Epoxy injection as a repair methodology vindicated

Moorhouse Commercial Park v Vero Insurance [2022] NZHC 3260

The High Court has delivered its judgment in a proceeding brought by the owner of a group of industrial buildings damaged by the Canterbury earthquakes, in a decision that will be welcomed by insurers.

The owner claimed that the insurer’s repair strategy to repair damaged concrete building elements by epoxy injection fell short of the policy standard of ‘substantially the same as ….when new’. The owner’s expert engineers presented a review of academic literature which they said showed that professional opinion did not support the use of epoxy as an effective repair method. 

The High Court rejected the challenge to the general effectiveness of epoxy repair, finding that the insurer’s evidence established that epoxy is an established and widely used method of repair for earthquake-damaged concrete structures, which is suitable depending on the extent of damage to a building.  The High Court noted the existence of a considerable body of international guidance on the use and efficacy of epoxy injection.  

While the visible damage to the building was minor, the owner’s experts provided evidence that it was possible more extensive damage had occurred to the building such as damage to the reinforcing steel.  They argued the insurer’s experts had done insufficient investigation to rule out this damage.  The Court rejected this as an attempt to move the onus of proof to the insurer, and an overly risk-averse approach.

The judgment confirmed previous Court decisions holding that the policy standard does not require the insurer to pay to restore the damaged parts of the building to exactly the same condition they were in when new.  It is sufficient for the damage to be restored in large part, or in essence, to the when new condition. 

 The owner’s claim included extensive compliance upgrades that it said had to be undertaken to obtain building consent for the repairs, even on the insurer’s repair scope.  However, the Court accepted the insurer’s position that the repairs fell within the Building Act’s general repair, maintenance and replacement exemption from the requirement of building consent.  The exemption applies to repairs with comparable materials or components.  The Court accepted that epoxy is a comparable material to concrete, and replacement of an old asbestos roof with a profiled metal roof was replacement with a comparable component.  No building consent or compliance upgrades were needed.

Lastly, the Court rejected the owner’s claim that the insurer was obliged to pay for further repairs to parts of the property that had already been repaired with the owner’s agreement, simply because the repairs were not “like for like” with the original construction.  It is open to an insurer and the policyholder to agree on how repairs are to be undertaken and the insurer discharged its obligation by paying for the agreed repairs.

Moorhouse has lodged an appeal against the decision with the Court of Appeal.  

 Comment (Cecily Brick)[1]

Whether or not epoxy injection is suitable to repair damaged concrete can be the difference between a requirement for a minor scope of repairs or a major reconstruction of a building. This decision, like a number of previous decisions, shows the High Court applying the repair standard and the insurance policy terms with realism.  The Court’s rejection of the claim for a second round of repairs will be another positive aspect of the decision for insurers, as they work through second-generation claims based on original repairs falling short of the policy standard.

[1] Cecily Brick appeared for Vero Insurance, the successful defendant.

Cecily Brick is a partner at fee langstone