EQC changes

20 MARCH 2018 EQC Act Changes Announced HON DR MEGAN WOODS Earthquake Commission The Minister Responsible for the Earthquake Commission Megan Woods has today announced changes to the EQC scheme.   “Cabinet has carefully considered the proposals regarding changes to the Earthquake Commission Act,” Megan Woods said.   “The changes that we have agreed on will improve how the Act functions and enable the scheme to work more effectively for future natural disasters. These are widely agreed, common sense changes that can be made before the independent inquiry into EQC. I’ve asked for them to be brought forward so that, if the worst did happen and we had a major […]

Southern Response- Private Investigators

Here is link to my discussion with Larry Williams about Southern Response engaging private investigators to investigate claimants and others.

Terms for EQC Independent Advisor

1 MARCH 2018 Terms of reference for Independent Advisor’s work released HON DR MEGAN WOODS Earthquake Commission The Independent Ministerial Advisor sent in to speed up EQC’s Canterbury claims be tasked with improving claims management, assessing operational, resourcing, policy and legislative constraints and assessing any constraints caused by processes with private insurers, Minister Megan Woods has announced. “Today I am releasing the Terms of Reference that will direct Christine Stevenson, the Independent Ministerial Advisor’s work to ensure swift and fair settlement of the 2600 outstanding claims from the Canterbury Earthquakes. “She will work with the board and management to identify and report to me operational changes needed to ensure timeliness, […]

Insurance Assignment Appeal

On 15 February 2018 the Court of Appeal will hear the appeal from the High Court decision in Xu & anor v IAG & anor [2017] NZHC 1964 about the ability of an assignee of insurance policy rights to enforce a reinstatement entitlement.

Failed EQC repairs

Here is a link to my interview with John Campbell on Checkpoint about issues with EQC work and claims.

Interest on EQC payments

Since the commencement of the Interest on Money Claims Act 2016 on 1 January 2018 EQC is now exposed to a liability to pay interest on late EQC payments from the date the money ought to have been paid until it was paid.  Previously the Court said it would only order EQC to pay interest as part of a substantive court judgment for the unpaid amount(s).  The new liability applies to court proceedings commenced after 1 January 2018.  It is an incentive to sue EQC now if you have not been paid as interest will be a substantial amount.  Here is a link to an interest calculator.

EQC & New Apportionment of Damage Method

Under the Earthquake Commission Act 1993, EQC has to apportion the damage/cost between earthquake events as there is a cap per event that is usually $100,000 plus GST per event.  Where there were damage inspections between quakes then it is straight forward to apportion based on actual damage.  In the past EQC has apportioned damage in the absence of inspections based on damage % in the area.  It has now taken to apportioning based purportedly on remedial costs on properties  in the area.  It is important to get from EQC in relation to apportionment the addresses of the properties used by EQC, details of the method of construction of the […]

Southern Response- Buy another house policy

In Southern Response Earthquake Services Ltd v Shirley Investments Ltd [2017] NZHC 3190 the High Court (Thomas J) decided that the costs of enhanced foundations and demolition were not to be included in the calculation of an insured’s entitlement under the insurance policy as these were additional costs that were only payable when incurred.  These costs would not be incurred on the “buy another house” option.  The Court also confirmed that the amount payable under the “buy another house” option can be no greater than the actual cost of the bought replacement house, excluding the land cost.  Thomas J gets a bit creative with her interpretation of Avonside in reaching her conclusions.  […]

Insurance recovery for Southland Stadium

In Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC  190 the Supreme Court allowed the appeal by the Trust against the dismissal of its claim by the Court of Appeal, but reduced the recovery by 50% for the Trust’s contributory negligence in not acting on engineering advice to investigate roof construction issues.  The original judgment was for about $15M.  The Supreme Court said that the Court of Appeal was wrong in characterising this case as one of negligent misstatement when it was a simple negligence case based on negligent issue of a code compliance certificate, however, it was correct to reduce any recovery by 50% for […]

When 2 insurers apparently cover the same date (4 September 2010)

In BC 74246 v QBE Insurance (International) Ltd & Allianz Australia Insurance Ltd [2017] NZHC 1473 the High Court (Whata J) resolved a dispute between QBE and Allianz about who was liable for the 4 September 2010 earthquake where the relevant QBE insurance policy expired at 4pm on 4 September 2010, but there was also an Allianz policy for the same property that stated the period of insurance “effective date” 4 September 2010 and expiry date of 4pm on 4 September 2010.  The 4 September 2010 earthquake occurred at 4.35am.  QBE asked the Court to order Allianz to be equally liable on the basis that the Allianz policy commenced at […]

Insurance assignment problems for lawyers

The High Court judgment in Doig v Tower Insurance Ltd [2017] NZHC 2997, delivered 5 December 2017 by Mander J, highlights that lawyers that handled the purchases of earthquake damaged properties with assignment documents may have liability issues if they did not advise the purchaser(s) that based on the current law in Bryant v Primary Industries Co Ltd [1990] 2 NZLR 142 the purchaser(s) would not acquire the right to reinstatement and would only be entitled to indemnity value.  The Doigs argued that Tower had represented to them by an email on 2 October 2012  that the Doigs would get replacement value and that they relied on the representation to […]

Under insurance & Replacement Value- Myall v Tower Insurance

In Myall v Tower Insurance Ltd [2017] NZCA 561 the Court of Appeal considered an appeal about the full replacement cost of “Riverlaw” mansion payable by Tower.  The calculation of the cost was complicated by the insured area being 650m2 when the actual area was 799m2.  The judgment exemplifies the need to call appropriate evidence at a trial court.  Mr Myall appears to have been prejudiced by the choice of witnesses made in the High Court.  The Court of Appeal decided the High Court was correct to apportion the rebuild cost pro rata rather than by elements.  It also decided that Tower could use materials in common use rather than […]

EQC claim assignments

The recent case of Xu & anor v IAG & anor [2017] NZHC  1964 said that an insured home owner could not assign to a new owner the reinstatement rights under an insurance policy.  The decision is subject to an appeal to be heard May next year.  EQC in this publication on its website confirms that Where an EQC claim is assigned, the assignee (the person receiving the benefit of the claim, for example a purchaser) will have the same entitlement(s) under the Earthquake Commission Act as the original owner. That means they will receive any remaining entitlement up to EQC’s cap for an event.      

Earthquake damage or Pre-existing.

In He v Earthquake Commission and ors [2017] NZHC 2136 the High Court (Dunningham J) had to decide whether the damage to Mr He’s property at 377 Selwyn Street, Addington was caused by the earthquakes or not.  The judgment records that over the life of the proceeding Mr He had engaged 6 different structural engineers.  The judgment also records that the tenant of the property at the time of the earthquakes supported EQC and the insurer that the damage existed before the earthquakes.  Predictably Mr He lost.  A surprising case to run to trial.

AMI Insurance – Exclusion clause application

In AMI Insurance Ltd v Legg & ors [2017] 321 the Court of Appeal upheld AMI’s appeal that it was liable to indemnify the Leggs for damage/costs from a rubbish heap fire on their Selwyn property in January 2013.  Some of the material in the heap came from the Leggs’ lifestyle block and some from a separate landscaping business run by their company Evolving Landscapes Ltd.  Legg insured the lifestyle block with AMI and ELL insured the business with Lumley.  In the High Court Nation J held both insurers liable.  Contrary to Nation J’s findings the Court of Appeal held that there was an effective causal connection between the ELL […]

Prattley v Vero Insurance – Costs judgment

Prattley Enterprises Ltd unsuccessfully sued Vero Insurance  to set aside a settlement agreement on insurance claims for earthquake damage to Worcester Towers.  It lost in the High Court, Court of Appeal and Supreme Court.  Risk Worldwide funded the litigation.  In Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2017] NZHC 1599 the High Court (Dunningham J) awarded Vero $277,674 for legal costs and $467,571.67 for disbursements.  Vero had sought $596,508 for legal fees and $472,800.48 for disbursements.  Apparently Risk Worldwide agreed to meet the costs as the funder of the litigation.

IAG Limitation Statement

Below is the IAG limitation position.  If you are an assignee you have 1 week to sue or your claim is statute barred.  This applies to all IAG brands. IAG’s position for all of its brands is that in respect of claims by our customers relating to policies which cover their contents and customer occupied home, IAG will not deploy the Limitation Act as a defence to proceedings served on IAG before 1st July 2018. Other types of potential litigants, who do not enjoy this blanket extension include: a. Assignees of insurance claims;  b. Body Corporate Policy holders;  c. Non- residential building policy holders;  d. Business Interruption cover and other […]

EQC Kaikoura Earthquake Claim Progress

Progress reported on Kaikoura earthquake claims 16 August 2017 Just over one-third – 34% – of the 38,000-plus residential claims from the Kaikoura earthquake managed by EQC and private insurers had been settled at 31 July 2017, EQC says. In a progress report on insurance claims from the earthquake, EQC says 62% of building claims had had their initial assessment completed at 31 July – up from 51% assessed and 28% settled at 30 June. So far EQC says it has paid $39.1 million to insurers who manage EQC customers and $21 million to customers that EQC manages (land and/or properties with open or unresolved claims for prior natural disaster damage). […]

Earthquake Insurance assignments- indemnity only

In Xu & anor v IAG & anor [2017] NZHC 1964 the High Court (Nation J) decided that reinstatement rights/benefits were not assignable to a new owner where the earthquakes occurred before the new owner took ownership and the previous owner purported to assign the rights/claims by a deed of assignment.  So the new owner was only entitled to indemnity value as an assignee.  The rights under the policy were held to be personal rights of the insured.  The High Court applied the Court of Appeal decision in Bryant v Primary Industries [1990] 2 NZLR 142.  The Xu decision will be subject to an appeal.   It will cause problems […]

Settlement agreement valid

In Annex Devleopments Ltd v IAG New Zealand Ltd & anor [2017] NZHC 706 a property owner, Annex, asked the Court to set aside a settlement agreement it entered into in February 2012 for settlement of a commercial building claim on the ground that it and IAG had made a mistake about the extent of the insurance cover.  Annex settled the claim(s) for $9,430,000.  IAG had previously made progress payments for emergency repairs and lost rent of $229,746.35.  Annex said that it ought to have received about $15M to $16M.  IAG insured the building for replacement with a sum insured of $8,706,824.  Annex said that its cover ought to have […]

Limitation- Time running out on claims

Last year insurers issued statements about dates on which they would rely on a defence under the Limitation Act(s) that require court proceedings to be brought within 6 years on which a homeowner could first sue otherwise the claim is no longer enforceable.  Those dates are fast approaching.  AA, Vero, FMG, MAS, and the IAG brands agreed not to plead a limitation defence for any residential earthquake damage claim where proceedings are filed in Court before 4 September 2017.  Southern Response will not rely on a limitation defence until 4 September 2018.  If an insured does not sue before these dates the claim dies.  This includes claims that are under […]

EQC- November 2016 Quake Update

Here is a link to the EQC update about claims from the November 2016 earthquake.  Apparently EQC has received about 38,000 residential claims with 71% for building damage only, 10% for building and contents, 9% contents only and 10% land damage.  EQC has retained management of the land claims.  Insurers manage building and contents claims from the November 2017 quakes only.  Apparently the intention is to settle the majority of claims by the end of 2017.

Young v Tower Insurance – costs

Mr Young and his co trustees had previously obtained a judgment against Tower Insurance on 7 December 2016 that their house was a rebuild at a cost of $1,620,887 together with general damages of $5ooo for Tower not providing a report.  The owners then asked the Court to order Tower to pay costs of $93,194 and disbursements of $102,259.91 (witness expenses and court fees).  This was said to be less than two thirds of the owners actual legal costs.  Tower said that any costs ought to be reduced significantly because the the owners had extended the hearing time with unnecessary allegations and not succeeded with the deliberate wrongdoing allegations.  The […]

Southland Stadium Appeal – Council held not liable

By the judgment 21 March 2017 in Invercargill City Council v Southland Indoor Leisure Centre Charitable Trust [2017] NZCA 68 the Court of Appeal allowed the Council’s appeal against a High Court (Dunningham J) judgment that it was liable to pay in excess of $16M for the roof collapse of Southland Stadium in September 2010.  The only Council act within the limitation period was the Council issuing a code compliance certificate on 20 November 2000.  The Court decided that the Trust had not relied upon the code so the Council could not be liable for negligent misstatement.  It relied upon its own contractors/staff in not remediating the roof issues.  The Court […]

Actual floor area v Insured floor area

In Myall v Tower Insurance Ltd [2016] NZHC 251 the High Court (Dunningham J) considered Tower’s obligations under the insurance policy where the actual floor area was 799m2, but the owner had insured the house for only 650m2.  The number of rooms and amenities were not specified on the insurance policy schedule which only referred to the insured house being a house built in 1885  with an area of 650m2.  There were 8 bedrooms and 6 bathrooms. Tower calculated the premiums based on 650m2.  Tower used a pro rata adjustment to reduce the calculated rebuild cost.  Mr Myall suggested that elements unaffected by area such as numbers of toilets and […]

District Court Limit now $350,000

As of 1 March 2017 the District Courts Act 2016 is in effect so that the District Court can now accept claims up to $350,000 rather than the previous $200,000.  This will enable many earthquake insurance/eqc claims to be filed in the District Court with its cheaper filing fee ($200 vs $1350).  The District Court also operates a quick track for earthquake claims shortening time frames for events.

Southern Response Group Action

On 16 December 2016 Gendall J in the judgment in The Southern Response Unresolved Claims Group v Southern Response Earthquake Services Ltd [2016] NZHC 3105 gave approval to the proceedings against Southern Response being brought as a representative action.  The Group currently comprises 41 members who allege that Southern Response engaged in a strategy to improperly minimise its overall financial exposure to Canterbury earthquake claims.  The strategy is detailed in the judgment.  Gendall J also decided that the litigation funder’s fee was fair and reasonable, but required it to communicate with group members about misleading original advice giving each group member 21 days to withdraw.  Other Southern Response policyholders have until […]

Quake Outcasts appeal to Supreme Court

In Quake Outcasts v Minister for Canterbury Earthquake Recovery [2016] NZSC 166 the Supreme Court dismissed an appeal by QO to appeal directly to the Supreme Court from a High Court decision dismissing their judicial review application of the revised compensation offers.  The court decided there were no reasons to allow the QO to skip the Court of Appeal.

Lawyer liable for no earthquake insurance

The High Court has decided in Witty v Rout [2016] NZHC 3016 that a lawyer is liable for failing to insure a house for earthquake damage as part of administering an estate.  Ms Hampson died on 15 September 2010 and probate was granted to Messrs Witty and Rout on 4 October 2010.  The insurance over the property came to an end in November 2010 as the premiums were not paid, so the property was uninsured when it was damaged in the 2011 earthquakes.  Mr Rout was sued in his capacity as executor and also as solicitor for the estate.  He was found liable in both capacities for $205,000 being the […]

Insurers to take over EQC role for Kaikoura quakes

Simpler process for settling Kaikoura Earthquake claims 13 Dec 2016 An agreement between private insurers and the Earthquake Commission (EQC) will simplify how home and contents insurance claims are resolved for people affected by the Kaikoura Earthquake. Under the agreement, private insurers will act as EQC’s agents and receive, assess and settle home and contents claims for earthquake damage from their own customers, even those claims that are under the EQC cap. EQC will assess land damage as land is not covered by private insurance policies. Customers are encouraged to lodge a claim with their private insurer in the first instance. Where customers have already lodged home building or contents […]

EQC & Insurance Newsletter #13

here is the link to the Grant Shand EQC and Insurance Newsletter#13

Prattley loses Supreme Court Appeal

The Supreme Court on 6 December 2016 in Prattley Enterprises Ltd v Vero [2016] NZSC 158 dismissed an appeal by Prattley against the refusal of the Court of Appeal to set aside an insurance  settlement agreement and order Vero to pay it a further $2.7M for damage to Worcester Towers in the Canterbury earthquakes.  Vero insured the building on an indemnity, and not reinstatement basis for $1,605,000.  The property was damaged in September, December and February earthquakes.  It was demolished in September 2011.  Prattley and Vero entered into a claim settlement agreement on 23 August 2011 where Vero agreed to pay Prattley $1.481M in full and final settlment.  In the […]

Tower- Financial issues- Sue now and collect $$ soon

Here is a link to Tower’s 29 November 2016 announcement to the market about its $21.5M loss for the year to 30 September 2016 and its intent to try to separate out its Canterbury earthquake liabilities into a Ru off company.  It says that it has 564 claims unsettled in Canterbury for which it has made a gross provision of $149M.  It says of this 564 there are 311 that are complex and challenging.  The provision works out at $264,000 per claim.  Seems a bit low to me.  It is also uncertain who and how the Run off company will be funded.  Tower proposes informing shareholders of the plan details […]

EQC- Earthquake numbers

EQC expects 50,000 claims from the Kaikoura earthquake(s).  It has received about 10,000 so far.  EQC received more than 460,000 claims for 166,000 buildings in Canterbury.  EQC says it has about 5000 failed remedial work claims to deal with.  EQC says that it has 3647 land claims to settle in Canterbury.  It says it has resolved 49,000 land claims so far.  Resolved to EQC means EQC has paid what it think it owes.  The Crown has not received any payments from EQC for land damage to red zone land acquired by the Crown.

Post earthquake(s) property settlements

Below is a memo from the Property Law Section of the NZ Law Society about property settlements post earthquake(s). Post-Quake Property Settlement Considerations Recent events have not only changed the physical landscape, but also that of conveyancing and settlements. The purpose of this memo is to raise awareness of some of the factors that must now be considered when advising clients and determining the most appropriate course of action to take. While it is impossible to address every scenario, the matters raised below should allow an application of general principles to most situations. 1.  Insurance Issues Many of you will be aware that insurers have placed embargoes on any new […]

High Court Earthquake List – 2016 Report

Here is the 2016 Report on the Christchurch Earthquake Litigation List by the Chief High Court Judge.  Points of note are:  302 new proceedings since 30 September 2015;  This includes 53 cases involving alleged defective or inadequate repairs;  More Judges to be allocated to earthquake cases;  In the year 125 cases were settled and discontinued and only 2 required a full hearing and judgment;  There are 400 active cases of which 55 are set down for trial and 345 are in the case management process;  More Judge time will allocated to early judicial settlement conferences;  Only 1 case awaits disposal in the Court of Appeal.  

Limitation – EQC and Insurance Update

We are fast approaching 6 years since the 22 February 2011 earthquake.  This is to remind people of limitation issues that were highlighted prior to the 6 year anniversary of the 4 September 2010 earthquake.  IAG said that it would not extend any limitation period for claims by body corporates or commercial claims.  Other insurers have also not provided a global extension for commercial claims.  So to be safe these ought to be filed in a Court by 21 February 2017.  AA, Tower, FMG, MAS and Vero have agreed not to plead a limitation defence to any claims filed before 4 September 2017.  Southern Response will not rely on a […]

Western Pacific Insurance- brokers

It is coming up to 6 years since Western Pacific Insurance Ltd (“in liq”) was placed into liquidation by its shareholders on 1 April 2011.  Time is fast running out to sue insurance brokers who placed insurance cover with Western Pacific in circumstances where there were solvency issues.  We are aware of about 6 court proceedings against brokers arising out of Western Pacific from unsatisfied earthquake claims.  We are also aware that brokers have notified their insurers of a likelihood of many more claims from the earthquakes.  The six period for suing the broker(s) is running out.

Costs from EQC and Southern Response

In Ramage v EQC & Southern Response [2016] NZHC 2327 the High Court considered an award of costs against Southern Response after it settled a claim at a mediation, but with costs not agreed.  EQC prior the Court hearing had agreed to pay costs of $32,677.51.  The judgment is notable at para [27] for the statement that success against EQC is determined by whether EQC concedes the claim is over cap.  If so, then EQC should be liable for costs of at least 50%.  Southern Response was found to have acted unreasonably by not disclosing complete DRA’s.  It also acted unreasonably by agreeing with EQC’s position that the claim was under […]

High Court Earthquake List Stats

On 13 October 2016 the current controllers of the High Court Earthquake list presented information about its operation.  Here are some interesting stats.  Court filings by year: 2010-1; 2011- 3; 2012- 52; 2013- 196; 2014- 135; 2015-66; 2016-283.  Percentage of cases disposed of by year: 2010-100%; 2011- 100%; 2012-98%; 2013- 89%; 2014- 66%; 2015-23%; 2016-1%.  52% of cases settled with less than 1 month before the trial date.  The 2016 spike is caused by the pre limitation period expiry for the 4 September 2010 earthquake.   We expect a similar spike in early 2017.  

EQC has a win on costs

The Court of Appeal in Yarrall & anor v EQC [2016] NZCA 517 dismissed an appeal against a costs judgment where the High Court had ordered the homeowner to pay EQC costs of $23,482 plus disbursements of $121.40.  The homeowners sued EQC challenging the apportionment of damage between the quakes.  Before the homeowners commenced the proceedings in August 2013 the insurer had accepted the EQC apportionment and had agreed to replace the house.  The dispute proceeded through the High Court earthquake list process until in May 2014 the homeowners accepted that the proceeding would serve no practical purpose.  On 23 May 2014 the homeowners filed a notice of discontinuance.  EQC […]

Earthquake Prone Buildings

Identifying and Managing Earthquake-prone Buildings Regulations have been approved for new earthquake-prone building legislation and these have been released for consultation. MBIE is consulting on the regulations, together with a methodology that will set the new approach for identifying and managing earthquake-prone buildings.  The methodology will outline the criteria for engineering assessments, and it is designed to enable councils to make informed decisions about whether buildings are earthquake-prone.  The Minister’s release can be found here, and a link to the regulations and consultation documents is here. If you have any comments or feedback on the proposed regulations or methodology, please forward them to the Property Law Section Manager by 1 December 2016.

Judicial modernisation – Bill updates 108-year courts legislation Amy Adams 11 October, 2016 Bill updates 108-year courts legislation Parliament has passed legislation tonight that updates and modernises the century-old law underpinning New Zealand courts. Twenty-three Bills divided from the Bill formerly known as the Judicature Modernisation Bill were passed into law with widespread support. “At more than 1000 pages, the legislation was one of the biggest law-making tasks ever undertaken by Parliament,” says Justice and Courts Minister Amy Adams. “New Zealand has a strong and independent justice system that serves us well, but its legislation needs to be more accessible and better supported by modern technology,” says Ms Adams. “The changes […]

Judical modernisation – Interest & DC limit to $350,000

The Judicial Modernisation Bill has now been subdivided into subsidiary bills – one of which is the Interest on Money Claims Bill and another that deals with the District Court.  It has now passed through the House committee stage with only its third reading and Royal Assent to go.  Good for claimants and bad for EQC it now provides that a defendant is liable to pay interest where the defendant pays money to settle the claim after proceedings commenced, but before any judgment.  Previously the High Court had refused to order EQC to pay interest under the Judicature Act.  The District Court bill increases the limit of the District Court […]

MBIE Cash Settlement Booklet

Here is the link to the MBIE Cash Settlement booklet recently released via an OIA request.  It was prepared by MBIE and CERA with input from EQC, CCC and Worksafe.  It is an excellent handbook for homeowners and contains accurate advice as to what to do when considering a cash settlement.  It makes many useful suggestions as to information to ask of the EQC/Insurer before settling and also what ought to be included in the cash settlement calculation.  Still a useful resource.

EQC Limitation Video

Here is a link to a video of me produced by EQC fix it about EQC and the impending limitation period expiry.

High Court orders costs against EQC and Southern Response

Yet again the High Court (Davidson J) has ordered EQC and Southern Response to pay costs to homeowners where both paid money after being sued in excess of what each had offered before being sued late 2013.  In Zygadlo v EQC & Southern Response [2016] NZHC 1699 the High Court ordered EQC to pay $12,210.27 in costs and SR $45,291.56.  EQC paid $159,626.71 in August 2015 and SR paid a further $340,000 in March 2016 to remediate the house damage.  EQC asked the Court to order that the homeowners pay it $21,350.47 because they had changed expert witnesses and delayed the proceeding.  They also said that the Court could not make a costs […]

Summary Judgment application fails against insurers

In Emmons Developments NZ Ltd v Mitsui Sumitomo Insurance Co Ltd & anor [2016] 1244 the High Court (Matthews AJ) discussed a summary judgment application by the owner of Rydges, a carpark and the Grant Thornton Building in Christchurch  for costs of demolition, building protection and fees from Mitsui and Vero subsequent to the earthquakes in 2010/2011.  It noted that Emson applied for summary judgment in early 2016, but then withdrew the application after the insurers filed/served opposition documents.  The Court decided that Emson should never have applied for summary judgment and awarded costs and disbursements against it of about $20K

AMI & Lumley liable for Selwyn fire damage in 2013

In NZ Fire Service Commission & ors v Legg & ors [2016] NZHC 1492 the High Court (Nation J) considered a claim by the NZ Fire Service Commission and the Selwyn District Council to recover costs incurred in fighting a substantial fire in January 2013 that emanated from a burn heap of vegetation from the owners of the property (Leggs) and the landscaping business operated at the property (Evolving Landscapes Ltd).  Leggs sought indemnity for the claim from AMI and Evolving sought indemnity for the claim from Lumley.  The evidence was that that fire started in the burn heap that the Leggs/Evolving had ignited in mid December 2012 that they believed […]

Failed repair/rebuild cases.

High Court – Claims about failed remedial work by EQC or insurers are not part of the High Court Earthquake List. They are dealt with separately in a similar manner to which leaky home cases are/were dealt with. This is because such claims usual involve more parties than just the EQC/Insurer (builder, engineer, architect etc). Apparently the Court will shortly issue guidance for the progress of claims.

Earthquake fixes and contaminated land (HAIL)

For homeowners looking to remediate earthquake damage there may be extra costs caused by contamination of the land where foundation solutions involve the disturbance or removal of soil.  These can include, but are not limited to, the costs associated with engaging an environmental expert, undertaking further investigation and removing the contaminated soil.  The cost to remove and dispose of contaminated soil can be in excess of $100,000.  You can find more information about contaminated land at The Ministry for the Environment has identified a number of industrial, agricultural and horticultural activities that are known to use hazardous substances which could potentially contaminate land. These activities are known as HAIL […]

EQC & Failed Repairs

EQC has repaired thousands of houses inadequately.  Any money spent by EQC on these repairs is wasted and ought not count when assessing whether EQC has paid “cap” under the EQC Act.  In some cases the repairs by EQC were so bad that they have increased the amount that it costs to fix the house.  EQC is liable for that amount also.  So when dealing with EQC about failed repairs it is essential to establish what has been done and what needs to be done to properly remediate the house.  We suggest involving your insurer in the process as you do not want to be short paid by EQC.

Southern Response & Missing DRA’s

People that settled with Southern Response based on an Arrow Detailed Repair/Rebuild Analysis (“DRA”) may have claims against Southern Response under the Fair Trading Act where the settlement sum was based on a DRA, but Southern Response did not disclose that it had other DRA’s with a greater sum that included extra components/allowances that were part of a rebuild cost.  Concerned insureds need to act quickly by reason of limitation issues.  Check whether the DRA settled on had allowances for fees and contingency etc.

EQC & Southern Response ordered to pay costs

In Driessen v EQC & Southern Response [2016] NZHC 1048 the High Court (Davidson J) on 19 May 2016 has ordered EQC and Southern Response to pay costs and disbursements to a homeowner where EQC and Southern Response settled the claims after being sued for amounts greater than they had offered to pay prior to being sued.  Prior to being sued in November 2013 EQC assessed the damage at $58,504.  Southern Response assessed its liability at $20,000 for DFPP.  Ultimately EQC paid $153,422 in November 2015 and Southern Response paid $358,232 in March 2016 (weekend before trial).  The Court ordered EQC to pay $20,120.08 and Southern Response $50,030.30.  The judgment […]

EQC Group Action

The EQC Action Group has settled its dispute with EQC.  Here is a link to the website that has the settlement terms.  There is a joint statement that sets out what is agreed. Insurance under the Act insures the house for replacement value, which includes the cost to reinstate a house to substantially the same condition as when new and the cost of complying with any applicable laws; EQC’s liability includes the costs to fix undamaged parts where that is affected by remediation of damaged parts; If  a house has suffered earthquake damage that includes the floor being out of level: The fact that the floor level is within the […]

Cera disestablished

below is from the CERA website CERA has been disestablished This page directs you to the agencies to contact for information and assistance on the regeneration of greater Christchurch, along with some useful contacts. The Canterbury Earthquake Recovery Authority (CERA) was established as a government department on 29 March 2011 to lead and coordinate the Government’s response and recovery efforts following the earthquakes of 2010 and 2011 in Canterbury. CERA was disestablished on 18 April 2016 as the Government transitions from leading the recovery, to establishing long-term, locally-led recovery and regeneration arrangements. Some of CERA’s functions have wound down, and other responsibilities are now carried out by these central and […]

EQC and Repairs

Here is a link to the Radio NZ website story about problems with EQC repairs.  It includes 2 interviews and mentions Grant Shand as being involved getting EQC to pay cap for a homeowner.

High Court Earthquake List

Here is the link to the spreadsheet of cases in the High Court Earthquake list as at 31 March 2016.  


As of 1 April 2016 the various Lumley general insurance claim teams merge into the IAG model.    

Vero settlement agreement valid

On March 2016 the Court of Appeal in Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZCA 67 dismissed an appeal by an insured against the High Court’s refusal to set aside a settlement agreement on the grounds of mistake.  It also comments on the inappropriateness of a Risk Worldwide person (George Keys) purporting to give “expert’ evidence when that person had a financial interest in the outcome of the claim.  Prattley claimed that it was mistaken in relation to a settlement agreement it entered into with Vero about damage to Worcester Towers at Cathedral Junction.  In August 2011 Prattley settled all claims with Vero for $1,050,000.  That […]

EQC and Drainage Claims

EQC announces plan to settle drainage claims 7 Mar 2016 The Earthquake Commission (EQC) is rolling out an assessment programme for sewer and stormwater pipes suspected of having earthquake damage, starting this month (March). EQC’s General Manager of Customer & Claims, Trish Keith, says it currently has about 2,500 drainage claims but expects this could increase to about 6,000 with most claims being settled with cash payment. “EQC’s focus has been getting houses repaired and people back in their homes. But we are now in a position where we can address the issues with drainage,” Mrs Keith says. “It has been some time since some drains were inspected. To ensure […]

Southern Response- Govt Review

Here is a link to the report by the Parliament Finance and Expenditure Committee in its annual review of the 2014/15 performance and current operations of Southern Response Earthquake Services Limited.  This is the first review of Southern Response.  The report raises concerns about the ability of Southern Response to settle all claims within the amount allocated by the Government and the payment by Southern Response of bonuses to staff based on their claim settlement record.  Southern Response so far has paid $3.3M to staff as bonuses.  The Committee was concerned about the possibility that policy holders were not receiving their correct entitlement to enable the staff to receive a bonus. […]

Unsettled earthquake insurance claims

Here is a link to a piece by Cam Preston about the current state of insurance claim settlements.  His view is contrary to that of the Insurance Council on its website here which says that its members are on track to settle the vast majority of claims in 2016.  IAG and Southern Response that together have over two thirds of the claims still have 5069 unsettled claims.  Currently there are only 209 active proceedings on the High Court Earthquake list.

Southern Response Avoids Class Action

By the judgment 24 February 2016 in Southern Response Unresolved Claims Group v Southern Response Earthquake Services Ltd [2016] NZHC 2345 the High Court (Mander J) declined the Group’s application for leave to bring the proceeding as a representative action in the name of  its nominated representative, Cam Preston.  The Group is an unincorporated body of 46 people with unresolved claims with SR.  The claims are in various stages with some still “under cap”.  The judgment refers to there being 2587 unresolved SR claims.  The Group Claimants appeared to have differing issues with SR, so the Court was unable to identify issues common to the entire group that is a […]

ABC Australia – “Lateline” on Christchurch Earthquake and delays

Here is a link to the ABC Australia show “Lateline” and its piece from 16 February 2016 about the delays in the rebuilding of Christchurch.  It contains interesting comments about IAG and its performance.  Below are 2 quotes from IAG that are interesting.   RENEE WALKER, IAG: We work with our customers. It’s always a negotiation, so they’ll be presented with a cash settlement offer and then is a negotiation. We’re not in the practice of forcing cash settlement. So there is always a conversation. RENEE WALKER: We think and we maintain that we are settling our claims at a reasonable rate. And we would like to work with our […]

Justice Kos Speech about Christchurch Earthquakes

Here is the link to a speech by Justice Kos at a Judges’ Conference in Brisbane recently.  It is about the Christchurch earthquakes and the judicial response to the earthquakes.  It goes through  the major cases and comments on the judicial processes implemented to deal with the cases.

High Court delays- earthquake cases

Some earthquake court cases have been in the Court system since 2013.  They have dragged through the joint expert process that the Court used to see as essential, but in practice achieved very little towards resolving claims.  Now that the cases have completed the interlocutory phases they are being allocated hearing dates.  Amazingly cases of 5 days hearing time are now being allocated hearing dates in March 2017.  That is appalling.  So much for the quick resolution of earthquake cases.


People that have bought properties after the earthquakes are likely to have taken an assignment in relation to EQC and insurance policies.  This may involve an assignment of the claim, the proceeds, the rights and/or the policy.  Each is a different property right.  This is likely to be recorded in the property sale and purchase agreement and a deed of assignment.  There has been no issue with EQC recognising the right of the new owner to receive what may have been due to the previous owner.  Some insurers have taken the position that the policy cannot be assigned without their consent.  Also that the purchaser cannot acquire reinstatement rights or […]

Cross leases and insurance obligations

We continue to come across home owners who do not understand the extent of their obligations under a cross lease in relation to insurance for earthquake damage. The cross lease will usually contain a term obligating an insured to spend any insurance money received on reinstating the damage.  So an insured that takes a cash settlement could be sued later by other owners if they do not spend the money on reinstating.  All owners can agree to vary the cross lease if needed to delete this requirement. If an owner repairs or rebuilds, but builds it different to what was there then the insured will need the consent of the […]

Earthquake 14 February 2015

Here is a link to EQC’s advice about what to do after the earthquake on 14 February 2016.   You have 3 months to make a claim.  The 3 month period cannot be extended.  It is better to be safe than sorry.

Insurance Council- Earthquake claim limitation

Here is the press release from the insurance council to the effect that CNZ members AA Insurance, FMG, the IAG brands, MAS, Tower and Vero have agreed not to plead a defence under the Limitation Act 1950 or the Limitation Act 2010 for any residential claim relating to the Canterbury Earthquakes where proceedings are filed in the Courts before 4 September 2017.  This does not affect claims against EQC or Southern Response.   To save arguments and issues I still recommend that owners sue insurers by 4 September 2016.

EQC- limitation earthquake claims

Here is the link to the press release from the EQC website about how it will apply the limitation period(s) under the Limitation Act.  To be safe I recommend that owners sue before 4 September 2016.  Better to be safe than sorry.

High Court Earthquake List

here is the link to the High Court Earthquake list as at 11 December 2015.    

Limitation Act – Time running out

Here is a link to a Press story about the 6 year limitation period under the Limitation Act and its effect on claims for earthquake damage.  To be safe anyone with an unsettled claim against EQC or their insurance company should sue by 3 September 2016. Once the limitation period expires that is the end.

EQC and its legal costs

This morning National Radio (Morning Report) broadcast an interview I did with Conan Young about the amount paid by EQC for legal costs in relation to Christchurch earthquake claims.  In information released under the OIA EQC disclosed that the legal costs have been $23.6M.  In 2014 the legal costs were $7.4M.  These numbers do not include amounts paid by EQC for legal costs of homeowners.  The interview was broken into 2 parts.  Here is the link to part 1 and here is the link to part 2.

High Court Earthquake List stats

The Christchurch High currently operates a special list to deal with earthquake cases.  Here are some stats from a recent Law Society presentation. 437 earthquake related proceedings filed 210 cases disposed of by discontinuance or judgment 176 cases discontinued with 71 discontinued after being set down for trial and 35 of those discontinued within 1 month of the trial date 34 cases disposed of by judgment using a total of 125 court days 227 active cases with 61 set down for trial and 166 in case management

6 year limitation- sue or no money

Under the Limitation Act insured homeowners only have 6 years from the date of the damaging earthquake(s) within which to sue EQC and insurance companies for compensation.  If homeowners do not sue then the claim(s) for money are no longer enforceable.  So EQC and insurers will escape without paying.  For houses and land damaged in the earthquake(s) on 4 September 2010 court proceedings must be filed  by 3 September 2016.  That date is fast approaching.  Once the limitation period has expired that is the end.  It cannot be extended.  Sue now.

EQC land claims

As well as covering buildings EQC also covers damage to residential land.  Homeowners need to progress these claims now.  These claims expire if the homeowner does not sue EQC within 6 years of the land damage.  The primary claim is for the cost to restore/remediate the land.  Do not believe EQC when it tells you that it only needs to pay a difference in value of the land between now and before the earthquakes. EQCover for land is limited to land that is within the property boundary – and includes: the land under the home and outbuildings (eg, shed or garage) the land within eight metres of the home and […]

Bad building video

here is a link to a story and video about bad building work – particularly of foundations.

Lladro claim fails against AA Insurance

In Newberry v AA Insurance Ltd [2015] NZHC 2457  the High Court (Nation J) on 8 October 2015 considered a claim by Brian Newberry about 30 Lladro figurines damaged in the Christchurch earthquakes that had a replacement value of $210,065.  The problem for Mr Newberry was that his insurance policy had a limit for “works of art” of $5000 per item with a total of $20,000, unless the items were separately specified in the insurance policy schedule.  Unfortunately, he did not specify the Lladro as “works of art”.  The insurance policy defined “works of art” as – Pictures, paintings, prints, sculptures, ornaments, tapestries, antiques (other than furniture), hand woven mats or […]

NZ Law Awards 2015

Grant Shand Barristers and Solicitors is again a finalist for the Insurance Law Firm of the Year Award at the New Zealand Law Awards.  Here is the list of finalists.  Grant Shand is the only finalist that does not act for insurance companies.  The New Zealand Law Awards will be held on Thursday 19 November 2015 at the Pullman Hotel Auckland.    

High Court Earthquake List

Here is the link to the most recent published earthquake list.  Interestingly all cases about failed earthquake remedial work by insurance companies or EQC will not be put on the list.  One of the earthquake list Judges; Justice Kos, is now a Judge on the Court of Appeal, so will be replaced.

Kelly v EQC & Southern Response – no appeal

The appeal period for any appeal from the judgment in C & S Kelly Properties Ltd v EQC & Southern Response Earthquake Services Ltd [2015] NZHC 1690 has expired with no party lodging an appeal.  There has been no agreement about the costs payable by EQC and Southern Response so the Court will now have to determine that issue.  Notwithstanding the recent MBIE report to the effect that 30 out of 32 hand selected properties that were jacked and packed by EQC were non-compliant with the building code apparently EQC still maintains that it can jack and pack this property.

Failed work for EQC

Here is a link to a Stuff article on the comments by builders involved in doing building work for EQC and Fletchers.  Beneath the article are comments corroborating the content of the article that EQC and Fletchers are not blameless for the defective building work.  Both EQC and Fletchers ought to be legally liable for any defective building work.  I am aware that both have previously been sued for defective work.  I would not rely on either to remediate defective work and homeowners have no obligation to allow EQC or Fletchers to try to remedy defective work.

IAG exceeds reinsurance limit for February 2011

Here is a link to an article on stuff that IAG has exceeded its $4 Billion reinsurance limit for the February 2011 earthquake.  Apparently IAG expects to settle claims for damage in the other earthquakes at less than the reinsurance limit.

MBIE Report on EQC Faulty Repairs

Below is an extract from the MBIE website about its report on faulty building repairs.  The report identified significant failings with the “jack and pack” method.  Here is the link. Report into Canterbury residential repairs released 19 August 2015 The Ministry of Business, Innovation and Employment (MBIE) has released a report into the Building Code compliance of earthquake repairs to Canterbury homes. The report follows an independent survey of 101 homes randomly selected from more than 2,700 addresses provided by EQC, Housing New Zealand, Southern Response and IAG. The survey also included a small sample of houses where homeowners had opted out of an insurer-led home repair programme. The organisations […]

Failed remedial work continued

Stuff and the Press recently published the article here about the likely liability of Fletchers and insurers for defective earthquake remedial work.  It is unfortunate that those involved in the article did not accurately state the law.  Where an insurer chooses to do, or have paid for, remedial work under the insurance policy then it is liable for the quality of that work as if it was the builder.  There are a few Court proceedings already against insurers for defective building work.  Fletchers as the project manager owes obligations to the home owner to perform its role with reasonable skill and care.  That includes ensuring that the work complies with the […]

EQC failed remedial work

Here is the link to the post on the EQC website about failed remedial work.  The houses the subject of the investigation will be the tip of the iceberg.  I do not recommend that homeowners rely on EQC to accurately scope and remediate the failings.  Better to engage an independent expert.

Earthquake Insurance Statistics

Five Years On: How Insurance Claims Arising from the 2010-11 Earthquakes Have Been Dealt With New Zealand’s proximity to the geologically active Pacific Ring of Fire leads to 20,000 recorded earthquakes each year. Most earthquakes are minor but annually around 200 are strong enough to be felt. Between September 2010 and June 2011, Canterbury was hit by three major earthquakes. While such natural events are not uncommon in the country, the intensity of those earthquakes, and the fact that they occurred so close together, caused considerable damage to the region, destroying buildings, roads and infrastructure. It affected 460,000 people, and damaged 150,000 homes; 20% of which (30,000) were seriously damaged. […]

Another Cathedral Judgment

In a judgment 5 August 2015 in Church Property Trustees v Attorney General & Anor [2015] NZHC 1843 the High Court (Dunningham J) discussed the consequences of the breach of trust by the CPT in spending $4.7M of the insurance proceeds for the Cathedral on the cardboard cathedral in Latimer Square.  CPT had recently transferred funds to cover the payment, so there was no need for any orders against it.  The Court decided that the payment for Cathedral contents was not required to be used for the Cathedral only.  It also decided that the CPT was not in breach of its obligations by failing to insure the Cathedral for replacement cost.