thechristchurchfiasco

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An MBIE Guideline Breakthrough…

31 Comments

If a homeowner’s insurance policy provides for a repair to be undertaken, then this is a private contractual matter that should be adhered to by both parties and governed by only the law of contract. The MBIE Guidance document does not override the insurance policy or compel the insurer to use it.  So if the insurer does use, or has used, MBIE guidelines for a cheaper, lower quality scope and costing, rather than the contractual, and/or the building industry and legislated standard, what then?

Using these lesser standards will mean that aspects of homeowners’ repairs may be seriously compromised. MBIE solutions can sometimes produce different, cheaper and less robust methodologies of repair. This brings me to the next point – we are already seeing the consequences of some MBIE repairs. There are instances of repairs failing in our city. The quality of the housing stock in the city may be compromised.   This could produce another round of disputes between homeowners and insurers, including EQC.  Homeowners may try to recover the loss of equity in their properties and to rectify ‘failed repairs’. See http://www.stuff.co.nz/the-press/news/10441327/Cheap-fixes-devaluing-thousands-of-homes

The good news for us is that the law firm representing IAG/State (Young Hunter) in our upcoming court case, has formally advised the High Court on behalf of IAG New Zealand Ltd, that IAG/State Insurance does not consider the MBIE Guidelines to be the standard in the case of our policy. The standard is just as it says in our policy “as when new”.  For us, this represents great progress and a real breakthrough.    This is because for some years we have had several scopes of works produced upon the instruction of IAG/State that assessed our home to the MBIE Guideline standard. Despite repeated protestations that this was the wrong standard – scoping nevertheless progressed on this basis. As I see it this current clarification justifies the position we have held for several years now.  Our legal team is delighted that this position has been unequivocally confirmed by our insurer.

We still have a three week High Court trial starting on September 21. The MBIE issue is one that will be covered in our case due to the scoping that was carried out.   This is an issue thousands of policyholders (and the rest of the country) will be very interested to follow, as your many comments tell me. Feel free to attend at Court in Christchurch to watch the case as it unfolds.

Be sure to insist on the policy standard as the assessment and scoping criteria for your property too.

~Future Proofing for a sustainable, participatory, democratic society.

https://thechristchurchfiasco.wordpress.com/

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/

31 thoughts on “An MBIE Guideline Breakthrough…

  1. Just wondering what happened to this case and where that leaves many of us who are still fighting MBIE guidelines being used as the standard of every brief given to engineers the insurance company employs? We were supposed to have a “joint brief” according to the lawyer at the mediated RAS meeting but SR refused to either take out the MBIE standard instructions OR to put in the correct policy wording I asked for. So of course they come back with the same old results of repair rather than rebuild the foundation on our TC3 section.

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    • The answer to that question is simple. A judge at the High Court has determined (without our input) that the document cannot be accessed by the public. Infer from that what you will.

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  2. The contract (policy) says the repairs have to be “as when new”. The insurer is required to assess the loss for both themselves and the insured. But for years the insurer instructs their experts to assess the loss to MBIE guidelines, or alternatively does not instruct to assess the loss to an “as new” standard.
    One consequence is that the insurer is not assessing the loss according to the contract (policy). The other consequence is a delay in assessing the loss as wise insured like yourself and others take this deceit on.
    If only there was a legal precedent for an insurer being proven not to have acted “in utmost good faith” and/or breached contract due to such tactics with an appropriate penalty applied.
    Where is the Insurance and Savings Ombudsman? I look but can not find their information sheet titled ” Duties of Insurers to act with Utmost Good faith”! If the ISO scheme was proactive it would have saved a lot of conflict, cost, delay and stress to insured

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    • Hi Jeremy, you’re on the ball with the MBIE assessment stuff. Unfortunately the ISO is an industry funded body so of only limited value to homeowners. Utmost good faith is also a rather nebulous term in law – the poor old policyholder is left holding the can once again.

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      • Utmost good faith – If a customer fails to disclose something, even minor, it may void a claim. So why not the other way. Why does the customer get screwed for not acting with utmost good faith but so far Insurer’s haven’t been held to account for failing to assess a loss to the contracted “as new” standard?
        Seems like a one-sided game here. Perhaps the insurers have traditionally had deep pockets to protect their benefits of “utmost good faith” but customers don’t. As you say – the poor old policyholder is left holding the can.

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      • One the reasons Jeremy is that the majority of the cases that have headed to the court thus far have not had good faith as one of the pleadings -good faith is a rather nebulous term in common law in this country – but the day will come when someone will take them on and the courts will have to respond.

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  3. Hi Sarah, do you have a copy of, or link to, Young Hunter’s submission to the court about the MBIE guidelines?

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    • HI Simon it was a court memo and I’m afraid I cannot provide you with the document currently. All in the sue course of time though.

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      • Thanks Sarah. Interesting that we’ve just rec’d a letter from IAG stating “I am unaware of any representative or agents of IAG that have accepted that the MBIE guidelines do not meet policy standard.” Me thinks the message still isn’t getting through to their technicians that MBIE guidelines don’t meet the policy.

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      • Simon very interesting. If you send me what you have I’ll follow it up – we can’t possibly have this continued misunderstanding floating around. I’ll try to sort it out.

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  4. Hi Sarah

    I now that clause 3.3.2.1 of the Simple House Acceptable Solution provides “Piles shall directly support the bearers”.

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  5. Hi Sarah,
    This is indeed great news and we’re already working on pushing back on IAG’s and the engineers insistence of using MBIE guidelines rather than the policy, or indeed any ‘standard’.

    It does amaze me that, in the face of mounting evidence and litigation, they and their preferred suppliers (certain engineering companies) are still using these ‘guidelines’

    Will watch your case with vested interest.

    Thanks, Simon

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  6. Hi Sarah, one point that I think is interesting is the requirement in the Building Code / regulatory regime for “Alternative Solutions” (at least for structural items) to be supported by evidence such as observation over time, or laboratory testing, or analogy with an “Acceptable Solution” – I have struggled to find any of this sort of evidence supporting the MBIE guidelines. Also on a related note, an “Alternative Solution” appears to only comply with building code if it is approved (by way of grant of a building consent or building compliance / exemption document) by a building consent authority i.e. The relevant city or district council. How then do insurers get away with MBIE referenced repairs and also avoiding wherever they can the obtaining of building consent? Also why are the councils letting them away with this stuff when they do on occasion apply for consent for MBIE referenced repair solutions?

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    • Your points are so very valid Ross. None of it stacks up and no-one seems to be looking at this closely in the Council – they ought to be because they may well be at risk in future actions.

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  7. Hi Sarah thank you for the way you write in such a clear concise way regarding issues affecting those of us still stuck in limbo because of insurers pedantic side stepping on policy wording. They are driving down our policy entitlements and yet raising their profits ( why else would they be doing this?) . In our case our their repair strategy on our 3 year old house includes grouting 6 slab/foundation cracks and getting a ‘ code of compliance exemption’ from CCC to do this. So much for a full replacement policy now called ‘as new’ by IAG. Keep up the great work:)

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  8. Will this follow through with EQC – as new. Early days I would hear Gerry telling people on the radio that the reason Joe Bloggs has more done than they, is because Joe has a different insurance policy. ?

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  9. I am SO looking forward to attending your court case.
    You certainly have done your homework Sarah. I think the outcome is going to be most positive for you and your family – and will then benefit lots of others (such as myself) who are in the same position as you.

    I am sure you will get the clear truth out (IN COURT) when it comes to the building code and the MBIE.
    We, the people, require “clear clarity” on this very point. It needs to be finalized once and for all.

    One can only imagine the cost of having to go back and rectify all the work which has been completed intentionally to the wrong code!
    (That will certainly hit the Insurance Companies – for their dishonesty!)

    We have followed your fantastic blog really closely from day one.. learnt sooo much in the process! A big Thank you.

    ENJOY your win !

    Geb

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  10. We are a rebuild in a red zone after almost 2 years as a repair after being a rebuild then total loss then repair now a rebuild. Does the mbie guidelines apply? We are with State too. Look forward to your court case. Thank you Sarah for helping others.

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    • Gayle I have not had a look at your policy so I cannot answer your question definitively but if you are a rebuild then I would suggest that the MBIE Guidelines don’t apply at all, they were put in place to deal with repairs. A rebuild is a new home which must be built to the Building Code and Act.

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      • The MBIE guidelines I’ve been told provide robust solutions for new foundations, and they would be what would be looked at and used by engineering in construction of a new home (subject always to basic good engineering interpretation and principles). The problem lies in the MBIE guidelines as they repair to structural repair of homes as I understand it.

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      • The MBIE Guidelines do not apply to new buildings. The sit below the Building Code.

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  11. Hi Sarah. Your news and Dean’s information is encouraging but as an Engineer, I have watched this travesty unfold with horror over the last several years, but I have a concern for the unfortunate people who were ripped-off with repairs to this lesser standard, many of which are now failing. What about them? Most can’t afford to do much more than complain. And what about the builders who did this stuff? And what about the local authorities that looked the other way while it was happening……?

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  12. Interesting discovery!…. As I am sure everyone knows EQC have stated that ALL overcap properties will be with the insurance companies by 4th September 2015. We are NOT on this list even though we have PROVEN DAMAGE in excess of $450000 JUST for the floor and proven to be from ONE event!.

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  13. Hi Guidance only, not to be relied upon, we are proving it everyday. Clause B1.3.1 of the building code requires that all building elements maintain equilibrium up to and including the Ultimate Limit State . There are numerous inferior repairs being undertaken based on this guidance and constant referral by consultants etc. Its got to change before its too late. I’ll sit on the periphery in your court room with interest. All the very best and good luck

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  14. Hi Sarah, at last some decency in decision making being seen and guidance provided by courts being used,
    As recently as Friday I was involved in an IAG claim resolution.
    One of the BIG matters was beside the engineer being instructed on a detailed brief/instruction that included explanation of MBIE, etc and “as new” the engineer wrote in their report that “as new” was MBIE, etc A MASSIVE FAIL!!! 😦
    Good to see that doesn’t have to argued here AGAIN!! in yours.

    Best regards,
    DEan

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    • Briljant news Dean – this is the kind of information we should be sharing with the community. So thanks for that. Power to the people.

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    • Sarah it sounds like IAG have admitted that policy standard is the applicable standard. How does this lie with all their assessments being to MBIE guidelines standard? My insurer suggests that engineers can only review using building act and code, and relevant MBIE guidelines, then somehow they will “loss adjust” my claim afterwards to policy standard that magically they are the only ones able to interpret. I would be interested to hear why MBIE guidelines will still be a point of issue in your trial if this admission has been made by IAG? Wouldn’t they have to go redo their engineering reports? Or are they mounting an argument that they can perform magic like my insurer and “loss adjust” to get to policy standard??

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      • Despite insurers telling homeowners that MBIE is not the poilcy standard they still use it – however no amount of loss adjusting will return it to an us new condition.

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