Salisbury Street Victory

On 10 September 2020, Osborne J delivered the long-awaited judgment in Body Corporate 335089 v Vero Insurance New Zealand Ltd and Body Corporate 341154 v Vero Insurance New Zealand Ltd.[1]  The judgment was a decisive victory for Vero represented by Christine Meechan QC and Hesketh Henry.

The matter concerned two substantially similar multi-unit complexes (insured by Vero) at 152 and 160 Salisbury Street, both of which suffered damage as a result of the Canterbury Earthquake sequence (CES).  The two cases were heard together in a single six week hearing between May and July 2019, which was the first fully electronic casebook trial to take place in the Christchurch High Court.

Each plaintiff sought declarations from the Court as to the earthquake damage to its property and the scope of work required to repair the damage (in each case seeking a rebuild of the four buildings at its property). 

The hearing was truly a battle of the experts – comprising almost in its entirety complex expert evidence from (among others) geotechnical, structural and civil engineers, many of whom submitted multiple briefs of evidence including during the course of the hearing itself.  Ultimately, in a detailed 150 page judgment, Osborne J found that the earthquake damage to the buildings was less extensive than contended by the plaintiffs and could be repaired by the remedial work proposed by Vero’s experts.

Although of course unique to the facts before it, the judgment addresses a number of technical issues that are of broader interest to insurers and the construction sector, including (among other things):

• The extent to which cracking in concrete slab and panels is indicative of structural damage;
• The efficacy of epoxy to repair cracks;
• Establishing damage to piled foundations;
• Use of finite element analysis as a predictive tool in conjunction with inspections; and
• Application of the doctrine of natural servitude in respect of secondary flowpaths.

From an insurance perspective, the judgment provides a lucidly reasoned exposition of how a “when new” policy standard is to be applied to a technically complex set of evidential facts. 

Hesketh Henry lawyers acting on this matter were:  Helen Macfarlane, Stephanie Corban, Rob McStay and Alice Eager.

[1] [2020] NZHC 2353