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EQC to pay to remediate “on sold” houses

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.

 

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Insurance Claims Tribunal

Notwithstanding the success of the Greater Christchurch Claims Resolution Service it appears the Government is proceeding with the establishment of the Canterbury Earthquakes Tribunal.  Based on the version of the bill reported from the House on 9 May 2019 the goal is for the Tribunal to exist from 10 June 2019.  The Tribunal still cannot deal with “on solds” being houses sold after the relevant earthquake(s).  Unlike the GCCRS the decisions of the Tribunal are public.  The Tribunal still has restrictions on the ability to award costs.

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EQC and Costs- High Court not helping owners

In the puzzling decision of Hood v EQC & anor [2019] 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.

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EQC & Court Costs

In Viktor and Beata Ltd v EQC & Tower Insurance Ltd [2018] 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.

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Costs awarded against homeowner

In Hoju & anor v EQC & anor [2018] NZHC 2138 the High Court (Osborne AJ) awarded costs of $12,934 and disbursements of  $15,537.28 in favour of Southern Response Earthquake Services Ltd against homeowners that claimed to recover repair costs of $472,604 from Southern Response, but later accepted the claim was under cap and discontinued against Southern Response.  EQC quantified repairs at $12,154.60 and Southern Response at $13,442.  For the homeowners their lawyer, Stephen Rennie (Rhodes & co), argued that the homeowners should not pay any costs because deciding costs should wait until the claim against EQC is determined and that EQC and Southern Response should have used the same lawyer.  Mr Rennies also wrongly suggested that Southern Response had not engaged with the homeowners prior to the court proceedings and that the claim was necessitated by limitation.  All of these arguments failed.  Southern Response recovered all disbursements on experts (less GST) and costs on 2B basis apart from band A for 4 conference memoranda and discovery.

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Canterbury Earthquakes Insurance Tribunal

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?

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EQC liability for costs and Insurer responsibility

The High Court on review in Deo Gratias Developments Ltd v Tower Insurance Ltd & ors [2018] 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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