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.
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.
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 [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.
In Gabriel & ors v EQC & Vero [2018] 1255 the High Court dismissed an application by Vero for summary judgment against the current owner of an earthquake damaged house based on an argument that the original insured had waived the claim against Vero. The original insured owner had apparently agreed with Vero in 2013 to close the claim, however, the evidence was uncertain about whether the claim referred to was only the “out of EQC scope claim” or the entire house claim. So the Court refused to enter summary judgment and the claim continues against Vero by the current owner assignee.
In Deo Gratias Developments Ltd v Tower Insurance Ltd & anor [2018] NZHC 767 the High Court (Osborne AJ) ordered EQC to pay 75% of the legal costs and disbursements a homeowner incurred in Court proceedings against EQC and the insurer where EQC paid cap after being sued and the insurer settled the claim one month after EQC paid cap. In the three other proceedings considered in the judgment the Court ordered EQC to pay 50%. EQC had argued that 50% was its maximum liability. The closer the insurer settlement is to the cap payment the greater % of costs EQC ought to pay.
Here is a short video I did about the issues with assignments of EQC and insurance claims. We are still waiting for a Court of Appeal decision after a hearing on 15 February 2018 about the ability to assign insurance claims/proceeds for replacement costs.
Here is a short video I did about EQC’s liability to pay interest. If EQC has not paid then a homeowner should sue now to get interest from when EQC ought to have paid. For a cap payment this ought to be in excess of $30,000. A homeowner must sue to get the interest. EQC is very apprehensive about this new exposure.
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Christchurch 8141
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grant@grantshand.co.nz
Auckland
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26-28 Hobson Street, Auckland 1010
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grant@grantshand.co.nz
