This week Campbell live has run 2 stories on insurance cases in Christchurch where I act for the homeowners. Below are links. Next week I expect it to run another story.
http://www.3news.co.nz/Red-zone-residents-blast-unrealistic-insurance-offer/tabid/367/articleID/284843/Default.aspx
Today the NZLS Property Law Section released the below information about red zone agreements and settlements.
Bulletin at a glance – updates from CERA:·
An Update on Settlement Data
We take this opportunity to thank you for the role you have played in the settlement process to date.
We are pleased to advise that as at 21 January 2013:
o 1564 have chosen Option 1; and
o 4931 have chosen Option 2.
Settlement Date Extension
As previously advised, on 17 December 2012 an announcement was made confirming a one-off extension of up to 31 July 2013 for property owners who originally had until 30 April 2013 to settle with the Crown.
We take this opportunity to remind practitioners that if a client has already signed an agreement for sale and purchase and wishes to select a different settlement date (no later than 31 July 2013) they must actively seek an extension. You, as their solicitor, must submit a request for an extension to the Crown Settlement Agent.
For property owners who have not yet signed an agreement for sale and purchase the latest settlement date is now able to be selected is 31 July 2013.
Please note that the availability of this settlement date will be dependent on the level of demand from owners.
There is no change to the date by which property owners can accept the Crown offer. This remains at 12 months from the date of the offer letter, or until 31 March 2013 (whichever comes first). There is also no change to the timeframes for Southshore and the Port Hills.
Vacant Possession
Again, we wish to remind practitioners that the Crown offer requires vacant possession and this is non-negotiable.
As advised in our upgrade of 23 August 2012, settlement will be delayed if, prior to settlement, CERA becomes aware that vacant possession is unable to be provided by the vendor on the due date.
Please ensure that prior to accepting the Crown offer, your clients are aware of the implications of vacant possession including that, 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.
We reiterate the importance of vacant possession for tenanted properties. 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. We would be grateful if practitioners could be as involved as possible in the issuing of any termination notice to avoid situation where an incorrect notice has been given.
In addition, once notice has been given it is the Vendor’s responsibility to ensure that any Tenant has actually vacated the property prior to settlement.
GST Treatment for Insured Commercial Property
An amendment has been made to the Crown offer to purchase insured commercial properties located in the residential red zone.
The purchase price is now “plus GST (if any)”.
The amended option 1 and option 2 agreements for sale and purchase are attached. Amended versions are also available on both the CERA website and the CERA settlement database.
For further information, please contact info@cera.govt.nz or 0800 7464 2372.
Two articles in the Press recently referred to insurance cases in the courts arising out of the earthquakes. In the 1st article on 9 January 2013 it was suggested that earthquake cases would clog up the Christchurch court(s) for the next 5 to 7 years. That is a pessimistic view. The District Court and High Court are disposing of earthquake related cases (mainly against insurance companies) very quickly. The Press refers to the O’Loughlin case against Tower Insurance. That case was filed on 31 October 2012. It has a 5 day trial commencing 4 March 2013. There is also a reference to litigation being expensive and a last resort. Insureds will find that litigation is quick and inexpensive and it ought to be an early step in dealing with an insurance company. The 2nd article on 12 January 2013 suggests that a Court decision adverse to insurance companies in upcoming red zone cases could result in hundreds of already settled claims being reopened. I would find that highly unlikely.
9th January 2013
A surge in earthquake-related legal challenges is the tip of the iceberg and could overload the court system, lawyers say.
Ministry of Justice figures show 53 cases were filed last year in the High Court, with more than half lodged in the past three months. Six have been settled, four of which were insurance-related.
Duncan Webb, a partner at Lane Neave, said those “angry enough, rich enough or frustrated enough” were heading to court.
Legal action was a last resort for most, he said.
“It’s only when everything else has failed that you finally say, ‘the only thing we can do now is litigate’,” he said.
A fast-track system to hear quake claims was set up in 2011 to give priority to urgent cases or those that raised issues affecting many property owners and their insurers.
The system allowed High Court trials to be held about 65 days after a claim was filed and required District Court cases that involved claims up to $200,000 to go before a judge within 50 working days.
Civil cases normally took up to a year to go to trial.
The High Court would receive “more claims and files than it can dispose of”, Webb said.
“Some will be complex and some will be subject to appeals, so this is going to keep the Christchurch courts busy for five or seven years, I would think,” he said.
Former children’s television host Olly Ohlson launched Project Red Zone on fundraising website PledgeMe to raise more than $30,000 for a High Court challenge against the insurance payout being offered for his Brooklands home. The house was deemed repairable but the land was written off by the Government.
Ohlson felt he should be paid full replacement value if forced to rebuild elsewhere.
Dallington couple Matt and Valerie O’Loughlin have also begun raising funds to fight for their red-zoned home.
Webb said these were test cases that would decide “a few important principles”.
“One of the important ones is whether a house in the red zone is a loss in insurance terms because it’s in the red zone, quite apart from the damage,” he said.
“It’s the first case that if it gets over that hurdle it could change the face of it. The more [successful cases] you have, the more strength the precedent will have.”
The O’Loughlins’ lawyer, Grant Shand, said he was preparing about 20 court cases involving insurance disputes.
A declaratory judgment, as had been proposed by Christchurch East Labour MP Lianne Dalziel, and class action would not succeed, Shand said.
“You’re going to achieve a similar outcome quicker through decisions in particular fact cases. A [client] is going to get a better outcome if a judge actually physically sees affected people.”
PO Box 137243,
Parnell, 1052
Tel: +64 27 434 5489
grant@grantshand.co.nz
Join our mailing list to receive the latest news and updates from us.