A group of 98 Canterbury homeowners has won a landmark settlement with the Earthquake Commission (EQC) following a bid for a declaratory judgement in the High Court.
A Joint Statement, released today by the EQC and the EQC Action Group supported by its law firm Anthony Harper, records homeowners’ full entitlements under the EQC Act, removing ambiguity and inconsistency around EQC repair standards.
The settlement clarifies EQC’s obligations under the EQC Act. It removes EQC’s reliance on MBIE relevelling guidelines, confirms EQC’s requires reinstatement standards are to ‘as when new’, and corrects how EQC’s cash payment is calculated.
EQC Action Group founder and Committee Chair, Warwick Schaffer says, “This landmark settlement is a huge victory for the group, and will have far-reaching consequences for all EQC claimants.”
Group members have been working with Anthony Harper for three years to achieve this agreement with EQC. They were assisted by volunteers from Law for Change, a group of law students from the University of Canterbury.
The group had offered to settle with EQC by issuing a joint statement in September 2015. This was rejected by EQC, forcing the group to take its claims to the High Court in November 2015.
The action filed in the High Court in November last year sought clarification on specific interpretations under the EQC Act. One of these related to the MBIE Guidelines on relevelling damaged floors. Under the guidelines floors less than 50mm out of level were not repaired by EQC. The settlement with EQC states the MBIE Guidelines will not be used to determine if a floor needs to be relevelled, nor will it be used to determine how level a floor needs to be once repaired. Instead EQC must return the floor to a condition substantially the same as when new and compliant with current regulations.
The requirement to repair homes to a condition substantially the same as when new, rather than their condition just prior to the earthquakes, is also confirmed in the settlement with the Group.
EQC Action Group Committee Deputy Chair, Craig Edwards says previously EQC has used phrases such as ‘pre-earthquake standard’ and ‘like for like’ when describing their obligations. “This created the impression that the standard EQC had to meet was something less than as when new. This settlement clarifies that the standard required is higher,” he says.
The agreement also covers repair to undamaged parts of a property, such as old wiring that needs to be replaced as part of the earthquake damage repair.
Mr Edwards says previously EQC has refused to undertake repairs when it would be required under building regulations to significantly upgrade items such as wiring.
“In many cases EQC paid homeowners cash for the work, excluding the cost of the required upgrade, leaving homeowners with a substantial bill to complete the repair to their homes. The settlement clarifies that EQC will cover the cost of repair or replacement of undamaged parts, if this is required to repair the earthquake damage,” Mr Edwards says.
The settlement also confirms that if EQC elects to pay the homeowner, it must base its cost on a reinstatement strategy that returns the damaged part to a condition ‘substantially the same as when new’, as defined by the Act.
A final clarification the Group has agreed with EQC relates to the EQC Act Clause 9 (1)(a) of the Third Schedule. EQC considers this clause modifies the repair standard required. The Action Group and EQC have agreed that this provision only applies when EQC elects to repair or replace the damage and not when it pays the homeowner for the reinstatement of the damage. This is likely to mean that some of those who have been paid by EQC may be able to challenge the way EQC has calculated that payment.
“There has been widespread concern EQC was scoping repair work that did not meet the standard under the Act. EQC has been using the same scope of works whether it elected to do the work or pay the homeowner. In most cases a different scope will be required if EQC elects to cash settle,” Mr Edwards says.
The action taken by law firm Anthony Harper was an application for declaratory relief. Unlike other group actions against insurers, the Group was not seeking damages. Rather the aim was to clarify what EQC’s obligations are under the Act.
Anthony Harper Litigation Partner, Peter Woods says EQC has agreed to inform all staff handling the Group’s claims of the terms of the Joint Statement. “The Group believes having this clarification will ensure that EQC’s assessment of the earthquake damage to their homes and the reinstatement methods will meet EQC’s obligations under the EQC Act.”
Mr Woods says people outside the Action Group should also be checking EQC’s assessment of the earthquake damage to their properties and how payments were calculated to see if the Commission has met its obligations for the reinstatement of their properties.
“It took getting to the Court steps but now EQC has worked co-operatively with us to reach this agreement, and we hope the Commission will continue to do so to quickly resolve our members’ claims,” Mr Schaffer says.
For further information, please contact:
Partner, Head of Litigation
Tel: 03 364 3816
Mobile: 021 352 456
EQC Action Group, Steering Committee Chair
Tel: 03 372 9436
Mob: 021 372 943
EQC Action Group, Steering Committee Deputy Chair
Phone: 0274 344 245
EQC Action Group, Committee member
Phone: 03 322 4940
EQC Action Group, Committee member
Phone: 022 063 6653
Tel: 021 668 090
About Anthony Harper
Anthony Harper is an award-winning national law firm. For more than 150 years we have helped, assisted and advised New Zealand and international clients to achieve their goals. Our high performing, internationally ranked solicitors, include Peter Woods, Head of our Litigation Practice who Chambers regards as “… probably the most commercial litigation partner …”. As one of the largest law firms in New Zealand we are proud to be able to solve the most complex of problems for our clients, whilst fostering an inclusive work environment and enhancing our local communities. There is a difference. For further information, see www.anthonyharper.co.nz