thechristchurchfiasco

"Shifting the Balance of Power in the insurance industry – back to the policyholders! "

What’s Going On in this City???? … More on the “Guidelines”

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In conjunction with Adrian Cowie’s work on foundation levels in a previous post I would like to make the following comments about the Guidelines generally. (See https://thechristchurchfiasco.wordpress.com/2013/07/05/the-dbh-guidelines-and-eqc-operation-hoodwink-guest-blog-by-adrian-cowie/).

In an unprecedented move, the Council had its consent accreditation revoked  after International Accreditation New Zealand (IANZ) said it did not have the “necessary confidence” in it. (See http://www.stuff.co.nz/the-press/news/8870193/Dodgy-consents-may-put-people-at-risk).

Unfortunately it is not just IANZ that has lost its confidence in the process but many Cantabrians are also aware of the underhand manner in which these guidelines are being used for the benefit of EQC and the private insurance industry to the detriment of the homeowner. The document setting out the guidelines is entitled “Guidance: repairing and rebuilding houses affected by the Canterbury earthquakes”. It is an industry guidance document for the use of engineers, designers, builders, Building Consent Authorities and insurance companies. It contains “robust and well balanced engineering solutions for repairing and rebuilding earthquake – damaged houses in the Canterbury region” – that’s debateable!

Let us not forget that these concerns are not just related to the building of new properties but also extend to proposed repairs to earthquake damaged properties – tens of thousands of them. Let us also not forget that many of these repairs have already been carried out.

As yet there appears to have been very little debate around the use of the Ministry of Business, Innovation and Employment (MBIE) guidelines in the context of insurance situations.  It appears that an automatic assumption is made by insurers that the solutions offered by the ‘Guidelines’ are the automatic choice for repairs to damaged properties.  It is probably no coincidence that the guideline techniques are also the ‘lowest cost’ techniques under the Building Act/Code, however, it is by no means clear that in the legal sense of an insurance context, use of the guidelines is ‘obligatory’ or even lawful. OLYMPUS DIGITAL CAMERA

The building code is a means of prescribing functional requirements for buildings and the performance criteria to which buildings must comply in their intended use (s16 BA04). Section 17 states that all building work must comply with the code whether a building consent is required or not. I can only conclude then that lawful repair work to buildings can only mean building work that complies with the building code, unless it is a minor work exempted by Council under Schedule 1 clause 1(k)(ii).Earthquake Repair – what is exempt, by Richard Maiden in Prendos Property Talk.

The statement on ‘status’ of the MBIE document ‘Guidance: Repairing and rebuilding houses affected by the Canterbury earthquakes’ makes it clear that  While the Ministry has taken care in preparing this document, it is only a guide and, if used, does not relieve any person of the obligation to consider any matter to which that information relates, according to the circumstances of the particular case“.

In the context of an insurance contract, an obvious matter to which the information relates is the standard to which the property should be restored under the terms of the policy.  Usually the insurer undertakes to restore the home to a standard as close as possible to when it was new, or words to that effect.  This implies that the insurer should not use a minimum-quality repair strategy, if that strategy results in a quality which is less than the original standard of construction of the dwelling. I have experienced this attempt to minimize repair strategies and consequently costs in my own situation with State Insurance using the ‘guidelines’.

The use of minimum standards in the interests of low costs is arguably bad-faith on the part of the insurer and as such this course of action will inevitably compromise the quality of the dwelling.  Good building practice is not the same as ‘minimum standard’ building practice.

The ‘guidelines’ have been revised three times since the earthquakes and during a meeting with the Council and CERA on Friday 21st June I was told there would be more guidelines to follow despite the fact that our concerns were expressed in no uncertain terms. Why? – because each time  a new guideline is introduced a ‘looser’ standard in engineering terms is created and enables EQC, insurers, and their contractors to downgrade their previously determined rebuild strategies to repair strategies and cheap repairs at that. (See http://www.stuff.co.nz/the-press/business/8846915/Shock-for-50-Southern-Response-claimants). Each time the standard is revised it is neither required nor in good faith.

But there’s more …..

Arguably these ‘Guidelines’ breach the  following:

1. the Consumer Guarantees Act. The purpose of this legislation is to protect consumers. Under the Act, our rights are expressed as a series of “guarantees”, the guidelines erode those guarantees – in particular Section 6 ‘Guarantee as to acceptable quality’.

2.  the Fair Trading Act in relation to contractor operators such as EQR, insurance companies and their preferred contractors, as well as the Project Management Offices. These groups are failing to provide repairs as set out in the Building Act and Code in relation to aspects of safety, standards, clear provision of information, requisite  guarantees of workmanship, and durability as set out in the 2004 Act. Often a Code of Compliance fails to be issued. All of these factors have major consequences for the homeowner.

As well as bring into question the motivation behind the recent changes to the Criminal Procedure Act, passed 1 July 2013 which also has a significant impact on the consumer protection under the Building Act. The liability of a contractor is changed from “Liable” to “Liable on conviction” which means that in essence the contractor will have no liability unless the consumer proceeds through the court system – and we all know how much that costs – justice for the wealthy only! Section 369(2): insert “on conviction” after “liable”. Section 369(2): amended, on 1 July 2013, by section 413 of the Criminal Procedure Act 2011 (2011 No 81).

All of these potential breaches have major consequences for property owners in Christchurch:
• citizens life savings and the equity in their property will be severely impacted, not simply for this generation but for future generations;
• the future safety of the repaired or rebuilt structures, exposing homeowners and citizens to an unacceptable levels of risk;
• diminished repair or settlement payouts to the benefit of EQC and the private insurers’ profit margins;
• future housing stock of Christchurch will be downgraded;
• the risk of the land damage and future repairs are quietly and surreptitiously transferred to citizens;
• it transfers the value and intention behind the insurance contract in place when the damage occurred from the insurance company back to the homeowner – breaching the contract of insurance.

I have said it before and I’m going to say it again – WHAT IS GOING ON IN THIS CITY????? Could it be that the people of Canterbury have been deliberately misled about the degree of land damage and appropriate repair methodologies??? It certainly looks that way. “Fiasco” was definitely the right choice of words for the title of my book.

Author: Sarah Miles

Trained as a lawyer, psychotherapist and mediator. My goal is to make my voice heard for the causes in which I believe so as to improve and contribute to a more sustainable and equitable society. I believe in the enormous power of the human spirit and the power within each of us to effect major change. "The only triumph over evil is for good men [and women] to do nothing". https://thechristchurchfiasco.wordpress.com/

3 thoughts on “What’s Going On in this City???? … More on the “Guidelines”

  1. Could anyone please tell us what the MBIE verticality guidelines are?

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  2. Great that there are people who ate prepared to push and keep pushing, to get tha answers / help for all in Christchurch. I wonder why we are’nt all “Up in ARMS’ and protesting loudly about all this and the rest of the “goings on in CHCH!

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  3. Keep up the good work

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