By a judgment 20 May 2014 the High Court ordered Southern Response to pay $60,894 as legal costs and $79,828.88 for disbursements to Paul and Georgina Rout subsequent to the judgment of 6 December 2013 by which Southern Response was found liable to pay rebuild costs of $673,330.90. This was an award on a 2B basis together with all disbursements incurred, apart from the cost of a quantity surveyor that did not give evidence. Southern Response had refused to pay any costs and disbursements.
The High Court (Mallon J) on 6 May 2014 released its decision in Kraal & anor v EQC & anor [2014] NZHC 919. The decision was about whether the homeowners’ loss of the ability to use their home by reason of an extant notice under s124 of the Building Act 2004 was physical loss or damage for the purpose the EQC Act. The Court chose not to follow relevant US cases on point and instead decided that the loss of use of the property was not physical loss or damage so not covered by the EQC Act and because there was no cover under the EQC Act the Allianz insurance policy did not activate as it only covered amounts in excess of the EQC liability. The Court appears to have ignored the leading cases on damage which conclude that damage can include economic effects. The decision does not affect the claims of homeowners against EQC and insurance companies where the EQC/insurance cannot legally do the remedial work by reason of red zone/s124 notice. In those circumstances the house is a total loss.
By a judgment 5 May 2014 in Quake Outcasts v The Minister for Canterbury Earthquake Recovery the Supreme Court has granted leave to the Quake Outcasts and Fowler Developments Ltd to appeal the decision(s) of the Court of Appeal. The questions on which leave was granted are:
(a) Was the establishment of the Residential Red Zones in
Christchurch lawful as being a legitimate exercise of any common
law powers or “residual freedom” the Crown may have, given the
terms of the Christchurch Earthquake Recovery Act 2011?
(b) Were the offers made by the Crown to Residential Red Zone
property owners under s 53 of the Christchurch Earthquake
Recovery Act 2011 lawfully made? In particular:
(i) Was there a material failure to comply with the Act?
(ii) Was there a rational basis for the distinction drawn
between those owners who were insured and those who
were uninsured?
The appeal is set down for hearing on 29 and 30 July 2014.
I am now seeing second generation cases where building work done by/for insurance companies in purported performance of their insurance policy obligations has failed to properly remediate the property to the appropriate standard. I hope to commence proceedings in the High Court next week against those responsible for the building work which includes the Council that issued a code compliance certificate for the remedial work on one house and the insurance company. I expect that there will be many similar cases in the future. This will be this era’s “leaky home” debacle.
Auckland
PO Box 137243,
Parnell, 1052
Tel: +64 27 434 5489
grant@grantshand.co.nz
