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IAG, Farrells, QBE & Hawkins lose insurance test case

The High Court in Sleight v Beckia Holdings Ltd (in liq) & ors [2020] NZHC 2851 has found all defendants liable for $389,848 being the costs to repair an earthquake damaged house at 24 Kinnaird Place, Christchurch to the policy standard of “when new”.  IAG insured the earthquake damaged house.  IAG purported to repair the house as part of its managed repair programme with Hawkins as the project manager.  Hawkins, now in liquidation, was insured by QBE.  Farrells, now known as Beckia, was the builder that did the repairs.  The house was defectively repaired.  The build contract for the repairs was between Sleight and Farrells, but it referred to IAG and Hawkins performing roles.  The Court decided that the defendants were liable because the work done did not meet the policy standard and/or the standard required by the Consumer Guarantees Act.  The Court did not award any general damages.  Based on the written agreements between IAG and Hawkins, Iag was required to indemnify QBE for $260K of the judgment.  This is an excellent result for homeowners.  Likely to be appeals.

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Owners lose earthquake case

Owners of 12 units at 152 and 160 Salisbury St, Christchurch sued Vero Insurance seeking a declaration from the High Court that by reason of earthquake damage they were entitled to have the buildings rebuilt under their Vero insurance policy.  Vero said the buildings could be repaired to meet the policy standard of”when new”.  The High Court released its judgment in Body Corporate 335089 v Vero Insurance New Zealand Ltd [2020] NZHC 2353 on  10 September 2020  more than a year after court hearing finished.    The evidence for the owners failed to prove more than minimal earthquake damage by cracking and minor floor level changes.  The argument that because the buildings have dropped was not of itself enough to lead to rebuild as relativities with floor levels, ground levels and service slopes could be maintained. So the Court refused to make the declaration sought by the owners.  Costs will follow the event so this will be an expensive loss for the homeowners.

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