Potentially costly class action against Southern Response given go-ahead
Michael Hayward, The Press
The High Court has given the go-ahead to a class action with the potential to cost Government-owned insurer Southern Response hundreds of millions of dollars.
But first it will go to the Court of Appeal. Those behind the case want to run it as a precedent-setting "opt-out" action, where all parties able to make the same claim against Southern Response are automatically included in the case unless they actively withdraw.
Opt-out class actions are relatively common overseas, including in Australia, but have rarely been rarely attempted in New Zealand.
WHAT IS THE CASE?
The action alleges Southern Response underpaid on some settlements where a house was damaged beyond repair so homeowners chose to buy another house elsewhere or rebuild on another site.
It is alleged Southern Response did this by providing them with a version of its detailed repair/rebuild analysis (DRA) for their home that missed out several costs. The abridged DRA was used as the basis for settlement.
The DRA Southern Response did not give customers listed extra costs for items including demolition, contingencies, and additional design costs – resulting in a higher overall rebuild cost.