EQC – CANTERBURY EARTHQUAKES – TEST CASES
Letter from law firm Anthony Harper to The Hon Dr Megan Woods concerning test cases.
15 May 2018
The Hon Dr Megan Woods
Parliamentary Service Private Bag 18041
WELLINGTON 6160
BY EMAIL: m.woods@ministers.govt.nz
Dear Minister
EQC – CANTERBURY EARTHQUAKES – TEST CASES
1 As you are aware, we represent numerous homeowners in respect of their insurance claims for earthquake damage arising from the Canterbury earthquakes. A large number of our clients consider that EQC failed to properly assess and repair the earthquake damage through the Canterbury Home Repair Programme.
2 We have seen media reports that EQC intends to support "test cases", including in respect of homeowners' claims for defective assessments and repairs by EQC.
3 We understand that EQC may be trying to identify particular homeowner claims which could be used as "test cases". We assume that is on the basis that EQC is seeking to identify issues which are common to numerous claims, within one or more "test cases".
4 We consider that the most significant issue for EQC, homeowners and insurers is whether the statutory cap applies to claims where homeowners establish that EQC was negligent and/or in breach of statutory duty, due to the defective assessments and/or repairs. If the cap applies, most of these claims will be over cap and will need to be resolved by the homeowners' insurers. Further the fact that the cap applies is very material to how the homeowner, EQC and the insurers investigate and settle the claim.
5 We are aware that the previous Minister responsible for EQC stated that EQC's position is that the cap does apply in these circumstances. However, we understand that most, if not all, of the current claims filed in Court against EQC allege that the cap does not apply.
6 We consider that it should be possible for EQC to apply for declaratory relief in respect of this issue. We expect that, for the purposes of the application only, EQC could ask the Court to proceed on the assumptions that:
(a) EQC's assessment of the earthquake damage was negligent and/or in breach of statutory duty;
(b) EQC's repair of the earthquake damage was negligent and/or in breach of statutory duty; and
(c) The estimated cost of reinstating the earthquake damage that was not originally assessed and/or repaired by EQC is more than $100,000 plus GST.
7 On the basis of those assumptions, the Court could be asked to make declarations as to the interpretation of the Earthquake Commission Act 1993 in respect of the application of the statutory cap.
8 Obviously, EQC has sought declaratory relief previously and those applications have been considered by the full Court, which significantly reduced the likelihood of any appeal. We consider that the same approach could be taken for this "test case".
9 We appreciate that the "test case" we propose is restricted to one main issue and that individual homeowners will still need to prove negligence and/or breach of statutory duty. In our experience, each claim does need to be assessed on its own facts and it may be very difficult to identify any other issue(s) which is common to the majority of claims. Additionally, the "test case" we propose is streamlined and could be dealt with relatively quickly, compared with the other "test cases".
10 The writer would be pleased to discuss this with you. In any event, we urge EQC to proceed with this streamlined "test case".
Yours faithfully
ANTHONY HARPER
Peter Woods Partner