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Southern Response- Misleading Conduct

Southern Response (formerly AMI Insurance) had a practice of maintaining duplicate remedial costings for earthquake damaged houses.  A “customer” version and an “office” version.  The “customer” version did not include demolition, professional fees and contingency.  The “office” version included these costings.  Southern Response concealed the “office” version with the effect that many people settled their insurance claim for less than their entitlement.  Rick and Anna Groen sued Southern Response in the High Court claiming breaches of the Fair Trading Act and duty of good faith.  The High Court in Groen v Southern Response [2018] NZHC 1025 recently considered the status of the legal advice Southern Response received in the context of witness statements and an upcoming trial.  The judgment contains a good summary of the issues.  The Court decided that Southern Response could edit witness statements and statement of defence to remove reference to legal advice, but if at trial it tried to rely on the legal advice for its conduct then it would waive privilege over the advice and must provide the advice.  There are likely thousands of people in the same situation as the Groens that also have claims against Southern Response.

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Insurance Assignment – Indemnity only

In Xu & anor v IAG New Zealand Ltd [2018] NZCA 149 the Court of Appeal confirmed the High Court decision that under the insurance policy the reinstatement right under the policy was not transferable to a subsequent owner.  It was personal right that could not be assigned.  Because the original insured did not reinstate the house before selling it to the current owner there was no right to reinstatement costs.  Xu received indemnity value only.  The Court of Appeal followed its previous decision in Bryant.  It is now likely that Xu will try to have the Supreme Court consider the issue.  This judgment affects subsequent owners that may have bought a house with an assigned claim expecting to recover reinstatement costs.

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Myall v Tower Insurance – no further appeal

The Supreme Court in Myall  v Tower Insurance Ltd [2018] NZSC 35 has refused an application by Mr Myall for leave to appeal the Court of Appeal decision about professional fees on a house rebuild and the apportionment of the rebuild cost based on under insurance.  It said that notwithstanding obvious errors by the High Court and Court of Appeal there was no question of general or public importance.

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EQC ordered to pay 75% of legal costs

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.

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Southern Response – Misleading DRA’s

Here is a short video that I did about the practice of AMI/Southern Response in concealing costings from homeowners.  Homeowners that settled before 1 October 2014 are likely have short settled by in some cases hundreds of thousands of dollars.  The first Court trial on this issue starts 21 May 2018.

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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.

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Insurance recovery for Southland Stadium

In Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC  190 the Supreme Court allowed the appeal by the Trust against the dismissal of its claim by the Court of Appeal, but reduced the recovery by 50% for the Trust’s contributory negligence in not acting on engineering advice to investigate roof construction issues.  The original judgment was for about $15M.  The Supreme Court said that the Court of Appeal was wrong in characterising this case as one of negligent misstatement when it was a simple negligence case based on negligent issue of a code compliance certificate, however, it was correct to reduce any recovery by 50% for contributory negligence.