In Myall v Tower Insurance Ltd  NZHC 528 the High Court (Dunningham J) considered whether an insured should account for interest to the insurer on a partial claim payment; whether Tower must pay the full replacement value in cash now and any interest payable on the full replacement value fixed by the Court. Myall insured his house at 81 Ainsley Terrace, Christchurch for a floor area of 650m2. The house was damaged beyond repair in the earthquakes. It turned out the house was actually 799m2. After hearings in the High Court and Court of Appeal the full replacement value was fixed/agreed to be $5,273,021.71. Tower made interim payments of $1,359,000 in January 2012 and $1,612,644.12 in April 2013. It asked the Court to order Myall to account for interest of $431,138.71 on the part payments when/if Tower ultimately paid full replacement value. The Court declined to order interest as the policy did not provide for it and Tower did not specify it before it made the payments. Mr Myall said that because Tower had elected to cash settle it was liable to pay now even though Mr Myall has not replaced the house. The Court disagreed and said that the election was made under the policy which required the insured to reinstate, or replace, the house before payment. The Court did not consider the argument that any replacement house had to be in NZ. It did not award interest on the full replacement value. The judgment also records that Mr Myall is to pay Tower $32,000 for costs on the first High Court hearing.
In the puzzling decision of Hood v EQC & anor  NZHC 349 the High Court (Dunningham J) decided that Ms Hood who had been entirely successful with her claim by moving EQC from a repair cost of $10,729 to one of $438,292.63 through Court proceedings could only recover 50% of her costs because theoretically the insurer, IAG, was also around and Ms Hood should have recovered the balance of the costs from it. This was in circumstances where once EQC paid the cap the insurer immediately agreed to pay the rebuild cost claimed and IAG had for months said that wanted to settle out based on a rebuild. I do not understand how a person can be entirely successful, but not recover 100% of the recoverable costs. No rights of appeal of the judgment as it was review of a decision of Matthews AJ who also thought that 50% was appropriate.
The High Court (Davidson J) decision in Emmons Developments New Zealand Ltd v Mitsui Sumitomo Insurance Co Ltd & anor  NZHC 277 considered whether cracks to a concrete slab were “damage” under a material damage policy; what was required to remediate the cracks, and what the insurers were liable for when repairing insured earthquake damage also affected undamaged property. The buildings at issue were Rydges and the adjoining carpark. Each was damaged, but not destroyed in the February 2011 earthquake. The policy required restoration of the damaged portion of the property to a condition substantially the same as, but not better or more extensive than, its condition when new. There was agreement that there were pre-earthquake slab cracks and slab sagging. The insurers accepted that exterior cracks of .3mm and interior cracks of .4mm were damage. Insurers said that the insured had to prove damage crack by crack. This required proof that the earthquake caused the crack and the crack involved physical change to the extent that it impaired capacity with engineering consequences compared with its pre-earthquake condition. The Court decided that the policy required assessment of portions of the property- not crack by crack. So experts had to look at portions of the property ie. there may be parts with multiple cracks of lesser width. This required engineering judgment. The Court said that repair of each crack in the top horizontal concrete element required epoxy injection over the full length of the crack. Standard industry practice is to repair cracks of widths .2mm and above. Pre-existing cracks suffered loss of strength as a result of being worked during cyclic loading. A degree of loss of aggregate interlock was probable and the cumulative effect may constitute impairment so as to be damage.
Lyttleton Port settled its insurance claims against its insurers for about $450M for earthquake damage caused by the 4 September 2010 earthquake. It then sued its insurance broker, Aon, claiming a further $170M alleging that Aon was negligent in not obtaining full replacement cover of the Port’s assets without sub limits. Aon joined Colliers and Opus as third parties. Aon also asked the court to join as a third party the Port’s solicitor, Tony Paterson, alleging that he had failed to give advice to the Port about the relevant insurance policy. The High Court twice refused to join Mr Paterson. In Lyttelton Port Company Ltd v Aon New Zealand & Ors  NZHC 2809 the Court granted Aon leave to appeal to the Court of Appeal.
In Settlers Crescent Partnership v IAG New Zealand Ltd  NZHC 2775 the owners of 4 adjoining buildings at 14 Settlers Crescent, Ferrymead (funded by Risk Worldwide) sued to recover for damage in the June 2011 earthquake notwithstanding that they had cash settled for $10,233,973.80 with IAG for damage to the buildings in the September 2010 and February 2011 earthquakes on the basis that those buildings were recommended for demolition as being destroyed. The Court unsurprisingly found that the partnership suffered no further loss in the June 2011 and the claim failed.
In a surprising decision in Kilduff & anor v Tower Insurance Ltd  NZHC 2021 Gendall J ordered Tower Insurance to pay costs of $81,249 and disbursements of $122,515.20 in a case where Kilduff claimed $1,952,891 and only recovered $628,516 after a five day court hearing. Prior to the court hearing Tower had offered Kilduff $650,000 in August 2017 and $734,000 in October 2017. Both of these amounts exceeded the repair cost judgment of $628,516. Nevertheless, Gendall J decided that Kilduff had been successful once he added on costs and disbursements to the judgment sum to get a total of $855,169.20.
Here is the link to our EQC & Insurance Newsletter #19.
Here is a link to the Canterbury Earthquakes Insurance Tribunal Bill introduced on 1 August 2018. It appears to create a tribunal that is a replica of the Weathertight Homes Tribunal. Notably the Tribunal can only consider claims by an original insured against EQC and/or any insurer. The Act expressly does not apply if ownership of the property is transferred following the insured physical loss or damage. The Tribunal has the power to direct parties to mediation and appoint independent experts. It also has the express power to restrict cross examination of witnesses and disallow the use of experts unless they are necessary. A big negative is that the Tribunal is not empowered to award costs based on success, but can only award costs if there is proven bad faith, meritless allegations or unreasonable delay. Any appeals are to the High Court, but only with leave of the High Court. This Tribunal is about 7 years too late and repeats the errors that make the WHT a bad choice for many homeowners. It also excludes the “on solds” that are the most prevalent claims now. A positive is that it enables people to prosecute land claims cheaply without much risk of adverse costs. Another query is why does the Act not apply to Kaikoura claims?
Here is Southern Response’s 28 June 2018 statement about enforcement of limitation defence(s) after 4 September 2018. Southern Response had previously said that it would not enforce a limitation defence before 4 September 2018. In its statement it says that after 4 September 2018 its position is that the limitation period runs from the date that Southern Response settles, declines, or advises in writing a decision on the claim. This is similar to the EQC and Tower position.
In Robin v IAG & ors  NZHC 1464 the High Court (Gendall J) reversed the decision of Matthews AJ in Robin v IAG & ors  NZHC 204 about joining as defendants people involved in post earthquake repair work. Ms Robin owned 214 Fitzgerald Avenue. She sued IAG alleging that the earthquake repair work done did not restore the house to the policy standard. She also sued the manager of the repair work, Canterbury Reconstruction Ltd. IAG joined Hawkins who monitored/assessed the remedial work as a third party. IAG then asked the Court to join as defendants Houselifters Ltd, Max Contracts Ltd and the Christchurch City Council. Ms Robin opposed the joinder. Gendall J said that Matthews AJ was wrong not to join them as defendants. They were involved in the allegedly defective work and no other party could/would join them as third parties. It would not be onerous for Ms Robin to formulate and prove the claim(s) given she had sued CRL.
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