5th April 2013

Insurance giant Tower must pay out a Christchurch couple for a like-for-like replacement on another site, after their home was damaged in the earthquakes, a judge has ruled.


Matt and Valerie O’Loughlin arrive at the Christchurch High Court.

In an interim judgment, released today, High Court judge Raynor Asher now wants to hear more submissions from both parties on what a proper pay-out should be.

Matt and Valerie O’Loughlin took their insurers Tower Insurance Ltd to court after rejecting offers to repair their cracked and broken house.

In what was seen as a potentially landmark legal case, the retired couple told how their two-storey Gayhurst Rd property in the badly-hit suburb of Dallington was so damaged it couldn’t be fixed.

They said Tower was “obligated” to pay for a new home outside the red zone.

Tower said the damaged home could be repaired for $337,000 – but the O’Loughlins felt short-changed.

Now, after the two-week High Court hearing, Justice Asher has released an interim judgment which says the insurers are obligated to make a payment based on a rebuild or replacement for a comparable house to the O’Loughlins’ home.

He said it must be at a site outside the red zone, and it should be left to Tower to decide whether to pay out on the basis of a rebuild or replacement.

If it was a payment based on the costs of rebuilding the O’Loughlins’ home, that payment must be on the basis of the costs of rebuilding on a good site ($540,000), not on the present weakened and vulnerable section ($620,000).

“This is because the O’Loughlins have chosen not to rebuild on the existing damaged site, and both parties have proceeded on the basis of a cash payment which will enable them to purchase elsewhere in Christchurch out of the red zone,” Justice Asher said.

“They are not entitled to a payment in excess of the cost of replacing the house.”

Justice Asher said both parties needed to provide further submissions before he could make a final ruling on what the pay-out should be.

He also needed more submissions before he could decide what, if any, general damages should be awarded.

(Read full article here)