"Highlighting the inadequacies of the way in which the earthquakes of 2010-2012 were handled by the insurance industry! "

The Tide is Changing


The citizens of Canterbury are running out of time, money and feasible means of settling their insurance claims. It is now Five years post-earthquakes and with the Limitations Act looming in the background the time has come for those remaining unresolved insurance claimants to carefully consider their options. My own personal experience has left me in no doubt that what is called ‘representative action/ group action’ is the most cost effective solution to solving systemic insurance issues, which, when tackled on an individual basis are unable to produce adequate precedent [1] or satisfactory individual results. You may know that ‘class actions’ cannot be brought in New Zealand at present, but group litigation is possible by way of  Representative action. The terms are however  loosely used interchangeably.images

There are already several such actions currently taking place  in Christchurch. Earlier on in the process we saw a representative action for the group known as the Quake Outcasts.  This group had good success all  the way to the Supreme Court where it was found that the Government had treated uninsured and vacant section owners unlawfully. Sixty-eight of our ‘outcasts’ were initially offered NO payout post-quake for their uninsured or uninsurable land in the ‘Red Zone.’ The Supreme Court upheld their appeal. The same lawyer who assisted the Quake Outcasts is now running a collective action against Southern Response. This person is Christchurch lawyer Grant Cameron of GCA, who has invited thousands of unsettled policyholders to join together against Southern Response, with the backing of international financiers – Litigation Lending Services (LLS). The Southern Response representative action was filed in the courts recently. This firm has also had success with Cave Creek and Lake Alice psychiatric hospital actions in the past. The litigation is based on a ‘no win – no fee’ basis. If the action is successful, LLS and GCA fees will not exceed 20% of the total claim and, in some circumstances, the amount is likely to be significantly less. There is perhaps  chance that Southern Response may recognise that it is in a very vulnerable position and may decide that it is prudent to reach a negotiated resolution with the group prior to any court hearing  commencing.

In addition there is also an EQC group action which is likely to be filed at court in the not too distant future. Anthony Harper, the law firm running the action has agreed to take the case on at reduced rates and capped the fee at $2000 per property. Considering the real cost of High Court action, this is a nominal amount enabling ordinary homeowners to challenge EQC and seek a fair outcome to their claim.

There are also others who, recognising the travesty taking place are also interested in pursuing the litigation funding opportunities increasingly presenting themselves in Christchurch. Recently another litigation funder LPF Group director Bruce Sheppard and lawyer Kalev Crossland of Shieff Angland, were in Christchurch measuring  interest for other possible representative actions. There are currently at least five litigation funders operating in New Zealand. It is clear that the message of the plight of the Canterbury people has seeped through to those who can genuinely make a difference to large numbers of claimants  simultaneously.

Representative actions allow one or more persons to sue on behalf of, or for the benefit of, all persons “with the same interest in the subject matter of a proceeding” either with the consent of the represented parties or with court approval. The courts have permitted plaintiffs to use this mechanism to commence group actions. Using this method, a representative action can avoid a defendant having to face a multitude of claims based on the same subject matter and provide the plaintiffs with cost effective justice. Courts have tended to take a wide and flexible approach when deciding whether parties have the “same interest” in a proceeding and have allowed representative actions in a range of circumstances. The wording of the representative action is critical, because a cause of action requires actual reliance to be shown by each plaintiff. If this has not been possible then the courts have not been so willing to allow representative actions. For this reason, legal practitioners with experience and sound background in these matters are a crucial requirement. It is important that the group of claimants involved have the “same interest” in the proceeding. And though each individual’s claim will be different it is required that  an individual who is to ‘represent the group’  give evidence on behalf of the other parties’ specifics.

Class actions have flourished in the US and Canada and are also on the rise in Australia after the Federal Court of Australia Act was amended in 1992 to introduce “representative proceedings”. I am of the opinion that it is critical that a class action regime emerge in New Zealand. I am moved to hold this view because of the outrageously high costs for the average individual to access justice and the time taken for a case to be heard – I welcome the development of representative action wholeheartedly. I believe class and representative actions have the potential to effect massive and much needed social change in an environment increasingly shifting in favour of corporate interests. Class action litigation allows individuals access to the courts by pooling a large number of claims which would not have been financially viable for the claimants individually and very importantly it holds the promise of a more level playing field on which powerful defendants (such as the Government, private insurers and banks) can be held to account.

I suggest that all dissatisfied, under-settled and not-yet-settled insurance claimants watch this space attentively as the lawyers ponder on your (and their) best approach to start taking on the insurance corporates at their own game.  I will report the actions as they arise, but the only thing to remember is – it can’t work without your participation……..

[1] an earlier event or action that is regarded as an example or guide to be considered in subsequent similar circumstances.

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

Author: Sarah-Alice Miles

Love to write, create and watch the clouds move across the sky - these days in the Netherlands. 'Art allows us to find ourselves and lose ourselves at the same time'.

10 thoughts on “The Tide is Changing

  1. Hi Sarah, I have had a cash payout of about 14K but cost overruns came to about 22K. Appealing to the EQC has only produced blatant denial of in-admissions by the EQC. Their tactic I found interesting. During the repair process I was assured several times that they would look favorably on overrun costs if properly substantiated which I did. But the refusal to negotiate or contact me for explanation of my overrun claim has led me to believe that they encourage the owner to proceed with the work knowing all the time that it’s in their favour to make it as difficult as possible for any compensation. The payout refurbishment rates are grossly under priced and damage unnoticed eventually gets denied in a counter claim. The option left is the ombudsman and/or the Privacy Commissioner. Is there a way forward from others who have been similarly affected? What about the small claims court to settle? Garry


    • Yes this is a real dilemma for many. Unfortunately I don’t believe people realise just how low most of the offers are. No doubt many are left out of pocket. Small claims court will only deal with very small amounts- the district court will deal with anything up to $200,000 – and you can represent yourself. Sorry to hear you’ve found yourself in this position.


  2. There still seems to be a lack of proper focus on class/representative actions against EQC for the land loss and damage, yet inherently the process would seem to be more straight forward with the all of us having the same policy wording i.e. the EQC Act; and the High Court having ruled that EQC can be litigated as an insurer.
    It continues to perplex me that thousands of Christchurch property owners appear willing to accept a pittance from EQC for their Category 1 to 7 observable land damage as though that represented their full entitlement, when it is clear that EQC has not yet assessed the more costly land loss and damage, including the loss of land height, the physical loss of land from ejected liquefaction silt, the loss of bearing capacity of land, including the effects of raised or variability of ground water levels – none of which are compensated for by increased vulnerability payments, which by definition are not payments for the actual physical damage.
    Even at last Thursday’s cardboard cathedral meeting the land issues were dealt with relatively superficially.


    • Absolutely Lew I couldn’t agee with you more. This is a biggie and I’m sure will be addressed fully in due course. we had limited time in the Cathedral. The land issues require specialized input and more time. But I can assure you there are people currently working on this issue.


  3. I am of the opinion, having been through the mill, that private litigation is not costly and instead very good value for money. Take for example a homeowner who could sell his house pre quake for say 400K. The cost to PROPERLY remediate the house and its damaged foundations according to independent experts is say 1M, The IC only wants to pay 500K. The homeowner sues, and the IC settle prior to trial for 850K because they risk much, much more by going to trial The majority of expense for the plaintiff comes after the settlement, probable figure 100k. So for your house initially worth 400K you got 750K. plus usually keep the old house or at least the land worth perhaps 200k Well worth the trouble and worry and far more than you would have got by negotiating. Even if they remediated your house would it now have jumped from 400k to the 950k you now have?
    What is required for private litigation?
    A deep conviction that you absolutely have a case for them to answer, a track proven lawyer and a vegas or bust attitude.
    with sufficient faith, the small mount of money required up front can usually be obtained by hook or by crook.
    However if you are still stuck on them fixing your house rather than willing to take a cash pay out then it allows them more scope to argue endlessly.
    Plaintiffs should understand that there is nothing wrong with a cash payout as long as its for the right amount and the right amount is the maximum achievable under their own very specific circumstances and policy wording. At this late stage individuals with different specifics may find themselves taking a very big gamble with some group actions because if they are not successful it leaves little or no time for individual filing due to SOL.


    • I don’t disagree with you Percy- however the costs involved in preparing a case for trial are astronomical – if the job is done well. The outcomes in the courts for policyholders who take individual actions have not been all that favourable and the big legal questions like the validity of MBIE Guidelines are never addressed. That’s why I favour the group action route – ask the big questions which can then not be side stepped.
      As for cash settlement – yes fine if you know what you’re doing – Unfortunately though many policyholders have no idea of their true entitlement under the policy and do not have sufficient cash to do the necessary due diligence.


  4. Hi Sarah, enjoyed your ‘call for action’ speech last Thursday. I agree that individual action plays into the hands of EQC and insurers. Whilst I support the call for an inquiry into failed repairs it seems to me that to change the farcical double handling of dealing with EQC before going through the same thing with the insurer we need to punitively damage EQC. Seems to me that a rapid assessment by an unqualified assessor effectively delayed our progress by 18 months and we incurred over $10,000 in unnecessary interest charges as a result.


    • Thanks for your feedback Mark. And I totally agree with you that the double assessment process is indeed both unhelpful and debilitating for the homeowner. For all policyholders the issue of lost interest should be addressed- thus far we have not seen it as a cause of action in the courts. I have no doubt though that it cannot be too far away now.


  5. HI Sarah cant open maybe a problem with link

    Kind Regards

    Dean Marshall




    021 2777494

    Suite 9, Level 1, Bonnington House,

    225 High Street, Christchurch 8011

    PO Box 25 379, Christchurch 8144


    03 977 7706


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