Group Action outlines case against EQC

Lawyers for a group of Christchurch homeowners have today delivered a letter to the Earthquake Commission (EQC) outlining details of a group action seeking declarations from the High Court.

(Subs please see attached link to download copy of letter)

Anthony Harper partner Peter Woods is heading the group action on behalf of more than 100 Christchurch homeowners. His team at Anthony Harper, assisted by Law for Change with 40 volunteers from the University of Canterbury School of Law have been working on the proceedings for over 18 months.

He says the group action is seeking three sets of declarations from the High Court around EQC’s interpretation of the EQC Act.

“EQC’s interpretation has left many outstanding claims in dispute, and potentially many settled claims now in doubt,” Mr Woods says.

“This is not a class action for damages. The group action is seeking declaratory judgements on how EQC interprets the EQC Act. These judgements cover serious issues and will have far-reaching implications for all New Zealanders.”

The declarations cover the extent of EQC’s liability when EQC elects to settle by payment, replacement or reinstatement. In addition they argue EQC’s liabilities are not met merely by compliance with MBIE guidance.

“Where the EQC Act states the definition of ‘replacement value’ is ‘when new’ and compliant with the building code EQC has chosen to consider only the pre-earthquake condition of a building,” Mr Woods says.

Group Action member, Warwick Schaffer says EQC has been arguing it only needs to repair in ‘a reasonably sufficient manner’ rather than to ‘when new’. He says EQC has systematically lowered the standard of repair, limiting its true liability.

“Its use of MBIE guidelines on floor levels, created after the earthquakes, is an example of EQC avoiding structural repairs on many homes,” Mr Schaffer says.

“The MBIE Guidance document does not set out the standard required by either private insurance or the EQC Act, though EQC insists it can meet its obligations merely by complying with these guidelines.”

Peter Woods says EQC’s reluctance to accept liability extends to not only its standard of repair, but what it is willing to repair. EQC maintains it is only liable for earthquake damage and not liable for the cost of related work.

“In our view EQC clearly does have that liability. If the only way of replacing or reinstating earthquake-damaged parts of a building is to do work on other parts of the building that are undamaged, the cost of working on those other parts is simply part of the cost of replacing or reinstating the earthquake-damaged parts, and accordingly is a cost for which EQC is liable.”
[see attached letter, item 8]

This type of liability is normal for private insurance policies, he says. “We do not understand there to be any difference in this respect between the wordings found in private insurance policies and the terms of the Earthquake Commission Act 1993”.
[see attached letter item 10]

“Where EQC elects to settle a claim by payment, it has been using Clause 9(1) to reduce its liability. That clause applies only where the Commission elects to replace or reinstate property instead of making payment. EQC’s interpretation leaves claimants worse off, with insufficient funds for repairs,” Mr Woods says.

Peter Woods will be speaking at the Canterbury Earthquake Repair Standards public meeting at Christchurch’s Transitional Cathedral tomorrow evening, 7pm Thursday 10 September.

ENDS

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