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Court of Appeal allows Christchurch homeowner class action

Court of Appeal allows Christchurch homeowner class action to proceed

By Sophie Boot

Oct. 30 (BusinessDesk) - The Court of Appeal has rejected an attempt by government-owned insurer Southern Response Earthquake Services to throw out a class action lawsuit from Christchurch homeowners whose claims haven't been settled six years after the earthquakes that damaged their properties.

The group, which started off as 47 claimants in February 2016 but has since dropped to 26, gained approval for legal action against Southern Response from the Christchurch High Court in December last year. Southern Response was established following the February 2011 quake when failed insurer AMI said it didn't have enough money to cover its liability, prompting the Crown to inject $500 million and assume control of the unwanted business.

In the court case, heard in July, Southern Response's lawyer argued the claimants didn't have a common issue binding them together. The claimants' lawyer Francis Cooke QC said the group had been subject to a strategy by Southern Response designed to minimise its financial exposure after all their homes were damaged by the same earthquake.

The appeal court judges said they were satisfied a representative proceeding wouldn't deprive Southern Response of any defence to individual claims, nor would it give individual claimants a claim they would not have had otherwise. Allowing the action will "resolve critical issues of fact and law for each of the claimants in an effective and efficient manner", they said.

"We are concerned with the lack of progress with these proceedings," the judgment said. "The proceedings are in need of careful case management, to assist the parties with progressing to trial in a prompt and cost-effective manner." The two sides have said they are willing to cooperate, which should help define the issues, the judgment said.

The High Court judge had ruled members of the group may have been "technically ... to a limited extent misled by some of the statements made" on the group's website and in other material, so ordered an explanatory letter to be sent to the group members.

The homeowner group's lawyers disagreed with this, arguing there is only jurisdiction to require remedial steps of that kind when there has been an abuse of process which has materially misled members of the complainant group.

The Court of Appeal said the High Court has the jurisdiction to order corrective material if it is concerned people have been misled, but in this case, it wasn't clear who had been affected by any misleading statements or what misapprehension needed to be corrected, so set aside the order.

However, the appeal court found there was a small sub-group of claimants who didn't have a detailed repair/rebuild analysis (DRA) by April 2015 could have been disadvantaged as they were cut out of the fee ceiling and floor agreed to by the litigation funders. The court said that the class action proceedings can be brought as long as those claimants won't be made worse off by it succeeding.


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