Here is a link to an article by Andrea Vance of the Post. It is about a Wellington Council drinking water pipe that burst causing landslides and damage to 2 properties in Wadestown. The pipe was known to be in poor condition and had previous issues. The cost to fix the damage is north of $600k. The article contains my view about Council liability.
Du v Yoon & anor [2025] NZHC 621 concerned the operation of clauses in a standard form agreement for the sale and purchase of land that apply when damage is caused to the property by natural events occurring between the making of the agreement and settlement, and when settlement does not take place on the settlement date.
The plaintiff, Ningfei Du, says he is entitled to the return of the deposit of $1,063,000.00, which he paid following his successful tender to purchase the property at 149A Arney Road, Remuera, Auckland from the defendants, David Youn and his wife, Miji Sunwoo, in accordance with an agreement for the sale and purchase. Mr Du seeks specific performance of what he says is the defendants’ obligation to return the deposit after he cancelled the ASP, following damage to the Arney Road Property caused by the extreme weather events that took place over the Auckland Anniversary Day weekend in late January 2023. Mr Du says these events made the property untenantable, which entitled him to cancel the ASP. Mr Du also seeks interest on the amount of the deposit from the date of cancellation to the date of payment, plus costs. The defendants say the property was not untenantable and Mr Du had no right to cancel the ASP. They say the purported cancellation was a repudiation of the ASP and the deposit was forfeit. The defendants counterclaim for damages of $391,764.19 for losses they say they suffered as a result of Mr Du’s repudiation of the ASP and for interest on those losses.
The court found that the settlement date under the ASP was and remained 31 January 2023 and that there was no valid late settlement notice under cl 13 of the ASP that would have required Mr Du to settle on a date other than 31 January 2023. On 31 January 2023, the Arney Road property was under a Red Placard because it was considered that the building was at risk from an external hazard and that part of the building foundation structures was likely compromised. The Red Placard meant access was not permitted without written authorisation from the Civil Defence Emergency Management Controller or another Responsible Person. Under s 133BT of the Building Act, neither the defendants nor any other person could occupy the property while it was subject to the Red Placard. In terms of the test approved by the Supreme Court in Bahramitash v Kumar, as at the settlement date the property as a whole had been rendered unfit for the occupation and use of someone assumed to want the property for the same purposes as Mr Du.
The Arney Road Property was untenantable on the settlement date (as well as in March 2023), it follows that Mr Du was fully entitled, under cl 7.2(1)(b), to cancel the ASP. The terms of cl 7.2(1)(b) are clear. If the property is untenantable on the settlement date, the purchaser may cancel the ASP by serving notice on the defendants — as was done by Glaister Ennor on 27 March 2023. The fact this right was exercised after the settlement date is of no consequence. Nor was there any need for Mr Du to file a settlement notice just because the settlement date was passed.
It follows that Mr Du is also entitled to the return, in full, of the deposit he paid of $1,063,000 plus interest, from the date of cancellation to the date of payment in accordance with s 10 of the Interest on Money Claims Act 2016.
On 19 February 2025 I presented at the Legalwise Seminar entitled “Insurance Law Intensive.” The topic was Property insurance round up- Floods, landslips and earthquake issues- A discussion of recent cases and current litigation as well as issues arising post natural disasters.
Here is a link to papers.
On 16 July 2024 Grant Shand commenced proceedings in the Napier High Court against the Hawke’s Bay Regional Council for damage caused in the flooding on 26 June 2024 that damaged about 500 properties. Here is the website with information about the claim. The intent is for this to be an opt out class action. People who are insured for the loss and damage will need to check their policy wording to establish whether the insurer may have rights to bring proceedings and give notices in any class action.
Govt to support councils with buyout and better protection of cyclone and flood affected properties
The Government will enter into a funding arrangement with councils in cyclone and flood affected regions to support them to offer a voluntary buyout for owners of Category 3 designated residential properties. It will also co-fund work needed to protect Category 2 designated properties.
“From the beginning of this process the Government has supported a locally-led response to the North Island weather events, as requested by councils and communities in affected regions,” Grant Robertson said.
“The facilitation work that the cyclone taskforce has been engaged in to undertake risk assessments has been completed. From here the councils will lead engagement with their affected property-owners.
“Today’s announcement will help councils get the right solution in the right place and avoid significant financial hardship for property owners.”
The Government is committed to providing funding to support councils and will work through the details with them on how that will work in practice for both Category 2 and 3 properties. We expect to have those details resolved in June.
For properties designated Category 2 (where it is determined community and/or property level interventions are feasible to manage future severe weather event risk) the Government will work with councils to help them build flood protection and other resilience measures. The initial support for this is already in place with $100 million initial funding announced in Budget 2023.
People in homes designated as Category 3 properties (where future severe weather event risk cannot be sufficiently mitigated) will be offered a voluntary buyout by councils – the costs of which will be shared between the Government and councils.
Decisions on the details how the voluntary buyout process will work will be made in the coming weeks. This will include the criteria for valuation of Category 3 properties, the split of costs between councils and central Government and the treatment of uninsured properties.
“The focus of today is on residential properties. We are working with sectors, such as the horticulture sector on possible targeted support for commercial operators, and on regional plans that will provide overall support for recovery and rebuild,” Grant Robertson said.
A parallel process is also underway to engage with Māori, including on appropriate processes for whenua Māori. Engagement with those communities will be led by the Cyclone Response Unit, Te Arawhiti and local councils. The process will ensure that there are equitable outcomes for these communities.
“The Government welcomes announcements from councils in Hawke’s Bay setting out which properties are in Category 1 and indicative assessments of which are in Categories 2 and 3.
“Our understanding is Auckland Council will be talking to property owners from June 12 and Tairāwhiti has already begun contact with property owners in Category 3, with the remainder to be finalised over coming weeks,” Michael Wood said.
“It is also important to note that there may be some properties in other cyclone-affected regions like Northland and Wairarapa that are designated as Category 2 and 3. The Government will support councils in those regions in the same way.
“Initial indications are that across all regions there will be about 700 Category 3 properties, and up to 10,000 homes in Category 2 areas,” Michael Wood said.
“The weather events saw property damaged across multiple areas of the North Island. There is no precedent for the response required, but we do know that with climate change there will be more events like this in the future,” Grant Robertson said
“The Government is committed to assisting local councils to find solutions for those who have been affected. As I have said many times we cannot meet all the costs, particularly knowing that we will see more extreme weather events like this.
“As a Government we have to strike a careful fiscal balance between supporting affected communities and not making all tax-payers bear the cost. But the affected communities can be assured we are committed to making this approach work.”
In February 2017, a large number of residential properties located around Worsley’s Road in the Port Hills of Christchurch were badly damaged by fire. Some were completely destroyed. About 80 owners claimed their properties would never have been damaged or destroyed had it not been for the actions of the appellant Leisure Investments NZ Limited Partnership (Leisure Investments), the owner and operator of a nearby adventure park. The High Court entered judgment for the plaintiffs against the Adventure Park for d damages totalling $10,296,041 together with interest and costs . In the judgment 31 March 2023 in Leisure Investments NZ Ltd Partnership v Grace & ors [2023] NZCA 89 the Court of Appeal dismissed the appeal and confirmed the liability in negligence, under the Forest and Rural Fires Act 1977 and in nuisance. It confirmed awards for damages based on reinstatement costs, alternativc accommodation and general damages.
Homeowners with fire insurance are covered under the Earthquake Commission Act 1993 for damage to house and land by a natural landslip. For house damage EQC pays the first $172,500 under s18 of the EQC Act. For land damage EQC pays up to specified amounts under s19 of the Act for land damage plus the indemnity value of any bridges, culverts and retaining walls. Separate house insurance policies may provide additional cover for retaining walls and the house. The application of the EQC Act to land damage is not straightforward. So expert advice will help.
In Napier City Council v LGMFL [2022] NZCA 422 the Court of Appeal allowed an appeal by the Council on its ability to recover from its insurer (“Risk Pool”) for its contribution of $12.355M to settle a leaky building claim about Waterfront Apartments. The Waterfront plaintiffs claimed about $20M of which $16.2M comprised costs of remediation. The relevant insurance policy excluded cover for claims about weathertightness. The insurance policy did cover non-weathertightness defects. Contrary to the High Court decision the Court of Appeal decided that the exclusion removed cover only for Council liability from weathertightness defects. The Council could recover from Risk Pool for non-weathertighness defects. The dispute was sent back to the High Court for it to apportion the settlement between weathertight and non-weathertight defects and to determine whether the settlement was reasonable.
By a judgment delivered 16 December 2021 by Osborne J in Ross v Southern Response Earthquake Services Ltd [2021] NZHC the High Court has granted the representative plaintiffs (Ross) permission to end the group action against Southern Response on terms that the Southern Response package is open to eligible homeowners until at least April 2023; dissatisfied homeowners can sue Southern Response without Southern Response raising a limitation defence for a further 18 months after discontinuance and oversight/reporting by a committee to the Court. All eligible homeowners are now free to take up the package offer and the $2000 legal fee subsidy or to sue Southern Response. Southern Response is to pay a confidential sum of money to the litigation funder CFA.
In the Sleight v Beckia Holdings Ltd & ors [2021] NZHC 456 judgment about costs and interest Gendall J ordered IAG to pay interest at 5% pa from June 2015 under s87 of the Judicature Act 1908 on the costs to repair the Sleights’ house at 24 Kinnaird Place, Christchurch. He ordered interest from the date that IAG was made aware that its original earthquake repairs were defective in June 2015. He awarded interest on the cost of the repairs as quantified in mid/late 2020. Homeowners with failed earthquake repairs ought to seek interest from when EQC/Insurer should have know about the problem. As the Sleights commenced the proceeding pre 1 January 2018 the Interest on Money Claims Act 2016 did not apply. IAG has appealed this judgment.
