NZCA 246
This is an appeal from the High Court's judgment in Morrison v Vero Insurance New Zealand Ltd  NZHC 2344. The respondents are the trustees of the Tony Morrison Trust (TMT), which owns a commercial building in Woolston, Christchurch.
The High Court case considered computer modelling of the Canterbury earthquakes, and the extent to which that modelling was helpful for quantifying the extent of the damage to the building caused by each of the earthquakes. It also looked at when a building will be considered to be destroyed, under the policy.
Modelling of the damage
Vero challenged both the admissibility of the modelling evidence, and the weight given to that evidence.
The Court of Appeal considered whether the modelling evidence was admissible in terms of section 25 of the Evidence Act 2006. President Ellen France, giving the judgment of the Court, said:
The Court of Appeal reviewed the evidence of the experts, and noted that there were some difficulties with the model. These included, notably, the fact that the model did not take liquefaction into account, although this was a significant cause of the damage in the February earthquake. It was also not clear from the model how the extent of damage translated to produce the list of repairs required. President Ellen France therefore said "we consider the model was given considerably more weight than it should have been".
She went on to consider the reports of the experts who had viewed the building, which indicated that there was additional damage from the June earthquake, but that this damage was for the most part to items which were already listed as requiring replacement. President Ellen France decided that:
Was the building destroyed?
Vero also argued that the building was already destroyed (in terms of the policy) by the February earthquake, and there would therefore be no liability resulting from the June earthquake. The Court of Appeal noted that:
It was recognised by both Whata J in the High Court and the Court of Appeal that whether a building is destroyed needs an objective assessment. The Court of Appeal referred to its statement in QBE Insurance (International) Ltd v Wild South Holdings Ltd  NZCA 447,  2 NZLR 24, saying that:
President Ellen France noted that the building is still functional, as evidenced by it being currently tenanted (albeit at a reduced rental), and that the experts have agreed that the building can be repaired, although it is more expensive to do so than to replace it. She also considered the fact that the policy has a constructive total loss provision, which "could have, but did not, include economic destruction within that extended provision." She decided that in those circumstances they should not read in the reasonableness requirement that Vero suggested, and upheld the finding that the building was not destroyed.
The appeal was therefore allowed in part, and sent back to the High Court for reconsideration.
A copy of the decision is available here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.