The recent decision in Ridgecrest NZ Ltd v IAG New Zealand [2012] NZHC considered whether Ridgecrest was entitled to be paid for the damage resulting each earthquake up to the limit of the sum insured in each case.  These were unique facts.  The sum insured for any one event was $1.984M.  All of the relevant earthquakes occurred in one policy period and there was no reinstatement clause in the insurance policy.  Additionally, contrary to the policy wording the insurer commenced repairs that were not completed after the earthquakes on 4 September 2010 and 23 December 201o.  The Court was considering a preliminary question formulated by the parties about the policy.  Dobson J decided that in the particular circumstances the insured could not recover from the insurance company for amounts not spent on repairs prior to the building becoming total loss.  The precedent value of this decision is minimal.

Below is an email received from the NZ Law Society (Property Law Section).

A message from CERA
Vacant Possession

We wish to remind practitioners that the Crown offer requires vacant possession. Prior to accepting the Crown offer, vendors need to be aware of the implications of vacant possession. These implications must be taken into account when deciding on a suitable settlement date for their sale to the Crown. Prior to settlement the vendor must have removed all belongings from the property and has no further right of access once settlement has taken place. Any applicable insurance assessment must have already been completed.

Please ensure that your clients are aware that, even when Option 2 is chosen, the Crown will own the land and buildings once settlement has been completed.

In particular, tenants must receive legally correct notice of termination under any tenancy agreement affecting the property. Whether a tenancy is periodic or fixed term, the settlement date must not be prior to either the expiry of the tenancy or the date of correct legal termination. It is the vendor’s responsibility to ensure that vacant possession is able to be given on settlement so as to avoid a breach of the agreement for sale and purchase provisions. We would be grateful if practitioners could be as involved as possible in the issuing of any termination notice to avoid situations where an incorrect notice has been given.

Please note that settlement will be delayed if CERA becomes aware prior to settlement that vacant possession is unable to be provided by the vendor on the settlement date. Where CERA has been unable to confirm with the vendor that vacant possession has or will be provided on settlement, CERA is entitled to undertake a pre-settlement inspection of the redzone property. Please note that a pre-settlement inspection may occur on the morning of settlement. Confirmation of settlement will not be provided until any pre-settlement inspection has been completed and vacant possession has been confirmed.

In the recent decision in Marchand & ors v Jackson & anor [2012] NZHC 2893 the High Court (Kos J) found that a Christchurch insurance broker, John Jackson, was liable to the Marchands for his failure to place insurance cover and his failures to inform the Marchands that he had not in fact placed the insurance cover in relation to the house at 21 River Road, Tai Tapu.  The house was severely damaged in the earthquake on 4 September 2010.  Mr Jackson was found to be liable for the amount necessary to put the Marchands in the same position as if the insurance cover sought by them had been obtained.  There will be a separate hearing on the quantum of the loss.

The Christchurch High Court established a special earthquake list to handle claims arising out of the Christchurch earthquakes.  Most claims are against insurance companies.  So far the list is working very well to advance claims to a resolution.  The Court allocates a conference to occur relatively quickly after the filing of the proceedings.  The next conferences are on 28 and 29 November 2012.  If you filed a proceeding now you would be allocated a conference on 18 December 2012.   I recommend that anyone with an insurance issue or claim against an insurer to seriously consider filing the proceedings in the High Court.  It will speed up the progress of your claim.  I have the most claims in the list against insurance companies of any lawyer.

According to the Press there were now over 181,000 residential properties zoned green and 7860 zoned red.  Of those zoned red, 4903 have settled with the Crown and 6205 have signed a sale and purchase agreement.  Property owners zoned red should pursue their insurer for total replacement value and not be inveigled into accepting a payout based on repair costs.

Apparently EQC is now trying to avoid meeting its liabilities for earthquake damage by trying to identify damage to houses that  allegedly arose from weathertight issues.  Homeowners ought not accept EQC’s version of events and ought to engage a building surveyor to investigate the causes of damage.  If damage is caused by earthquake, EQC is liable.