In its first substantive judgment in Houston v Southern Response Earthquake Services CEI-OOXX-2019 the Canterbury Earthquakes Insurance Tribunal has shown that it will be a waste of time and money for homeowners. The decision by the chairperson of the tribunal, a former family court judge, CP Somerville, fails to follow an applicable Court of Appeal case about the policy standard of remediation and does not decide any super-structure repair scope or whether the insurer strategy complies with the Building code. Mr Somerville surprisingly approves a jack/pack repair for a house with a heavy roof and heavy cladding on TC3 land adjacent to a stream with a floor level differential of 72mm as being “as new”. Mr Somerville refused to get involved in deciding technical engineering issues and building code compliance. These are the issues in most earthquake disputes. Hopefully the judgment is successfully appealed.
In Pinot Properties Ltd v Vero Insurance New Zealand Ltd  NZHC 2244 the High Court (Osborne J) dismissed an application to transfer an earthquake court proceeding to the Earthquake Insurance Tribunal as the Court decided that the relevant building at 205 Manchester St was not a residential building, nor residential property, so was not eligible. The Court reached this conclusion notwithstanding that EQC paid claim(s) and the properties had been used for residential purposes. Vero insured the property under a commercial property.
In Dewes & ors v IAG New Zealand Ltd & ors  NZHC 2270 the High Court (Lester AJ) considered an application by home owners to transfer a claim about a defectively repaired earthquake damaged house where IAG had joined Hawkins and Hawkins’ insurer, QBE. QBE did not want the claim against it transferred to the Tribunal and said that it was a separate proceeding not within the Tribunal jurisdiction. The High Court disagreed with QBE and said the entire dispute could be transferred, which it did.
In Dodds v Southern Response Earthquake Services Ltd  NZHC 2016 the High Court (Gendall J) ordered Southern Response to pay Dodds $178,894.30 plus interest from 23 December 2013 because Southern Response misrepresented the cost to rebuild the house at 9 Errol Lane, Huntsbury damaged in the earthquake on 22 February 2011. Southern Response provided a Detailed Repair/rebuild Analysis to Dodds that excluded demolition, professional fees and contingency that totalled $895,937.78 whilst at the same having a full costing at $1,186,920.75 that it did not provide to Dodds. Dodds entered into a settlement agreement based on the lesser figure. The High Court decided that SR was guilty of misrepresenting the rebuild cost and engaging in misleading and deceptive conduct. It also said that Southern Response breached good faith obligations. The High Court ordered Southern Response to pay the difference in the 2 costings less the cost of demolition that Southern Response paid and some Arrow costs. It did not award general damages.
On 15 August 2019 the Government announced a policy that allows owners of on-sold over-cap properties in Canterbury to apply for an ex gratia Government payment to have their homes repaired.
If you’ve bought a home in Canterbury and discovered that it is damaged over the EQC cap, you may be eligible for an ex gratia payment to cover the cost of repair.
Under the policy, you will have twelve months (no later than 14 August 2020) to register your interest for the ex gratia payment. After that time, the policy will not be available.
If you qualify you may be able to receive an ex gratia payment equal to the agreed cost of repair.
Here is a link to information with an excellent Q & A section.
This decision is an excellent one for those owners.
In Biggins & anor v Southern Response Earthquake Services Ltd  NZDC 25609 the District Court considered an application by an insured home owner for summary judgment for the cost of a carport that was not included when SR rebuilt the insured’s house. There were also claims for general damages and the owners’ share of liability for a common driveway. The insured house had a carport. The house rebuilt by Southern Response after the earthquakes did not. SR said it was not liable because the cost of a carport was included in the costing for the rebuilt house. Southern Response lost. There were no documents that supported the SR position. SR also lost on the driveway share issue, but avoided a liability for general damages.
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.