Lyttleton Port settled its insurance claims against its insurers for about $450M for earthquake damage caused by the 4 September 2010 earthquake. It then sued its insurance broker, Aon, claiming a further $170M alleging that Aon was negligent in not obtaining full replacement cover of the Port’s assets without sub limits. Aon joined Colliers and Opus as third parties. Aon also asked the court to join as a third party the Port’s solicitor, Tony Paterson, alleging that he had failed to give advice to the Port about the relevant insurance policy. The High Court twice refused to join Mr Paterson. In Lyttelton Port Company Ltd v Aon New Zealand & Ors  NZHC 2809 the Court granted Aon leave to appeal to the Court of Appeal.
The Court of Appeal decision in Joint Action Funding Ltd v Eichelbaum  NZCA 249 said that for a person to recover costs under the High Court Rules that person needed to have personally incurred those costs with a lawyer and been invoiced for them by that lawyer. JAFL was concerned with a claim for costs by a barrister acting for himself. Unsuccessful defendants in claims brought via litigation funders have argued since JAFL that because the legal costs are not incurred by the actual party then no costs are recoverable. Fortunately the Supreme Court in McGuire v Secretary for Justice  NZSC 116 has said that JAFL was wrongly decided.
In Fitzgerald & ors v IAG New Zealand Ltd  NZHC 3447 the High Court (Gendall J) considered whether IAG’s proposal to epoxy rubble foundation cracks and jack/pack piles/perimeter to relevel a floor with a differential of 58mm complied with its insurance policy obligation to reinstate the earthquake damaged house to a condition as similar as possible to when it was new. The Fitzgeralds own 111 Innes Road, St Albans. It is TC3. The house built in the 1920’s is 2 storey with timber frame, weatherboard cladding and metal roof built on an unreinforced rubble perimeter foundation with internal piles. After the earthquakes the floor level differential is 58mm in the house. The earthquakes also caused some cracks to the perimeter foundation. The Court decided that the policy standard of”when new” involved a comparison to the state of the house when it was built. So any foundations must provide that level of support. Gendall J decided that repairing the foundation cracks with epoxy met the policy standard and so did the proposed jacking and packing of piles and perimeter. This would not meet the standards for a newly built home, but met the insurance policy standard that required the comparison to as built in the 1920’s. The conclusions were premised on IAG being able to obtain building consents (or exemptions) and code compliance certificates for the work. If it could not do so, then IAG would be required to replace the entire foundation.
A demolition contractor, Nicon, has sued Tower Insurance/Stream Group for allegedly unpaid fees on post earthquake demolition work and quote provision. Nicon claims $350 plus GST for each of the 1083 quotes it gave to Tower/Stream ($379,050). It also claimed that Tower was obliged to give it the work for any actual demolition carried out on the quoted jobs. In Nicon Ltd v Tower Insurance Ltd & anor  NZHC 2005 the High Court (Gendall J) decided four preliminary questions about the alleged agreement with Tower/Stream. The Court decided that a written heads of agreement between Nicon and Stream was binding and it required Tower/Stream to offer Nicon first the demolition work on jobs it quoted on. Tower/Stream did not do so. The Court decided that the evidence did not prove the existence of a $350 quote fee. The claim likely continues now as one for loss of profit by Nicon on demolition jobs that Nicon was not given in breach of the agreement.
In Hoju & anor v EQC & anor  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.
In a surprising decision in Kilduff & anor v Tower Insurance Ltd  NZHC 2021 Gendall J ordered Tower Insurance to pay costs of $81,249 and disbursements of $122,515.20 in a case where Kilduff claimed $1,952,891 and only recovered $628,516 after a five day court hearing. Prior to the court hearing Tower had offered Kilduff $650,000 in August 2017 and $734,000 in October 2017. Both of these amounts exceeded the repair cost judgment of $628,516. Nevertheless, Gendall J decided that Kilduff had been successful once he added on costs and disbursements to the judgment sum to get a total of $855,169.20.
Here is the link to our EQC & Insurance Newsletter #19.
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?
In Blumberg v Frucor Beverages Ltd & ors  NZHC 1876 the High Court (Jagose J) considered whether a not-at-fault car driver could recover the costs of hiring a replacement car whilst the collision damaged car was repaired from the at-fault driver. The dispute was really between insurers and Right2Drive (New Zealand) Ltd. R2D since 2016 has provided not-at-fault drivers with replacement cars during the period of their damaged car’s repair. R2D seeks to recover its charges from the at-fault drivers or their insurer(s). Since 2016 insurers had refused to pay R2D $4.22M, so R2D initiated the court proceedings. The Court decided that the insurers were liable for all of the R2D charges. These were mitigation expenses reasonably incurred. The driver was only required to act reasonably which he/she had done so by entering into the hire agreement with R2D to mitigate the loss of use of their car.
In QBE Insurance (International) Ltd v Allianz Australia Insurance Ltd  NZCA 239 the Court of Appeal upheld the High Court decision that Allianz was not liable for earthquake damage because its insurance policy did not commence until 4pm on 4 September 2010 in relation to the earthquake that occurred at 4.35am. The QBE policy ended at 4pm on 4 September 2010 so it was solely liable. The agreement between the insured’s broker and Allianz on placement was that the Allianz policy would incept on the expiry of the QBE policy. Any later documents could not affect that agreement.
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