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.
In Bruce & ors v IAG New Zealand Ltd  3444 the High Court (Mallon J) decided that IAG had not complied with its obligations to reinstate the earthquake damaged house to “as when new”. So it is liable to pay the costs of reinstating the house and/or loss in value of the house by reason of certain defects. Quantum is to be determined at a later hearing. IAG originally spent about $1.4M to rebuild the foundation, but post work the floor level differential was 46mm and there were 8 areas with slopes of more than .5%. The Court confirmed that where an insurer elects to repair that the policy becomes a repair contract and the insurer is liable in damages. The standard of repair was to be an equal condition as it was when it was built in 2006. The owners claimed general damages for distress, inconvenience and mental anguish caused by IAG’s conduct. IAG said that general damages are not available in New Zealand for breach of an insurance obligation. The Court found that the Bruces’ were entitled to general damages that were to be quantified at a later hearing.
In Viktor and Beata Ltd v EQC & Tower Insurance Ltd  NZHC 3017 the High Court (Nation J) considered claims for costs by the homeowner and EQC on a claim for earthquake damage to 8 Lamorna Road, Queenspark. The homeowner discontinued the claim against EQC two weeks before the scheduled trial after EQC paid $19,311 for defective EQC repairs, but without EQC paying any more money than it had paid prior to commencement of the proceeding for earthquake damage. The owner then settled with Tower Insurance with Tower paying $25,000 towards costs. The owner sought costs of $24,752.54 from EQC and EQC sought costs of $18,286 from the owner. The Court decided that each party was to some extent unsuccessful so awarded not costs at all.
In Fitzgerald & ors v IAG New Zealand Ltd  NZHC 3447 the High Court (Gendall J) considered whether IAG’s proposal to epoxy rubble foundation cracks and jack/pack piles/perimeter to relevel a floor with a differential of 58mm complied with its insurance policy obligation to reinstate the earthquake damaged house to a condition as similar as possible to when it was new. The Fitzgeralds own 111 Innes Road, St Albans. It is TC3. The house built in the 1920’s is 2 storey with timber frame, weatherboard cladding and metal roof built on an unreinforced rubble perimeter foundation with internal piles. After the earthquakes the floor level differential is 58mm in the house. The earthquakes also caused some cracks to the perimeter foundation. The Court decided that the policy standard of”when new” involved a comparison to the state of the house when it was built. So any foundations must provide that level of support. Gendall J decided that repairing the foundation cracks with epoxy met the policy standard and so did the proposed jacking and packing of piles and perimeter. This would not meet the standards for a newly built home, but met the insurance policy standard that required the comparison to as built in the 1920’s. The conclusions were premised on IAG being able to obtain building consents (or exemptions) and code compliance certificates for the work. If it could not do so, then IAG would be required to replace the entire foundation.
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.
A demolition contractor, Nicon, has sued Tower Insurance/Stream Group for allegedly unpaid fees on post earthquake demolition work and quote provision. Nicon claims $350 plus GST for each of the 1083 quotes it gave to Tower/Stream ($379,050). It also claimed that Tower was obliged to give it the work for any actual demolition carried out on the quoted jobs. In Nicon Ltd v Tower Insurance Ltd & anor  NZHC 2005 the High Court (Gendall J) decided four preliminary questions about the alleged agreement with Tower/Stream. The Court decided that a written heads of agreement between Nicon and Stream was binding and it required Tower/Stream to offer Nicon first the demolition work on jobs it quoted on. Tower/Stream did not do so. The Court decided that the evidence did not prove the existence of a $350 quote fee. The claim likely continues now as one for loss of profit by Nicon on demolition jobs that Nicon was not given in breach of the agreement.
In Self Realisation Meditation and Healing Centre Charitable Trust (New Zealand) v IAG New Zealand Ltd  NZHC 2077 the High Court (Osborne AJ) struck as parties two builders joined by IAG to claims by a property owner about earthquake damage to two Christchurch houses. Each builder had minimal allegedly defective work and the property owner sued only IAG based on the policy without alleging defective remedial work.
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?
The High Court on review in Deo Gratias Developments Ltd v Tower Insurance Ltd & ors  NZHC 1881 has overturned a previous High Court decision to award an earthquake claim plaintiff 75% of the 2B cost and disbursements. Davidson J decided that there was insufficient evidence that EQC was responsible for the costs being incurred to justify more than the 50% usual award. The short time between EQC paying cap and the insurer settling the claim was insufficient to justify an inference of greater EQC responsibility. Interestingly Davidson J says that an insurer is not bound to wait for EQC to declare over cap or pay cap before settling with an insured. The loss covered by the EQC Act requires objective assessment, not simply EQC’s view. The insurer is not bound by EQC’s subjective view. Additionally the Court upheld the cost awards against EQC on all 4 claims because the claimants had by the court process recovered more than EQC ever offered as costs.
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