New Backers for $1 Billion Southern Response Class Action
MEDIA STATEMENT
EMBARGOED TILL WEDNESDAY 3AM, 29 April 2015
International Financiers
Announced as New Backers for $1 Billion Southern Response
Class Action
A new class action launched by a Christchurch lawyer against Government-owned Southern Response has brought an international litigation funding heavyweight to the potential $1 billion class action case.
Class action specialist Grant Cameron is inviting over 3000 unsettled Southern Response policyholders to join in a united effort to force Southern Response to meet its contractual obligations.
“Southern Response is only meeting 40 to 50 percent of the amounts claimed based on its own inadequate building reports. This is not an organisation concerned with its policyholders. This is an organisation concerned with limiting its own financial exposure,” he said.
Cameron says many Cantabrians are under too much financial stress to fund court action on an individual basis and a no win – no fee alternative is the only way to take action without any risk.
The action against Southern Response is being underwritten by Litigation Lending Services, an international consortium that specialises in class actions.
“Our litigation funder can get independent experts to tell you the real value of Cantabrians’ claims, and fight for damages including anxiety, stress, relocation, rent, storage and any other cost because of payout delay.”
Cameron says
LLS is a very substantial company and it only funds actions
where its lawyers consider there is a high likelihood of
success. This gives the funder the confidence to go ahead
on a “no win no fee” basis.
“That means, in the unlikely event of the action being unsuccessful, LLS would meet any court costs. It won’t cost individual policyholders in the action a dollar.”
Cameron says the earthquakes were in 2010 and 2011 and, over four years later, Southern Response policyholders are still waiting for their claims to be resolved fairly. “That is four years of hardship, worry, and stress”.
“Individuals tell me they feel powerless dealing with Southern Response. It’s easy for organisations to delay payouts when they are dealing with individuals. A class action empowers individual policy holders and will force Southern Response into action.”
Cameron has taken several successful class actions including against the Government on behalf of the families of the 14 victims of Cave Creek disaster when Department of Conservation viewing platform collapsed in the West Coast’s Paparoa National Park in April 1995.
In April 2001, he was successful in achieving redress for former patients abused at Lake Alice psychiatric hospital, and recently he achieved success in the Supreme Court for the Quake Outcasts group over Christchurch red zone issues.
Mr Cameron said his legal practice had negotiated a fee with the underwriters. “If the action is successful, LLS and GCA fees will not exceed 20 percent of the claim and in some circumstances, the amount will be significantly less. Put simply, if the policyholder does nothing, they are likely to only get 40-50 percent of their claim value met by Southern Response. If a policyholder spends no more than 20 percent of their claim value, they are in line to recover 100 percent of their claim.”
As required, the funder will also pay for expert reports for policyholders, so the true damage and remedial options will be known.
He said court action was not inevitable. “Southern Response may recognize that it is now in a very vulnerable position and it may decide it’s prudent to reach a negotiated resolution with us. Obviously, that would be the sensible way to resolve matters,” he said.
Mr Cameron said Southern Response policyholders could join the class action through a special website www.srca.co.nz or by contacting GCA Lawyers directly on contact@srca.co.nz or (03) 365 1347.
“There’s a great deal of truth in the old union saying, ‘unity is strength’,” he said. “Joining together gives policyholders the strength to impose change on Southern Response, and to put power back in their hands. I’m sure many will find it an extremely satisfying experience,” he said.
-ends-
29 April 2015
Unity could be strength
for Southern
Response
policyholders
Questions
and answers paper
This
paper, presented in a series of questions and answers,
provides background information on the proposed class action
against Southern Response, the Government-owned claims
management company established to settle the claims of the
failed insurance company, AMI.
Q What is Southern
Response?
A Southern Response is a government owned company responsible for settling insurance claims under policies entered into by AMI. When AMI found it could not meet claims in full, government stepped in and took over ownership of the company and appointed a new board and CEO.
Q What is a class
action?
A A class action is a legal proceeding brought by persons who have a legal issue in common. Often this form of proceeding makes case management easier for the courts, and for class members it usually overwhelms the “delay, deny, defend” strategy often employed by deep-pocketed defendants.
Q What is this
class action all about?
A Following the Christchurch quakes of September 2010 and February 2011, AMI, NZ’s largest domestic insurer, sought government support to meet claims. Government later took control of the company and changed its name to Southern Response Earthquake Services Ltd, with the intention of ensuring policyholders’ claims were met in full. Over 4 years, Southern Response has failed to settle claims in a timely fashion and the class action will allege breach of contract by the insurer. Policyholders are asked to unite and now pursue early recovery of their full claim entitlement along with damages, interest and costs.
Q Why do policyholders need to take this action?
A Four years after the quakes, Southern Response has yet to settle over 3000 claims, and those are just the claims it currently has before it. There are many more claims still waiting to emerge from the EQC system, perhaps another 3000. On the evidence to date, the company is attempting to resolve claims for about 40-50% of the true value of the claim and policyholders are being consistently misinformed about the true damage to their homes, the correct remedial action, and the true cost of the same.
Q What’s the
evidence for the insurer underestimating the value of
claims?
A GCA Lawyers has been consistently comparing the insurer’s estimates with the true cost as established through independent expert reports, including Quantity Surveyor assessments. The evidence shows the insurer representing claim value to be about 40-50% of true claim value and this is backed up by the experiences of a leading QS firm, that has done over 300 Southern Response assessments.
Q What’s
wrong with the insurer’s damage
assessments?
A The evidence to hand shows that often damage assessments are not carried out by suitable experts. Either expert advice is not being sought by the insurer or, where it is, the expert is not properly briefed and the resulting report does not align with the policyholder’s rights under the policy. With inaccurate damage assessment, the insurer then makes inappropriate judgments as to the proposed remedial strategy, often stating to policy holders that the damage can be repaired, but where independent assessment shows that a full rebuild is necessary. Inappropriate repair assessments also lead to inaccurate estimates as to claim value and policyholders are not being correctly informed about the true nature and scope of their claim.
Q Why would Southern Response act in this way?
A It is hard to know why Southern Response chooses not to pay Cantabrians the proper amount due under their insurance policies.
Q What are policyholders entitled to under their policy?
A The original AMI policies said that policyholders would be able to repair or rebuild their damaged family homes to an “as new” condition. Southern Response took over these policies and now has a contractual obligation to honour them.
Q Who are GCA Lawyers?
A GCA Lawyers is a Christchurch based boutique commercial and litigation law firm, that acts for clients throughout New Zealand. The firm specialises in complex litigation and is renowned for conducting group and class actions. It has conducted about 15 such actions over the last 23 years. More information can be found at www.gcalawyers.com
Q How did GCA Lawyers get involved?
A The firm was approached by a large group of policyholders who had formed the “Southern No Response” group. The firm was advised by the group of very poor client service, misinformation, bullying, long delays, repetitive damage assessments, file losses, replaced Claims Managers and a raft of other complaints. After meetings with policyholders it was plain that a “no win, no fee” action was required so financial risk could be shifted to a substantial third party. GCA Lawyers has been negotiating with appropriate funding companies across the globe to find the right partner for this class action.
Q Who is providing
funds for the class action?
A Funding is being advanced by a specialist litigation funding company Litigation Lending Services (NZ) Ltd. Although registered in NZ, the company is fully indemnified by its parent, Litigation Lending Services Ltd of Sydney, Australia. The company is substantial with a long history of successful litigation lending. For more information www.litigationlending.com.au
Q Can LLS be contacted?
A Yes. The contact persons are: Stuart Price, Managing Director & CEO, and Lisa Brentnall, Litigation Manager. +61 02-8226-8752.
Q What
does “no win, no fee” mean?
A No win, no fee
means that policyholders only pay if they win.
The
Litigation Funder takes all the financial risk and should
the case not succeed, it will walk away and carry the loss.
Conversely, if the action succeeds, it will recover the
monies it spent on the action and a share of the monies
recovered.