Ministry of Justice

Management of agreed repairs / disagreement over scope of works / determining reasonable costs / State Insurance policy / insurer required permission before expenses incurred / insurer’s control over reinstatement process / duty of good faith / implied condition that insurer obliged to have due regard to interests of insurer / insurer required to balance cost v risk / implied condition that insurer not to unreasonably withhold permission to incur expense / IAG reasonably withholding permission to replace skylights / IAG unreasonably withholding permission to seek Master Build Guarantee, to encapsulate roof, to repair T & G floor boards by gluing from below, and to incur professional inspection fees / fabric roof repair required IAG to balance weathertight risks with cost of repairs / IAG able to choose between reasonable alternative repair options for fabric roof / IAG unreasonable to refuse permission for homeowner’s proposal for repair of fabric roof as IAG’s favoured alternative rep...

Hearing on three issues after case stated to High Court / first, uplift from the policy cap to the market value cap / policy cap is an overall cap on claims within one policy period, not per earthquake event / market value cap operates as an overall cap, not per earthquake event / insurer not permitted to now raise evidential issues as to scope of works, costs, and depreciation / insurer had sufficient time to commission own evidence in rebuttal / evidence before Tribunal sufficient to dispose issue / second, insurer’s entitlement to EQC payment credits when policy does not respond to that event due to policy cap / insured not permitted to be more than fully indemnified / retaining EQC payment would enable insured to recover in excess of maximum sum payable / third, liability for costs incurred by insured displacing insurer’s denial of liability / insured did not seek approval prior to engaging experts / policy required prior authorisation / insured unable to recover costs under policy...

Election under insurance policy / insured stated they did not intend to complete certain repairs / telephone conversation recorded in file note / file note is hearsay contained in business record / Evidence Act 2006, s 19 provides file note is admissible; questionable whether staff member would have useful recollection of events / whether an election under insurance policy / communication of election choice must be unequivocal / insured needs to make an informed election choice, having a reasonable appreciation of scope of damage, the work required to remediate, and the likely indemnity otherwise available / insured was not aware of difference in outcome between the two options / alternatively, election was not unequivocal as it was directed towards particular repair strategy.   

Transfer from High Court / Canterbury earthquake sequence / State insurance - IAG / defective repairs / contract of insurance with third parties / whether IAG liable for works of third parties / 1920’s house / repair standard / policy standard “when new” / scope of works / building code / contractual breaches under the building contract / functionality / aesthetics / cause of deficiencies / damages – not within scope of hearing / submissions for costs 

Procedure / dismissal / without prejudice rule / costs for bad faith / dispute over whether driveway needed to be repaired or re-laid in order to replace drains damaged by earthquake / EQC agreed to pay for cost of relaying driveway but offer rejected because it did not cover cost of bringing application / EQC sought costs for bad faith & dismissal of claim as offer resolved dispute / Canterbury Earthquakes Insurance Tribunal Act 2019, s 46, s 47 / without prejudice rule waived in terms of settlement agreement but agreement on its own not enough evidence to dismiss claim / Tribunal unable to consider merits of costs application or reasonableness of offer due to without prejudice rule / EQC entitled to make settlements full & final / EQC did not act in bad faith in raising defence that applicants’ advocate agreed to repair / application dismissed.

Expert advisors / appointment of independent engineer as expert facilitator / applicant objected to appointment on basis engineer had worked for respondent in a number of claims / Canterbury Earthquakes Insurance Tribunal Act 2019, s25 / engineer worked for a variety of insurers & claimants / s25 requires actual rather than apparent bias / actual bias requires a real connection between expert & party such that their independence is affected / no evidence of actual bias / engineers not fiduciaries & their duty is simply to advise / no conflict of interest where engineer appears as an expert witness against former principal.

Applicants sought declaration that aesthetic damage caused by 4 September 2010 earthquake to exposed concrete floor was beyond repair & required replacement of house built in 2009 /  insurer argued structure & fabric of building showed little signs of damage and replacement was disproportionate to the damage suffered  / Tribunal held proportionality not relevant to claim seeking performance of insurance obligations / proposed repair to fireplace, clearwater system & sewerage unreasonable / other proposed repair methods not unreasonable / Tribunal not prepared to make other declarations sought or determine insurer’s liability / repairs needed to be scoped & costed.

Disagreement over scope of works /  Southern Response Insurance policy / interpretation of insurance contract / interpretation of ‘as new’ / application of ‘as new’ / ‘as new’ and ‘when new’ create the same outcome / repairs must meet the current building code / what repairs are required to meet the policy standard / whether to relevel or rebuild foundations under the insurance contract / Southern Response’s repair methodology to relevel is not unreasonable / whether Southern Response elected to cash settle / law on damages / Southern Response breached its duty of good faith / damages of $5,000 awarded to the insured for mental distress/ Tribunal’s power to award costs.

Procedural order / second respondent seeking further particulars of claim / response filing deadline extension / first case management conference deferral / Canterbury Earthquakes Insurance Tribunal Act 2019, s 15 / written response and support documents to be filed within 15 working days of service, as per s 15 / extension may be directed by Tribunal / extensions to be sought by memorandum and will be determined as without notice application, as per amended Practise Notes / respondents unable to file detailed response due to lack of application clarity / should file pro forma response and orally request further particulars at first case management conference / second respondent not involved in EQC Protocol 1 repairs as expected costs under EQC cap / claim requires commission and consideration of expert reports and other document before claim response possible / however, Tribunal not a pleadings based process / imperative to be fair, speedy, flexible and cost-effective process / discov...