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Southern Response will not appeal Rout judgement

31 January 2013

Southern Response will not appeal Rout judgement

The Southern Response Board has decided not to lodge an appeal against the decision of the High Court in the claim brought by Mr and Mrs Rout.

Southern Response Chief Executive Peter Rose said the Court decision provides useful guidance on various issues facing homeowners and their insurers.

“Important from Southern Response's perspective is the recognition of the MBIE Guidelines as a 'relevant and authoritative guidance document' taken into account by Christchurch City Council in considering applications for building consent.

“We will continue to follow the Guidelines in relation to the viability of repairs and the investigations needed to satisfy Christchurch City Council. The Guidelines provide criteria for the type of geotechnical testing required to make decisions about re-levelling foundations. The case makes some comments about another key issue, deep soil testing limited to the specific facts of the case. It is important to note in our view, that the case does not expand the restricted circumstances in which deep soil testing is required under the MBIE Guidelines or provide any ruling about the type of testing required in other cases.

“Southern Response does not intend to change its current approach to deciding when deep soil testing may be required,” said Peter Rose.

The Court accepted that the Flood Management Area floor level heights do not apply to repairs but to new builds only.

“We are aware this decision is being treated as authority for the proposition that insurers are generally obliged to pay for the cost of houses to be restored to their pre-earthquake level, but this is is not the case. This decision only concerns a very limited number of houses which for specific safety reasons have a Consent Notice specifying floor levels registered on the title. Southern Response does not intend to change its current approach to re-levelling floors in any other situation,” said Peter Rose.

“It is clear from this case that rebuild costs are to be based on the cost of foundations actually built, which will generally not be as expensive as foundations notionally assessed for Red Zone sites. There is a clear confirmation of the principle that claimants cannot receive a windfall from their insurer. Claimants will not be entitled to be paid their rebuild costs unless they have incurred them,” he said.

ENDS

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