New Christchurch earthquake judgment - Jarden v Lumley General Insurance (NZ) Ltd

David John Jarden and Joanne Jarden v Lumley General Insurance (NZ) Ltd

[2015] NZHC 1427

The Jardens own a house on a lifestyle property just north of Rolleston. Their house was damaged in the Christchurch earthquakes.

The Jardens' statement of claim sought a rebuild of their house, on the basis that it is not economic to repair as the estimate cost of repair is more than 80% of the estimated cost of a rebuild. They seek an order for payment from Lumley of the cost of repair, less the amount received from the Earthquake Commission (EQC). The Jardens' insurer, Lumley, says that much of what the Jardens have claimed for is either pre-existing damage, or not damage at all.

The damage to the house

The Jardens complained that the damage to the house included the brick cladding coming loose from the timber framing, cracks in the house's slab foundation, a possible void underneath the slab, the floor not being level, the interior walls not being plumb and experiencing some cracking, and a leak in the roof. They claimed that all of these things were a result of the earthquakes.

Lumley's experts considered that the cracks in the floor slab were the result of natural, non-seismic shrinkage, that it was very unlikely that there were voids beneath the slab as there has been no liquefaction in the area, and that the limited damage to the roof was more indicative of wind damage than earthquake damage.

With such a difference of opinion in respect of both the extent of the damage and the cause of the damage, the main issue in this proceeding became what evidential standard must be met by an insured to prove their loss.

Justice Kós confirmed that "the burden of proof in a claim under a policy of insurance lies in the plaintiff. In this case, the policy holder." He also noted that:

"proof on a balance of probabilities must be applied with common sense. It required the trial judge to be satisfied on the evidence that an event or outcome is more likely to have occurred than not: 'If ... a judge concludes, on a whole series of cogent grounds, that the occurrence of an event is extremely improbable, a finding by him that it is nevertheless more likely to have occurred that not, does not accord with common sense. This is especially so when it is open to the judge to say simply that the evidence leaves him in doubt whether the event occurred or not, and that the party on whom the burden of proving that the event occurred lies has therefore failed to discharge such...