Red Zone Settlements

Below is an email received from the NZ Law Society (Property Law Section).

A message from CERA
Vacant Possession

We wish to remind practitioners that the Crown offer requires vacant possession. Prior to accepting the Crown offer, vendors need to be aware of the implications of vacant possession. These implications must be taken into account when deciding on a suitable settlement date for their sale to the Crown. Prior to settlement the vendor must have removed all belongings from the property and has no further right of access once settlement has taken place. Any applicable insurance assessment must have already been completed.

Please ensure that your clients are aware that, even when Option 2 is chosen, the Crown will own the land and buildings once settlement has been completed.

In particular, tenants must receive legally correct notice of termination under any tenancy agreement affecting the property. Whether a tenancy is periodic or fixed term, the settlement date must not be prior to either the expiry of the tenancy or the date of correct legal termination. It is the vendor’s responsibility to ensure that vacant possession is able to be given on settlement so as to avoid a breach of the agreement for sale and purchase provisions. We would be grateful if practitioners could be as involved as possible in the issuing of any termination notice to avoid situations where an incorrect notice has been given.

Please note that settlement will be delayed if CERA becomes aware prior to settlement that vacant possession is unable to be provided by the vendor on the settlement date. Where CERA has been unable to confirm with the vendor that vacant possession has or will be provided on settlement, CERA is entitled to undertake a pre-settlement inspection of the redzone property. Please note that a pre-settlement inspection may occur on the morning of settlement. Confirmation of settlement will not be provided until any pre-settlement inspection has been completed and vacant possession has been confirmed.

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Insurance broker liable

In the recent decision in Marchand & ors v Jackson & anor [2012] NZHC 2893 the High Court (Kos J) found that a Christchurch insurance broker, John Jackson, was liable to the Marchands for his failure to place insurance cover and his failures to inform the Marchands that he had not in fact placed the insurance cover in relation to the house at 21 River Road, Tai Tapu.  The house was severely damaged in the earthquake on 4 September 2010.  Mr Jackson was found to be liable for the amount necessary to put the Marchands in the same position as if the insurance cover sought by them had been obtained.  There will be a separate hearing on the quantum of the loss.

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High Court Earthquake List

The Christchurch High Court established a special earthquake list to handle claims arising out of the Christchurch earthquakes.  Most claims are against insurance companies.  So far the list is working very well to advance claims to a resolution.  The Court allocates a conference to occur relatively quickly after the filing of the proceedings.  The next conferences are on 28 and 29 November 2012.  If you filed a proceeding now you would be allocated a conference on 18 December 2012.   I recommend that anyone with an insurance issue or claim against an insurer to seriously consider filing the proceedings in the High Court.  It will speed up the progress of your claim.  I have the most claims in the list against insurance companies of any lawyer.

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Body corporate sues earthquake insurer and broker

A recent High Court decision about discovery issues BC398983 v Zurich Australian Insurance Ltd & anor [2012] NZHC 2333 discusses a claim against Zurich for earthquake damage to the Salisbury Park Apartments.   At issue is the indemnity limit for replacement value cover.   The insurance policy stated the limit was $12.95M.   The body corporate says that the limit is $100M.   Its position is supported by the insurance broker ACM who supposedly organised the $100M limit.   The limit is an issue because reinstatement may cost about $22M.   Zurich says that EQC payments received of $6.8M must be deducted from the sum insured.   The body corporate says it recovers the EQC payments additional to the $12.95M sum insured.  The judgment does not resolve these issues, but makes orders about disclosure of classes of documents.

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Vero

The Christchurch Press recently published an piece about the delays by Vero in settling claims. You will find that you get a much quicker settlement by suing Vero under your policy. You may be surprised how economic suing an insurer actually is and how quickly the dispute is resolved.

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TC3 land

Insureds that own TC3 land ought not postpone taking action against their insurer. There are plenty of experts able to provide assistance with formulating remedial woork necessary to get building consent on TC3 land. I recommend insureds take action now against their insurers to recover proper compensation

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Insurance issues

Many businesses have business interruption insurance cover associated with their property damage cover.  Insurers are still seeking to reduce payouts based on an argument that the business would have decreased by reason of reduced patronage due to the earthquake and not because of property damage to the insured premises.  This is often described as “depopulation.”  Insureds ought not blanketly acccept this argument.

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