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.

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.  Highly likely that the decision is appealed.

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 12am on 4 September 2010.  The Court dismissed the QBE claim because the clear intention was that the Allianz policy commence when the QBE policy expired at 4pm.  It was to be seamless cover.  The Court implied the 4pm commencement as a term and also said that the objective interpretation of the policy was that it was to commence at 4pm.

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 their detriment.  The claim had serious problems because any representation was after the Doigs had agreed to purchase the property, the Doigs took legal advice and any competent lawyer would have known of the law from Bryant, any representation was not equivocal, there was no detriment because the evidence was that the Doigs had still profited from the purchase once you added together insurance and EQC payments with the current property value.  The Doigs also claimed interest from January 2014 on the Tower indemnity payment.  The problem was that the claim was under cap until July 2016 so Tower had no liability before then.  Tower paid indemnity in November 2016 which the Court held was within a reasonable time.  A total failure for the Doigs who will now have a costs liability to Tower and may want to look at recovery from lawyers involved.

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.




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 commercial policy holders.

Customers (not assignees) excluded from the blanket extension, will be considered on a case by case basis, but exceptional circumstances would be required, to avoid IAG utilising the Limitation Act defence.


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).

It says the focus continues to be on the hardest hit communities within Marlborough, Kaikoura and Hurunui, meaning assessment and settlement progress there has been greater.

EQC is on track for “the majority” of Kaikoura earthquake customers to receive their settlements by the end of 2017, it says.

Kaikoura MOU Variation

EQC also says that private insurers and EQC recently signed a variation to the Memorandum of Understanding relating to Kaikoura earthquake claims management.

The original MOU covered the management of EQC claims for damage arising from earthquakes centred “in and around” Kaikoura between 14 November and 13 December 2016. The variation extends the time period of the original MOU and now covers EQC claims for damage arising from earthquakes “in and around” Kaikoura from 14 December 2016 through to 13 December 2017.

EQC says the effect of the variation is that if a homeowner has previously lodged a Kaikoura earthquake-related EQC claim, the new claim will be assessed and settled by the same insurer who managed their previous Kaikoura earthquake-related EQC claim.

If a homeowner is lodging an earthquake-related EQC claim for the first time as a result of another Kaikoura area earthquake, the claim is for land damage, or they have an open EQC claim from a previous event (such as the 2010-2011 Canterbury earthquakes), their claim will be managed by EQC.