Gerry Brownlee

25 OCTOBER, 2013

Extension for Port Hills property owners

Canterbury Earthquake Recovery Minister Gerry Brownlee says the outcome of this week’s Quake Outcasts hearing in the Court of Appeal will determine how CERA should address issues identified in the Port Hills zoning review, but that may take some time.

Given the delay, the final expiry date for all Crown offers in the Port Hills will be extended to 31 March 2014, instead of the current 31 January date.

The Crown has appealed the findings of the High Court on the judicial review of the Quake Outcasts case and Mr Brownlee says until there is a final outcome it is not possible to progress the Port Hills zoning review announcement as originally planned on 28 August.

“It is not just the appeal hearing time frame we are being mindful of, it is the time it may take for that decision to be announced by the court, and the decision itself.”

Mr Brownlee says that for the people waiting on the zoning review outcomes it is only fair to outline what realistically may occur. The zoning review took into account all Port Hills properties, and not just the ones identified by properties owners unhappy with the original zoning decision.

The initial decision in regard to the Quake Outcasts was delivered in August, and in it Justice Panckhurst accepted the argument of the applicants. In his ruling the judge confined his decision to the case itself. However the potential to use the case as a legal precedent has led the Crown to take a view that its impact may be much broader.

However the Crown respects His Honour’s explanation of the legislation because it does not want to be in contempt of court while proceedings continue.

Justice Panckhurst’s ruling affected the timing of the Port Hills zoning review announcements decision, as any new red zones would have been created using exactly the same approach that His Honour determined was inappropriate. The ruling said the Minister for Canterbury Earthquake Recovery should have used his powers under section 27 of the CER Act 2011, denying the right of Cabinet to make decisions in favour of adversely affected property owners.

“We know a previous court ruling had questioned my decision to use section 27 of the CER Act for amending the Regional Policy Statement to enable more subdivisions to be created through the RMA process. So this recent judgement did not offer consistency in that regard,” Mr Brownlee says.

“And the decision Cabinet made to ensure property owners had the option of a voluntary offer has so far seen 6897 families move off their badly affected land and re-establish their lives. The Government did the very best it could to help those most in need, in the wake of a devastating natural disaster.”

Mr Brownlee says he acknowledges the blow the delay means for the Port Hills property owners who are waiting for a decision about the future of their land.

“In the interim there are support services in place and we will do whatever we can to ensure those property owners who are affected are accessing the information and assistance they need. The extension to the final settlement date will give Port Hills property owners extra time to ensure they can make the appropriate decision in regard to their future.”

Mr Brownlee says CERA staff will shortly meet with community leaders to discuss the extension and how it will apply.

The High Court has considered an automatic reinstatement clause in an insurance policy in Wild South Holdings Ltd v QBE Insurance (International) Ltd [NZHC] 2781.  The relevant buildings suffered damage in the September 2010, February 2011 and June 2011 earthquakes. The quakes occurred during a single insurance policy period where the sum insured was about 1/3rd of the replacement value.  The clause provided the the cover automatically reinstated upon loss unless notice was given otherwise by a party that the cover was to reinstate. It does not appear that either party ever gave notice that the cover was not to reinstate.  An extra premium was payable on reinstatement.  The Court does not conclusively decide the issue, but does appear to approve of the view that the policy cover did reinstate automatically on each event.  The effect is that the insured will be able to claim multiple times up to the sum insured each time under the insurance policy.

In the decision in Christchurch City Council v Attorney General & anor [2013] 2447 the High Court dismissed an application by the Christchurch City Council to set aside the decision about the eligibility of claimants to pursue a leaky home claim.  The Court was not satisfied that the DBH had applied an incorrect test as to when the relevant house was built.

The High Court in Fowler Developments v CERA & ors [2013] NZHC 2636 set out the costs to be awarded to the successful claimants subsequent to the recent successful judicial review proceedings about red zoning.  The judgment is notable for awarding increased costs against the respondents by their failures to provide documents and by the public interest nature of the case.

A 42 unit complex on Bealey Aveneu was the subject of a leaky home claim.  The developer and project manager had a public liability insurance policy with IAG.  There was a product liability exclusion. In the decision BC83501 & ors v Christchurch City Council & ors  [2013] NZHC 2472 the Court considered an application by the developer/project manager to bring a claim under the insurance policy with IAG.  Justice Fogarty decided that the unit complex was the insured product under the insurance policy and that it would be contrary to common sense to allow the developer/project manager to insure faulty workmanship/performance by an insurance policy.

In University of Canterbury v The Insurance Council and ors  [2013] NZCA 471 the Court of Appeal dismissed an appeal from a High Court decision that the Christchurch City Council’s policy decision whereby it could require earthquake strengthening of existing buildings beyond 34% of current building code requirements was unlawful.

In Crystal Imports Ltd v Allianz New Zealand Ltd & anor [2013] NZHC 2566 the High Court considered an insurance policy dispute between the owners of the Warner’s Building at 50-52 Cathedral Square, Crystal Imports Ltd, and the owners of the Novotel (Accor) which leased part of the Warner’s Building and operated the Warner’s Hotel.  Warner’s Hotel was insured by Allianz for 2011 under Accor’s 2011 insurance policy with Crystal noted on the schedule of insured.  The building was damaged in the 22 February 2011 earthquake and demolished in October 2011.  Crystal lodged a claim under the Allianz policy for its interest in the building.  It appears that the insurance cover was insufficient to reinstate the building. Accor denied that Crystal was covered under the Alianz insurance policy.  The Court decided that Crystal was an insured under the 2011 insurance policy and in any event Accor was estopped from denying the Crystal interest in the insurance policy by its conduct.

By a judgment 30 September 2013 the Court of Appeal dismissed an appeal by Hanover Group Holdings Ltd against a High Court decision about its insurance cover. The Court of Appeal decision is Hanover Group Holdings Ltd v AIG Insurance New Zealand Ltd [2013] NZCA 442.  Hanover had a directors and officers liability insurance policy with AIG which provided some insurance cover for liability arising from statements in prospectuses.  There was a dispute about the extent of insurance cover AIG provided.  AIG says that it was limited to a specific dollar amount and certain methods of capital raising.  Hanover said the insurance cover was what it termed “full prospectus” cover.  The Court of Appeal agreed with the High Court and decided the insurance cover was limited.