By: N/A
Published: 11/04/2013
An Earthquake List was implemented in the High Court in May 2012 to ensure that cases involving disputes arising out of the earthquakes are dealt with as swiftly as possible.   

Matters are escalating. At 28 March 2013, 87 claims had been filed in the Earthquake List. 11 have settled, discontinued or disposed of. Decisions have been delivered in 9 and reserved in 4 cases. Decisions for MJ & VJ O'Loughlin v Tower Insurance Ltd and Church Property Trustees v The Attorney- General & The Great Christchurch Buildings Trust, have recently been delivered.

A summary of the key issues before the Court for determination is set out below with hearing dates where available:

Impact of Red Zone
  1. Impact of red zoning and extent of repair costs: whether house is repairable or beyond economic repair; whether house is constructive total loss due to red zoning; whether notional repair costs for red zoned houses sold to the Crown assume a payment by CERA to reinstate the ground; whether costs of rebuilding elsewhere should include additional cost of foundations on existing site; and what foundation requirements should be assumed:
MJ & VJ O'Loughlin v Tower Insurance Ltd (Decision delivered 5 April 2013)
  1. Whether a grout and resin technique for notional levels meets the policy standard, and whether the house must be elevated to new datum where land subsidence has occurred:
MJ & VJ O'Loughlin v Tower Insurance Ltd (Decision delivered 5 April 2013)
Shaw v Tower Insurance Ltd (For trial May 2013)
  1. Whether insurer following obligations under red zone master agreement with EQC and/or Crown instead of under policy.
Scope of rebuild (non-Red Zone)
  1. Scope of repair/rebuild costs;
  2. Whether insurer liable for costs if EQC has not settled claims available to insured on all quakes yet; whether insurer only liable to pay, at its option, indemnity value or costs of repair or rebuild once incurred by plaintiffs;
  3. What it means to rebuild to "as new" standard for purposes of measuring the "full replacement cost"; claim that AMI must use materials as near as practicable to original villa, not something with same "look and feel"; what quality of foundations to be assumed:
Turvey Trustee Ltd v AMI Insurance Ltd (Decision delivered 11 December 2012, appealed 20 December 2012, appeal since abandoned)
  1. Whether house can be repaired economically and whether repair meets policy standard of "same extent and condition as when new":
 MacDonald and Bailey Trustee Service v Tower Insurance Ltd (For trial 8 April 2013) 
  1. Meaning of "like for like" when rebuilding on another site;
Election to buy another house: Additional costs
  1. Dispute regarding extent of project management and architect fees, excavation and additional foundation costs, builders margin and contingency where a replacement house is to be purchased. Insurer said to have refused to pay the undisputed amount but says it will do so once it has proof of purchase of new house;
Assignment of claim and repair costs
  1. House sold and rights assigned in May 2012. Claim against EQC for cap for September, February and June Earthquakes and claim against IAG for further repair costs for damage in each quake; 
House under construction / Retaining walls
  1. Issue of whether damage to property (house under construction) mostly confined to retaining wall and due to faulty workmanship/ wall not code compliant; how rebate to calculated given house area understated in policy;
Professional fees
  1. Correct approach to professional fees on a rebuild:
 McKay v Tower Insurance Ltd (For trial 13 May 2013)
  1. Whether professional fees payable when indemnity value settlement elected, and reasonableness of fees on notional rebuild:
BD McLean, CL McKeown & PL Butler v IAG (For trial 14 May 2013)
  1. Whether IAG wrongly applied depreciation and was incorrect in insisting replacement of contents by Plaintiffs before meeting contents claim;
Residential rebuild: Failure of insurer to pay
  1. Claim for rebuild of house on same site; EQC claim made but no payment; allegation that Tower has failed or refused to pay;
Extent of replacement cost and indemnity for damage suffered in second event:
  1. Claim for replacement cost of insured property damaged in February and June events; renewal of policy between events; whether indemnity correctly refused on basis there was nothing left to insure after February event;
Rental properties
  1. Question of liability for material damage; issue of alleged disclosure about rent claim;
  2. Claim for full replacement of rental house on same site; insurer said to have refused or failed to pay;
Rental of individual rooms
  1. Whether a property with rooms rented out individually should be construed as a "dwelling" for the purposes of an EQC claim:

Morley v The Earthquake Commission (Reserved decision delivered 18 February 2013)
Harris & Others v The Earthquake Commission (Reserved decision delivered with Morley 18 February 2013)

Breach of agreement by EQC

  1. Whether breach of agreement by EQC in failing to pay agreed amount for damage to retirement complex;
Section 124 Notice
  1. Whether s 124 notice renders house a write-off for insurance purposes; costs of repair or rebuild;

Rock fall mitigation

  1. Claim for wasted expenditure, additional costs of completing work and lost profit arising from rock fall mitigation project;
Unit Titles
  1. Earthquake damage/construction defect claim against insurers (including EQC) and parties responsible for construction of the building:
Body Corporate 83501 & Ors v Christchurch City Council and Ors (6 week trial to be allocated after 1/7/13)
  1. Claim against insurer and broker about limit of material damage and business interruption policy; whether payments under policy are to be net of EQC payments for property:

Body Corporate 398983 v Zurich Australian Insurance and Firm P1 Ltd (Preliminary question set down for hearing on 12 April 2013)

  1. Whether EQC proceeds and proceeds of sale of land to be distributed in accordance with original ownership interests or reassessed ownership interests:
Dominion Finance Group Ltd v Body Corporate 382902 & Ors (Decision issued 11 December 2012)
  1. Application to settle scheme under section 74, Unit Titles Act;
Broker Negligence
  1. Lapse in insurance due to neglect/misconduct of broker; insurer is broker's professional indemnity insurer:
Marchand, Marchand & Costelloe v Jackson (Reserved decision delivered 2 May 2012).
  1. Claim that defendant broker failed to arrange promised cover, alternatively that QBE policy was never cancelled;
  2. Lapse in insurance due to non-payment and issue of whether insurer cancelled policy validly;
 Multiple events / Merger / Uncompleted repairs
  1. Entitlement to be paid for damage resulting from each pleaded earthquake up to the limit of insurance in each case:
Ridgecrest NZ Ltd v IAG New Zealand Ltd (Decision delivered 8 November 2012)
  1. Claim for repair costs after September event plus indemnity value of building following February event up to sum insured;
Application of automatic reinstatement clause
  1. Whether automatic reinstatement clause applies to allow Plaintiffs payment of reinstatement cost of September damage and reinstatement cost of February damage;
CERA demolition
  1. Whether CERA demolition notice extends to all leased premises, some of which are said to remain tenantable; whether tenant which claims to have improved premises has an interest in insurance policy:
One Three Four Ltd v J R F Holdings Ltd (Fixture 4 March 2013)

Reinstatement of commercial property
  1. Whether insurer liable to pay at least the indemnity value, under an extension to the insurance policy which deals with Earthquake Full Reinstatement Cover; whether damage to building repairable practically or economically; question as to impact of CERA demolition notices; when money payable under policy; and measure of loss:
TJK (NZ) Ltd v Mitsui Sumitomo Insurance Co Ltd (Decision on liability to pay indemnity value in the meantime delivered on 22 February 2013. Trial provisionally set for July 2013)
  1. Whether building repairable, question as to appropriate repair option for foundations, and extent of business interruption losses; 
  2. Whether any part of claim for damage to building in earthquake is damage formerly compensated from previous event;
 Commercial lease: fitness for use                
  1. Whether lease contains condition as to fitness of use;
Judicial review: CERA offer for vacant red zoned sections
  1. Challenge to CERA offer for vacant sections in red zone; whether offer of 50% of 2007 rateable valuation is discriminatory and arbitrary:
Fowler Developments Ltd v The Chief Executive of the Canterbury Earthquake Recovery Authority (For trial 6 May 2013)
Council Earthquake Prone buildings policy
  1. Challenge to Council's earthquake strengthening policy for damaged buildings: whether must meet 33% or 67% of new building standard:
The Insurance Council of NZ Inc v Christchurch City Council (Reserved decision delivered 4 February 2013)
Amendment of District Plan
  1. Judicial review of Minister’s decision under CERA Act to insert Chapters 12A and 22 in Regional Policy Statement, plaintiff seeking land be zoned residential:
Independent Fisheries Ltd v The Minister for Canterbury Earthquake Recovery (Decision delivered 27 July 2012)
  1. Validity of decision to deconstruct the Cathedral: whether it is a breach of trust or ultra vires power:
The Great Christchurch Buildings Trust v Church Property Trustees (Reserved decision delivered 15 November 2012)
  1. Application for declaration that Church Property Trustees may use insurance proceeds to build transitional cathedral and fund operations of Chapter and Cathedral community:
Church Property Trustees v The Attorney- General & The Great Christchurch Buildings Trust (Decision delivered 8 April 2013).
Environment Court
  1. Challenge to Environment Court decision to continue with hearings;
  1. Liability and quantum under reinsurance contract; issues as to scope of cover and evidence of losses and categorisation thereof:
NZ Local Government Insurance Corporation v R + V Versicherung AG (Decision reserved).

For further information about the High Court Earthquake List procedures or the impact of recent judgments on your insurance claim, contact the Insurance team at Wynn Williams.
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