Rout v Southern Response Earthquake Services Ltd - [2013] NZHC 3262

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-000586 [2013] NZHC 3262

BETWEEN PAUL JOHN ROUT AND GEORGINA ANN KNOX ROUT
Plaintiffs

ANDSOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Defendant

Hearing: 7-16 October 2013

Appearances: GDR Shand and D S Maclaurin for Plaintiffs
C M Stevens and PJL Leman for Defendant

Judgment: 6 December 2013

JUDGMENT OF D GENDALL J

Table of Contents

Para No Introduction/background [1] Summary of findings [9] Events leading to the claim [10] Pleadings and issues [17] The policy [22] Approach to interpreting the policy [27] Issue 1 – Did the designation of the “red zone” of itself engage the policy? [30] Issue 2 – Is the damage to the house repairable in terms of the policy? [38] Positions taken by the parties from September 2010 to February 2013 [45]

The Southern Response 13 February 2013 letter [67] Experts’ evidence on whether the house is economically repairable [74] Mr Bruggers’ evidence [75]

Further Arrow DRRA assessments [81]

ROUT v SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED [2013] NZHC 3262 [6 December
2013]

Lewis Bradford reports  [82] Mr Anderson’s evidence  [83] Mr Rakovic’s evidence  [84] Mr Lewis’ evidence  [91]
The MBIE Guidance Document (the Guidance Document)  [98] Mr Hutt’s evidence  [102] Mr Higgins’ evidence  [108]
Other experts’ evidence  [112] Mr Cowie’s evidence – surveyor  [112] Mr Maiden’s evidence – building consultant  [121]
Quantum Evidence  [125] Mr Betts’ evidence  [126] Mr Gibson  [127] Mr Farrell’s evidence  [129] Mr Stanicich’s evidence (Fowler Homes)  [134]

Is the house “economically repairable” in terms of the policy? [141]

Issue 3 – As the house is uneconomic to repair what are the Routs’ options
under clause 1(c) of the policy?

[160]

Issue 4 – Relief sought and quantum [170] Judgment sought for rebuild costs [173] Judgment sought by way of a declaration [182]

Issue 5 – General damages [198] Result [205] Costs [207]

Introduction/Background

[1] The plaintiffs, Paul John Rout and Georgina Anne Knox Rout (together the Routs) currently own and live at a property containing 3429m2 in Brooklands, Christchurch (the property). In 2005/2006 they built a house (the house) on the property. The house is a single storey dwelling with attached garage and comprises approximately 241m2. It has been, and continues to be, used as their family home.

[2] Christchurch suffered two major earthquakes on 4 September 2010 and 22

February 2011 and other significant aftershocks. These events damaged the Routs’

house and property, but not to such an extent that they could no longer continue living there. Their property however was “red zoned” in July 2011. “Red zoning” had been a decision (amongst others) taken by the Crown in June 2011, the background to which I outline at [14] below.

[3] In response to an 8 February 2013 offer under this “red zoning” scheme, on

22 March 2013, the Routs chose to sell the land on which their house was built to the Crown, at a sale price of $396,000. In January 2014 they are to move from the property.

[4] The Routs have…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NZHC 3262
Decision Date: 6 December 2013

CaseChat Overview and Summary

Paul and Georgina Rout sued their insurer, Southern Response Earthquake Services Limited, for compensation for earthquake damage to their house in Christchurch. The Routs' house was located in an area that was "red zoned" by the Canterbury Earthquake Recovery Authority. The Routs claimed that Southern Response was liable for the cost of rebuilding the house or the purchase of another house. Southern Response denied the claim, stating that the house was repairable and the Routs were entitled to a cash payment for the repair costs. The case involved several issues, including whether the "red zone" designation gave rise to a claim under the insurance policy, whether the damage to the house was repairable, and the proper quantification of the repair costs. The court found that the creation of the "red zone" did not engage the policy, and the house was uneconomic to repair. The court also found that Southern Response may not have acted in accordance with its obligations under the policy by offering to pay based only on the costs of repairing the house using a low mobility grout injection method. The court ordered Southern Response to reimburse the Routs for the cost of rebuilding the house on a sound site, not on the present weakened and vulnerable section. The court also rejected the Routs' claim for general damages.

Orders