likely than not to be true, I am not satisfied that the landslip was the cause of the damage observed by these witnesses.
[346] First, the defendants’ experts have demonstrated through their geotechnical and structural engineering evidence that the damage to the Property, both the house and the garage, was not caused by the landslip in June 2015. I have found the defendants’ expert evidence is sound. In the absence of any geotechnical or structural engineering evidence to seriously contest the defendants’ evidence, there is no reliable basis for finding that the landslip caused the claimed damage.
[347] Second, the defendants have pointed to alternative explanations for the damage to the Property. In relation to the house, Mr Smith and Mr Donnan gave evidence that as a result of the complex design and the standard of construction of the house, over time, construction defects have caused the claimed damage to the house. In relation to the garage, Mr Smith gave evidence that any variation in the floor levels and related garage damage are more likely the result of poor construction tolerances and minor movements soon after construction resulting from the ineffective founding of the pile. While I am not required to make any findings on alternative explanation, I note these explanations are consistent with the evidence of damage to the Property.
[348] I am satisfied, on the evidence from the defendants’ experts, that the landslip was not the cause of the damage observed by the Goodiers and their witnesses. I do not find, as a matter of common sense or logic or, indeed, reasonable inference that the Goodiers and their witnesses have proved to the standard of balance of
92 Strathboss Kiwifruit, above n 89, at [37].
93 Nulty, above n 90, at [35].
probabilities that the damage claimed was caused by the landslip. No such reasonable inference can be drawn on the evidence, given the rational and geotechnical evidence to the contrary.
[349] Lastly, EQC has invited the Court to draw an adverse inference that the reason no geotechnical engineer or engineering geologist was called by the Goodiers, as the litigation funder had earlier suggested, is that this evidence was not available to them.94 EQC submits the only logical inference to be drawn is that no such expert would be prepared to express an opinion that the landslip could have caused the alleged damage to the Goodiers’ Property.
[350] I have accepted the geotechnical evidence from EQC that the landslip, with the saturation of loose soils on the edge of the headscarp did not cause the alleged damage to the Goodiers’ Property. On that basis, an adverse inference does not need to be drawn.
No further liability
[351] I have found that the Goodiers have failed to establish that their claimed damage to their house and garage was caused by the landslip. There is no further liability for either EQC or IAG, other than that which they have already accepted and paid. It follows that, for the same reason I disallowed the claim for general damages against IAG, general damages are not payable by EQC in the absence of any findings of liability.95
[352] For completeness, I find that the s 124 Notice under the Building Act 2004 does not have any impact on IAG or EQC’s obligations under the Policy or the EQC Act, in light of my findings that the claimed damage to the house and garage was not natural disaster damage.
94 Ithaca (Custodians) Ltd v Perry Corporation [2004] 1 NZLR 731 (CA) at [153]–[154].
95 Jarden, above n 50, and see [89] of this judgment.
Summary of conclusions
[353] In summary, I find that the damage to the house and garage was not caused by the landslip. I have reached the following conclusions about the evidence of damage to the Goodiers’ house:
(a)I accept the evidence of Mr Peters that there is an absence of a causal mechanism to link the natural landslip with the claimed damage to the house. I reject Mr Csiba’s “vibration” theory and his evidence which attributes the damage to the house to the landslip.
(b)I am satisfied on the balance of probabilities that the Goodiers’ house has been built on undisturbed stiff/dense material which was unaffected by the landslip, which comprised the movement of soils that had been excavated and placed downslope of the house and overlaid the ground under the garage.
(c)There is no causative link between the movement of soils down the head escarpment of the slip and the solid soil structure upon which the house is built, some eight to 10 metres away. The well-laid pavers on the driveway, which are sensitive to land movement occurring underneath them, indicate clearly that they had not moved. They are undisturbed, and were not affected by the natural landslip.
(d)There has been settlement of the southern carport post and sagging of the workshop timber beam causing elements of damage to the house, but such settlement and damage is unrelated to, and not caused by, the landslip.
[354] I have reached the following conclusions about the evidence of damage to the Goodiers’ garage:
(a)The southwest pile was founded on unsuitable material, namely the fill soils that slipped away during the landslip.
(b)I accept the evidence of Mr Smith that the pile on the southwest corner of the garage is not load-bearing and has not been load-bearing for some time. The garage is supported by the thickened perimeter foundation to transfer the weight from the unsupported corner and suspended pile.
(c)Therefore, the garage is not supported by any of the loose-fill soils that have slipped away during the landslip. Because the pile was not contributing materially to the support of this corner of the garage, the loss of soils under this corner has not caused any damage or movement to the garage. Significantly, I find there has been no lateral movement of the garage slab.
(d)Any particulars of damage claimed in respect of the garage have therefore not occurred as a result of the landslip.
PART V – SUMMARY OF FINDINGS
What is the nature and extent of the natural disaster damage to the “home” (as defined in the Policy) and “residential building” as defined in the Earthquake Commission Act 1993?
[355] The damage to the Goodiers’ home and garage did not occur as a result of the natural landslip and is not “natural disaster damage”.
Was it caused by the landslip?
[356] There is no causal connection between the landslip and the damage to the house and garage.
What is the liability of EQC and IAG for the cost to reinstate?
[357] There is no further liability for either EQC or IAG to reinstate, other than that which they have already accepted.
Does the s 124 Notice have any impact on EQC and IAG’s liability or obligations?
[358]The s 124 Notice has no impact on EQC and IAG’s liability or obligations.
Costs
[359] If the parties cannot agree over costs, those parties seeking costs should file memoranda within 20 days of this judgment.
[360] Reply memoranda for the Goodiers are to be filed within four weeks of their receiving the memoranda for costs.
[361] Any reply is to be filed within two weeks of the defendants receiving the Goodiers’ memorandum.
[362]The memoranda are to be no longer than 10 pages.
Cull J
Solicitors:
Chapman Tripp, Wellington for the First Defendant
DLA Piper New Zealand, Wellington for the Second Defendant
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