Clarendon Tower owner wins case

The High Court has ordered the insurer of Christchurch's Clarendon Tower to pay the building owner the $30 million it was worth before rebuild work begins.

The 17-storey Worcester St office building was badly damaged by the September 2010 and February 2011 quakes and condemned by the Canterbury Earthquake Recovery Authority.

Its demolition, overseen by recently failed Mainzeal Property and Construction, is all but finished.

TJK (NZ) Ltd owns the building and insured it with Mitsui Sumitomo Insurance Company, of Japan.

Under the policy TJK could elect reinstatement, which it did, but insurer Mitsui refused to pay the indemnity of the building ($30m) before rebuilding work starts.

The market value of the building was set at $30m, much less than the estimated $90m that could be needed to reinstate the tower.

TJK went to the High Court in Christchurch arguing that Mitsui should pay the $30m value up front while it waited for the reinstatement.

Mitsui believed it should hold the money until TJK has incurred the rebuilding costs.

But in a summary judgment released yesterday, Justice Forrest Miller ruled Mitsui should pay TJK the $30m, as that was the agreement.

"Earthquakes damaged Clarendon Tower so as to cause substantial loss for which Mitsui had promised to indemnify TJK.

"On those agreed facts, and subject to proof of loss, Mitsui must pay TJK not less than the indemnity value of the building," the judgment said.

Mitsui has paid millions of dollars towards repairs and demolition, without specifying what category of the cover it was for, Judge Miller's decision said.

The ruling is but a side issue of a larger fight between the insurer and insured over whether the building should have been demolished at all.

Owner TJK said the building was damaged beyond repair before its demolition, while insurer Mitsui said it could have been repaired for $45m to $50m.

TJK has sued Mitsui in the High Court over the disagreement and a trial is set for August.

Cera's condemnation of the tower and its subsequent demolition made that argument academic, but Mitsui could still save tens of millions of dollars if it successfully defends the court case.

Clarendon Tower had been one of the most problematic tower blocks in the central city, with its risk of collapse threatening nearby buildings.

The February quake brought down internal stairwells, forcing people to wait hours to be rescued.

The owners had initially tried to save the building, and then had their two demolition plans rejected by Cera.

Speaking after the hearing, TJK lawyer Peter Woods said the ruling "was a great start".

The owner would need to spend the indemnity money on rebuilding before it would be able to get more money from the insurer, he said.

The company was committed to rebuilding the tower, he said.

The Press